The main story of 2022 was interest rate volatility. The rapid rise of rates completely changed the dynamics of the housing market. Sellers still maintained a lot of power, but it was checked by buyers’ ability to meet their very high expectations. 

But what about now, in 2023?

Before the middle of last year, the typical home buyer in Oakland or Berkeley was someone who worked in the tech industry. They earned a high salary and were richly rewarded by stocks that spiraled upwards. They had plenty of money through vested stock options to put down large down payments or even pay cash. They believed the future was always up. If they paid a little too much for their home, so what! It would rapidly increase in value even if they did nothing to it. 

A few of those buyers are still there, but the world has changed. Many stock options are underwater, tech giants are laying off workers, and news headlines tout the era of “bossism”. Even for the tech workers who still have lots of savings and good-paying jobs, the magical thinking of invincibility is gone and folks are much more cautious. 

So if the tech folks have been largely sidelined, who is buying a house now? Everybody else! Professionals, small business owners, government workers, nonprofit folks, nurses, and firefighters. There are lots of people who make a decent living and have secure jobs. They have been saving to buy a house but can’t always save enough to get to that 20%. They can pay a monthly mortgage but don’t have enough money to cover an appraisal shortfall or buy a house and immediately fix problems. 

They write decent offers but need to include appraisal contingencies and inspection contingencies, and sometimes ask the seller to help with closing costs and maybe even replace the sewer lateral. Cash offers have become rarer. 

Less cash, less insanity, more contingencies, more ability to negotiate, more time. These are the new dynamics of the East Bay real estate market in 2023. 

I welcome it.