Selling in the East Bay area? Get a free home value report
Purchasing in the East Bay area? Get full MLS access
Is there a bubble coming to the East Bay real estate market? You may have heard something about this in newspaper headlines. Today, we'll share our opinion with you.
Prices increase, sometimes by as much as 25%. Now, we're at the peak of the market. However, loans given out to buyers with little equity caused the last housing bubble. When you could buy a home for up to 3% down, it was easy to walk away from the property if you got into trouble. At that point, you didn't invest too much in it.
Between 2013 and 2015, prices increased quite a bit. Many investors bought properties on the East Bay. Those buyers gained equity over the last year or two. We refer to these as low-risk properties.
Since many people have put 20% down to buy their homes, they have more equity and more protection. They're not going to walk away from the property because they have truly invested in it.
We do still have 0% down VA loans and 3% down FHA loans, but those are typically available for properties priced below $700,000. If these homeowners run into some kind of hardship, it is easier for them to walk away from the property. That being said, in our current market we will have many buyers interested in snatching up that property.
On the higher end of the market, if people default on properties over $2 million, that doesn't really impact anyone other than the homeowner and the bank that financed the property.
Ultimately, we will see slower growth, but no bubble. There is a huge demand for East Bay housing and no reason to worry about a bubble.
If you have any questions for us, give us a call or send us an email. We look forward to hearing from you!
