Most of the homes sold within the San Francisco Bay Area have ended up selling…
With the year drawing to an end, a lot of home buyers in the Oakland area are looking ahead to 2018. And many of them share the same question: Will 2018 be a good time to buy a house in Oakland, California? From a cost perspective, now might be a great time to buy. This article explains why.
A Good Time to Buy a House in Oakland?
There are a number of factors to consider when trying to decide if now is a good time to buy a house in Oakland. Home prices are an obvious consideration, so let’s start there.
House values in the area have risen steadily over the last few years. As with many cities across California, Oakland has experienced a shortage of supply within the local housing market. There simply aren’t enough homes to go around, based on the current level of demand. And this has put tremendous upward pressure on prices.
According to numerous sources, the median home value in Oakland is approaching $700,000. The real estate information company Zillow reports that the median house price rose 7.5% over the last 12 months alone (as of November 2017).
Looking forward, the company’s economists are predicting smaller gains over the next year or so. But the general consensus seems to be that house prices in Oakland will continue rising — to some degree — over the coming months.
This ties back to the question at hand. Will 2018 be a good time to buy a house in Oakland, California?
As far as prices are concerned, a case could be made for buying a home sooner rather than later. If house values within the Oakland real estate market continue to rise, as expected, buyers who postpone their purchases until later in 2018 could encounter higher costs and reduce affordability.
Mortgage Rates Predicted to Climb
Mortgage rates are another important consideration, because most buyers use mortgage loans to finance their purchases. And here again, we have a forecast for gradually increasing costs between now and 2018.
On November 20, 2017, the economic research team at Freddie Mac published an updated forecast for the U.S. housing market. This report makes various predictions relating to home prices, mortgage rates, and other housing-related metrics.
The company’s economists expect 30-year mortgage rates to average 4.0% for 2017, and 4.4% in 2018. This means they expect to see a gradual increase in mortgage interest rates over the coming months.
The Mortgage Bankers Association made similar predictions recently. Both groups expect to see a rise in borrowing costs over the course of 2018.
Granted, these are just forecasts. They are the equivalent of an educated guess. Still, the general consensus here sends a strong message to future home buyers. With an expectation of rising housing costs ahead, now might be a good time to buy a house in Oakland. Those who wait could encounter higher home prices and higher mortgage rates.
Oakland Real Estate Market One of the Most Competitive
The housing inventory situation in Oakland can be summed up with a single word. Tight.
There is still a high level of demand for homes within the market, but not enough inventory to meet it. Consider the following evidence. A normal or “balanced” real estate market is said to have somewhere between five to six months worth of supply. In October, Oakland was reported to have a meager 1.4-month supply of homes for sale.
That is well below the national average, and below what is considered to be a balanced market. So we are still looking at sellers’ market conditions as we move into 2018.
Oakland was also singled out recently for being one of the most competitive real estate markets in the country, according to a national real estate company. Homes in the area are selling quickly, and often above their original listing prices.
As a result of these conditions, home buyers planning to buy in Oakland in 2018 should be prepared for stiff competition.
The Bottom Line for Home Buyers
So is now a good time to buy a home in Oakland? Obviously, there are a lot of personal considerations you must make, including your long-term plans and your lifestyle. But from a market perspective, a case could be made for buying a house sooner rather than later.
Both mortgage rates and home prices are expected to continue inching upward over the coming months, and that could mean higher costs for buyers who postpone their purchases.
Disclaimer: This article includes data, forecasts and predictions relating to the Oakland real estate market in 2018. Much of this information was provided by third parties not associated with our company. We have gathered and presented it here as an educational service to our readers.