It's a new year, and it brings a whole new set of questions from Bay…
A recent forecast for the Oakland, California real estate market in 2021 suggests that home prices could keep rising at a steady pace. That outlook is not surprising, when you consider the seriously imbalanced supply-and-demand situation in the area. Low inventory and strong demand from home buyers has been boosting prices over the past year. And this will likely continue well into 2021.
Positive Outlook for Oakland Real Estate Market
The Oakland housing market has been hot lately, with buyers competing fiercely for limited inventory. And the latest real estate predictions from analysts and economists suggest we could see more of this next year, as well.
In mid-October, the housing market research team at Zillow issued a positive home-price outlook for the Oakland real estate market extending into the fall of 2021. In fact, they anticipate that prices will rise more over the next year or so than they did over the previous 12 months.
According to a recent statement on the company’s website:
“Oakland home values have gone up 6.0% over the past year and Zillow predicts they will rise 7.9% in the next year.”
The housing market forecast above was issued in October, so it extends into the fall of 2021.
According to an October 19 report from the California Association of Realtors, the broader Alameda County area saw even bigger gains. CAR reported that the median sale price for existing single-family homes within Alameda County, California rose by more than 15% in September 2020, compared to a year earlier.
Granted, real estate outlooks and predictions are the equivalent of an educated guess. So we probably shouldn’t get hung up on the exact numbers being forecast. It’s the broader point that’s important.
The key takeaway here is that home prices in Oakland have shown surprising strength throughout a pandemic and economic recession. So we have every reason to expect them to continue climbing through the end of 2020 and into 2021.
San Franciscans Migrating to the East Bay?
Numerous reports over the past few months have suggested that a lot of residents are “fleeing” the crowded San Francisco housing market for cities with a bit more breathing room. COVID-19 has a lot to do with this trend.
In crowded, compressed cities like San Francisco and New York, a lot of home buyers are moving out to greener pastures in search of square footage, yard space, and other suburban amenities.
This is a big part of the reason why economists are issuing strong forecasts and predictions for the Oakland real estate market into 2021. An influx of buyers, combined with a shortage of inventory, is putting upward pressure on home values all across the East Bay. It also makes the housing market a lot more competitive.
Local real estate agent Justin Palmer recently told The San Francisco Chronicle:
“We’ve seen a large migration from San Francisco, people needing more space, whether that’s outdoor space or room for a second office.”
Housing Supply Will Remain Tight Well into 2021
According to multiple sources, Alameda County currently has about a 1.5-month supply of homes for sale. This is a theoretical measurement that allows analysts to track inventory levels over time. And that figure is well below what’s considered to be a balanced market.
From an inventory perspective, the Oakland real estate market currently favors sellers over buyers. Anecdotal reports from local agents back this up. Agents have reported bidding wars for desirable homes, buyers waiving their contract contingencies, and other trends commonly seen in a red-hot real estate market.
But it’s not just Oakland experiencing a supply shortage. Housing markets across the Bay Area are highly competitive right now, largely due to tight inventory conditions.
According to a recent housing market forecast issued by the California Association of Realtors:
“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 sales growth in 2021.”
2021: A Good Time to Buy A Home in Oakland?
All of this leads to the big question. Will 2021 be a good time to buy a home in Oakland, California? Obviously, there are some personal and financial considerations you need to make, before entering the housing market. But in many respects, 2021 could be a very good time to buy a home in Oakland.
Mortgage rates are incredibly low right now. In fact, the average rate for a 30-year fixed mortgage loan dropped to an all-time record low of 2.78% this week. And while rates might creep upward over the coming months, they’re expected to remain at historically low levels well into 2021.
The bigger concern here, from a home-buying perspective, is house prices. Oakland home buyers who make a purchase during the latter half of 2021 will almost certainly encounter higher prices. So a strong argument could be made for buying sooner rather than later, to get ahead of that.
Disclaimer: This article includes real estate market predictions and outlooks for Oakland, California stretching into 2021. Those views were provided by third parties not associated with our company. Economic and real estate forecasts are the equivalent of an educated guess and should be treated as such.