It's a new year, and it brings a whole new set of questions from Bay…
Forecasts for the East Bay housing market in 2021 suggest we could see more of the same, in terms of supply and demand. The way things are going right now, the East Bay real estate market should remain highly competitive in 2021 with motivated buyers competing for limited inventory. This in turn will put upward pressure on home prices throughout next year.
Geography note: This article pertains to the eastern part of the San Francisco Bay Area, which includes the major cities of Alameda, Berkeley, Concord, Fremont, Hayward, Martinez, Richmond and Walnut Creek (among others).
A Big Year for the East Bay Housing Market
In 2020, the East Bay real estate market behaved as if a global pandemic had never happened. Things slowed to a crawl back in April, as the health crisis prompted government-imposed business closures. But things began to pick up again in June, and they haven’t slowed since.
This is partly a testament to the adaptive business practices of real estate, mortgage, and closing companies, which have digitized their workflows.
Recent sales data show us that home-buying demand in the East Bay remains strong, as we approach the last two months of the year. And real estate market forecasts for 2021 suggest more of the same.
In a report published on October 19, the California Association of Realtors (C.A.R.) wrote:
“California’s home-buying season extended further into September as home sales climbed to their highest level in more than a decade, and the median home price set another high for the fourth straight month…”
They also singled out the San Francisco Bay Area as having one of the largest increases in both home sales and prices. By their estimate, sales in the region increased by a whopping 34.2% from September 2019 to September 2020. Bay Area home prices, on the other hand, rose by around 20% during that same 12-month period. And all of this despite the ongoing health crisis and economic recession.
Here are some key trends for the East Bay’s two most populous counties:
- In Alameda County, prices rose 15.4% year-over-year, while home sales shot up by 32.2%.
- In Contra Costa County, house values and sales increased by 19.4% and 35.2%, respectively.
Real Estate Outlook for 2021: More Growth Ahead?
No matter how you measure it, the East Bay real estate market has been surprisingly strong throughout 2020. And several forecasts suggest that could continue into 2021 as well.
It’s a supply-and-demand story, as usual.
As of October 2020, there’s just not enough inventory on the market to meet the demand from home buyers. This in turn has pushed house values north while increasing competition among buyers. It’s also driving the positive housing market predictions for East Bay cities in 2021.
As of October, the real estate data company Zillow was issuing favorable home-price forecasts for most (if not all) real estate markets in the East Bay.
Here are their 12-month forecasts for several cities in the region, issued in late October 2020.
- Alameda: +7.7%
- Concord: +8.5%
- Fremont: +7.0%
- Martinez: +8.7%
- Richmond: +8.9%
- Walnut Creek: +8.9%
Granted, these are just housing market predictions — not certainties. They are the equivalent of an educated guess, issued by the economic research team at Zillow. So we probably shouldn’t get too wrapped up in the exact numbers being projected here.
The takeaway here is that East Bay housing market forecasts suggest that home values will continue to climb as we move into 2021. And inventory shortages have a lot to do with those predictions.
Low Inventory Still a Challenge for Home Buyers
In many ways, a lack of inventory is the key factor influencing real estate market trends in the East Bay. The same is true for many California cities, in fact. But conditions are particularly tight in the eastern part of the Bay Area, where supply has fallen to record-low levels over the past couple of years.
In a housing market forecast for 2021, published earlier this month, C.A.R. president Jeanne Radsick said: “While the economy is expected to improve and interest rates will stay near historical lows, housing supply constraints will continue to be an issue next year and may put a cap on [home] sales growth in 2021.”
As of September 2020, Alameda County and Contra Costa County both had about a one-and-a-half-month supply of homes for sale. That’s well below what is considered to be a balanced real estate market. As a result of these trends, East Bay home buyers are competing fiercely with one other for limited inventory.
Many of these trends will carry over into 2021 as well. While home-price growth is expected to slow down a bit next year, the lopsided supply-and-demand conditions will persist for the foreseeable future. Those who are planning to buy a house in the East Bay next year will need to be patient and persistent.
Recap of key points from this article:
- Demand for homes soared during 2020, despite the ongoing coronavirus pandemic.
- Forecasts for the East Bay housing market predict rising prices into 2021.
- Home-buyer competition remains high in cities like Alameda, Concord, Fremont and Richmond.
- A shortage of inventory is one of the key driving factors in these and other real estate markets.
Disclaimer: This article includes home-price predictions for the East Bay housing market in 2021, which were issued by third parties not associated with our company. Real estate and economic forecasts are the equivalent of an educated guess.