What a wild ride it’s been in the Oakland market this past year!
Fall of 2023 interest rates exceeded 8% and the Oakland real estate market screeched to a halt. Sellers had been suffering from the demise of ‘rate rage’ since late spring of 2022, but when rates topped 8% that September it’s thought our local community’s homes lost another 10% in equity.
As realtors in the middle of an 8% rate storm, it’s hard to tell when—or if—there will be an end, and it’s equally challenging to advise clients how best to navigate. Will the market continue to get worse? What if rates go up again? Working through that period and doing our best to advise our clients consumed much of the Cush Team’s life force. Having a collective 60 years of in-the-trenches experience over several booms and busts, certainly helped our clients rise to the top. Read further, there’s sunnier horizons to follow in this historic timeline…
After limping through September and October of 2023, sellers were handed a mid-November 2023 lifeline and the Fed announced that there would likely be up to four rate cuts in 2024. Cush had two homes on the market that were injured by the rates and seemed unsalable based on expectations we had established before the rate hikes. Since bringing them to market that September we had one home that we hoped to sell in the $2M+ range, but never realized an offer over $1.6M. But great news: when the Fed lifeline was thrown, we were able to sell it, as initially aimed for, for over $2M. The second home we had trouble with was on the market at what we thought to be a teaser price of $2.2M, but the highest price we could achieve during that tumultuous time was an offer for $2.3M. We did not take that offer, we held out, and in the end it sold Thanksgiving week for $2.6M (just after Fed announcement of pending rate drops).
Moving forward into January 2024, the real estate market took off strong, still riding the wave of the Fed’s November announcement. Cush had a million-dollar preemptive offer on a house we listed on the market in January, and it seemed a sign that sellers were primed for better days ahead. But alas, as the weeks went on, we did not see the rate cuts anticipated. Rumors were brewing they would come in spring or summer, but by summer, rates were still in the mid 7% range and we were yet to see a rate drop while the market had again lost steam. This wild year was, and like all years, impossible to predict.
We hit August 2024, and news was a buzz that the Fed had an interest rate drop baked into their upcoming September announcement. With the news of the coming drop, interest rates dropped into the low 6% arena. Finally, in September the Fed announced their first rate drop in 4 years. Not only that, but it was a significant drop of 50 basis points—twice what was expected.
Will the lower interest rates revive the market? We hope so but it is still hard to say. Some homes are selling in multiple offers while others languish. Why? Ultimately it’s always about a combination of five factors. Seller expectations, buyer expectations, strategic pricing, preparation of the home, and of course the luck of market timing. These days it seems Interest rates are the new seasonality and for most buyers. The issue with buying a home is not the down payment, but the reality of the monthly mortgage payment.
Recently at a prominent real estate conference in Dallas, one high-profile economist suggested we could see as many as eight interest rate reductions in 2025. There is hope!
Regardless, homeownership is a worthy investment, and better than paying rent if you are fortunate enough to have the option. As the old saying goes, “Buy land, they don’t make it any more’. When the rates go down, as they now, there’s also more competition for great homes in our high-demand region, and you won’t see the prices as they are today. It’s a good time to buy!
Stay ahead with your strategies, and if you need a professional realtor to lean into, we are here for you.
This professional perspective is written by David Higgins, Founder & Realtor | Cush Real Estate by Design
*100% written by experienced humans without generative AI
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