OAK NOTES from Grace Bishop
Jan 2019


If you enjoy reading news about the imminent downfall of U.S. real estate, you’ve had plenty of fodder over the past few months.

The Dow tumbled 5.6% in 2018, its worst year since 2008, the median price of condos in New York fell below $1M for the first time since 2015, and nearly half of Bay Area residents want to leave the region. It might be tempting to conclude that it’s time to dust off the bomb shelter and get ready for Armageddon.

But not so fast. The East Bay real estate market is a bit more complicated than that.

We believe that the better we can understand the forces that drive our market, the better we can predict how 2019 will play out. We can narrow them down to just 3 key points:

Buyer Fatigue

  • In 2018, activity slowed - 2% fewer homes sold between 2017 and 2018. This was partially driven by pricing: median home values in the East Bay increased 6% to $930,000. Affordability is a key factor: only 18% of Alameda County residents can afford to purchase a median-priced home (Q3 18, CAR).
  • In 2019, we expect buyers to remain wary. It’s unknown whether prices will rise, fall or flatten, but with affordability remaining a key factor, buyers will remain discerning. It’s important for sellers to price accurately according to competitive forces and buyer expectations - and your home should look its best.


  • In 2018, the market was strong for the majority of the year. However, in September, inventory spiked to its highest levels in 6 years and the buyers weren’t as eager to pick up the slack. This gave buyers more homes to choose from, which meant properties that weren’t priced exactly right languished on the market. As a result, average days on market increased from 18 in May to 31 in December.
  • In 2019, it is unknown how most sellers will respond to the uncertain market: If many believe this is their last chance to get top dollar and they flood the market with inventory, buyers could remain cautious and, as a result, the market could slow and prices could decline; if they don’t perceive current conditions as a risk and decide to not sell, inventory could remain tight and prices could remain stable. Either way, their actions will be a critical factor in the market’s overall health.

Interest Rates

  • In 2018, interest rates increased almost a full percentage point in the second half of the year which meant that buyers had to reduce their price targets by about 10%-12% in order to maintain their target monthly payment. With home prices increasing as rates went up, many buyers were forced to choose between sacrificing neighborhood, home size or budget in order to achieve their goals of home ownership.
  • In 2019, changes to the tax code will have a negative impact on buyers with loans between $750,000-$1,000,000 as they will see their interest deductions capped at $750,000. On the rate front, President Trump is appealing to the Fed to reduce their pace of interest rate hikes. Traditionally, the Fed has ignored political pressure and has had their action dictated by the markets. The December stock plunge has made some Fed board members suggest that a more measured approach could be appropriate given the volatility in the markets.

In summary, there is never a crystal ball to predict exactly how the East Bay market will respond to this array of forces, but trust that real estate will always be in demand. As they say, “There’s no such thing as a bad house, only a bad price.”


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The East Bay real estate market tends to take a pause in December - it’s typically one of the slowest-moving months of the year. But this year buyers really put on the brakes. Home sales dropped 19% compared to the previous year, prices fell 11%, homes sold closer to asking at 3.5% over list - the lowest since January 2014 - and average days on market increased from 25 to 31. Considering the backlog of unsold inventory, this is not necessarily the sign of a significant slowdown. Many of the properties that sold in December were not ideal and required price reductions to sell. As a result, key metrics appear inherently weak for the month. It remains to be seen if this is a significant trend.

As usual, the market will likely remain slow through the winter months. Only when the spring market heats up, starting in April, will we see how the 2019 East Bay real estate market will fare.


On January 9th the FED released the minutes from the December 18th meeting. There were no surprises since FED chair Jerome Powell addressed most of the markets concerns the week before. The notes reiterated the FED's position to be cautious in the face of potential volatility, especially since inflation remains tame. The minutes also showed that the vote to raise rates was not unanimous. In fact, some members voted against a hike. Mortgage bonds are enjoying the rally as volatility has pushed investors to the safety of bonds. Rates that were near 5% in late 2018 are now around 4.25%, giving many recent buyers a chance to refinance. If you would like to see if you are eligible for a no-cost refinance, please contact Faramarz Moeen-Ziai of Commerce Home Mortgage - fmz@commercemtg.com / 415-377-1147



The new eastern span of the San Francisco–Oakland Bay Bridge, stretching from Oakland to Yerba Buena Island, was constructed to replace a seismically unsound portion of the Bay Bridge with a new self-anchored suspension bridge (SAS) and a pair of viaducts. This enormous undertaking began in 2002 and was completed 2013. The decision to replace the original double cantilever span was made following the Loma Prieta earthquake when a section of the bridge collapsed, on October 17, 1989. The replacement span is engineered to withstand the largest earthquake expected over a 1,500 year period. Currently the world’s widest bridge at a width of 258 feet, the bridge is the most expensive public works project in California history with a final price tag of $6.5 billion.

The aerial shot featured in Red Oak’s 2019 calendar emphasizes the new lighting that uses about half the power of the old bridge’s lights and will last about 5 to 7 times longer. According to Moffatt & Nichol, the designers of the new fixtures, the lights will only need replacing every 10 to 15 years (compared to every 2 years with the old eastern span), reducing cost, improving worker safety and reducing traveler inconvenience due to lane closures.

The San Francisco-Oakland Bay Bridge is one of 12 images featured in Red Oak Realty’s 2019 "The East Bay From Above” calendar. Throughout the year we’ll include more about each month’s aerial photograph by Stephen Loewinsohn. Call or email for a complimentary copy of the 2019 calendar.


Entering it's 13th year in Berkeley, this restaurant has a local, hometown feel. Owned and operated by the Saulnier family (known for other restaurants they’ve run in the Bay Area), their past experience shows itself proudly here. This unassuming spot is known for breakfast, brunch and lunch (open daily, except Sunday) and the menu does not disappoint. Traditional fare, as well as other interesting items like the tofu with harissa scramble and the “tv dinner” (your choice of meat or fish, starch and veggie) help make this am/lunch spot special. The staff is pleasant, friendly and not afraid to share their favorite items with you when you are finding it hard to choose.  

It was midday Friday when we stopped by for a meal. Despite the wait for indoor seating, the patio with its heating and partial sunlight made for a warm and toasty spot on a not so pleasant day. In the mood for brunch we selected rice noodles with lemongrass prawns and julienne vegetables as a starter and followed it up with “the demon lover” (their version of chicken and waffles) and “the charlie” (a coriander encrusted tuna sandwich).

Everything was super fresh and hot. The rice noodles had delicious fresh basil, mint and sambal vinaigrette with fine cut, crunchy vegetables. The fried chicken was crispy, yet dry with white meat tenders over a buttermilk waffle with the gravy living up to its "old fashioned" name. The tender encrusted Ahi tuna lay on a house pickled ginger and carrot slaw, all on an Acme bun served with a side of crispy fries. To help wash the meal down we chose one of the restaurant’s delicious rotating agua frescas, a pineapple and ginger blend that was light, sweet and refreshing. Choices also include beer, soju and sparkling wine.

900 Grayson is a friendly local spot, with no formalities, just great food full of flavor, perfect for these cooler days.

900 Grayson is located at 900 Grayson Street in Berkeley. (510) 704-9900. They are open Monday through Friday from 8:00am to 10:45am and 11:30am to 3:00pm; Saturday from 8:00am-2:30pm; closed on Sunday.

Grace Bishop
Realtor | #01245471