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Is 2016 a Good Time to Buy a House in the East Bay?

“Is 2016 a good time to buy a house in the East Bay? Or should I wait until 2017?” That’s the million-dollar question (sometimes literally) that home buyers want to know. Here is some housing information to help you answer this question and plan your purchase.

A Good Time to Buy a House in the East Bay?

The U.S. economy is generating positive headlines again. The nation’s unemployment rate has fallen below 5%, consumer confidence has rebounded, and the once-troubled housing market seems to be on solid footing again.

But how do these economic factors affect your decision to buy a house in the East Bay market? Is 2016 a good time to buy a home? Or should you wait until 2017? Let’s look at some of the personal and economic factors that might affect your decision.

Before you consider external factors like market conditions, you’ll want to do a self-assessment regarding your current financial situation. Start with your employment status. Do you have a stable job and income stream right now? More importantly, is it likely that you’ll remain employed over the next few years?

No one can predict the future. There will always be unforeseen events that catch us off guard. That’s part of life. But you have to ask yourself some tough questions: If you lost your job next month, how soon do you think it would be before you found another? How would that affect your ability to pay your mortgage? Do you have two incomes (with a spouse) or just one?

The good news is that the job market has improved significantly since the recession years. The national unemployment rate has been hovering below 5% in recent months, down from a recession high of 10% back in 2010. So there are more jobs to go around these days.

Think about your long-term plans as well. Do you plan to stay put for at least the next two or three years? If so, it might be a good time to buy that East Bay home you’ve been dreaming about.

Bay Area Home Prices Still Rising in 2016

According to a recent report by CoreLogic, home prices in the nine-county Bay Area were up 7.1% in May 2016, compared to the same time last year. But the housing market seems to be cooling a bit.

For instance, Zillow reported a 7.6% increase in Pleasanton home prices during the last year or so, but they’re forecasting a modest gain of only 1% over the next 12 months. (Here’s more info for Pleasanton home buyers.) The company offered similar forecasts for Walnut Creek and other cities within the East Bay real estate market.

Here’s the takeaway: While the rate of appreciation might be slowing, home prices are still climbing in most parts of the East Bay. This means home buyers who delay their purchases until late 2016, or even late 2017, could end up paying more for a house. For many people, this puts another check in the box for buying now versus later.

Mortgage Rates Still Hovering Below 4%

Borrowing costs are another important consideration when deciding when to buy a house in the East Bay. And there’s some good news on this front. Average mortgage rates have been hovering below 4% for most of 2016. The average rate for a 30-year fixed home loan dropped to around 3.4% earlier this month, according to Freddie Mac.

Many analysts expect rates to remain at historically low levels for at least the next few months. But they could start rising beyond that, some economists say.

Freddie Mac recently issued a forecast to this effect. By their estimation, interest rates will likely be higher at the end of 2016 and the start of 2017, compared to where they are now.

On July 12, 2016, Freddie Mac’s economic team stated:

“In light of this recent [economic] activity … we have lowered our 30-year fixed-rate mortgage forecast for both 2016 (by 30 basis points) and 2017 (by 50 basis points) to 3.6 percent and 4.0 percent, respectively.”

The Bottom Line

Is 2016 a good time to buy a house in the East Bay, or should you wait until 2017? If you plan to stay put for a while, and you feel pretty good about your employment and income situation, this might be a good time to buy a house.

Rising home values could create affordability problems for buyers who wait too long. There’s also a chance we could see higher mortgage rates in 2017, according to Freddie Mac’s chief economist. These are all important points to consider when entering the market.

Disclaimers: This article includes forward-looking statements (forecasts and predictions) regarding East Bay home prices, mortgage rates, and similar trends. Such statements were provided by third-party sources not associated with our company. This material has been provided for informational purposes only.

Mike Trejo

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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