Everyone wants to know if now is the right time to buy or sell, or if waiting will work better. Based on where we ended 2025, I can tell you what the data patterns suggest.
According to December 2025 Inner East Bay data, 70.3% of homes sold over list price at 111.9% of asking. Inventory dropped 14.1% to just 420 available homes. Closed sales held steady at 269 properties.
The short answer: if you're waiting for dramatically lower prices or 3% interest rates in 2026, you're waiting for conditions that won't materialize.
The Rate Lock Effect Isn't Going Away
Homeowners with 2.75% to 3.5% mortgages aren't selling unless they absolutely have to. Taking on a 6.5% mortgage feels financially painful.
The 420 available homes represent a 14.1% drop from the previous year. Low inventory keeps prices elevated. Elevated prices combined with higher rates make moving expensive. That expense keeps people in their homes. Which keeps inventory low.
Expect this pattern to continue through at least the first half of 2026.
What Last Year Numbers Tell Us
The median home price in November was $1,050,000, down 10.6% from $1,175,000. But price per square foot dropped only 0.6% from $696 to $692.
This gap reveals the median price change reflects which homes sold rather than declining values. More sales at lower price points changed the median without indicating individual homes lost value.
For 2026, expect modest appreciation in the 2% to 4% range. The minimal price per square foot change combined with 70.3% selling over asking shows underlying strength.
Spring Will Still Be Spring
Spring remains the strongest selling season. If you're selling in 2026, timing your listing for late February through April positions you for maximum competition.
Spring also brings the most competition from other sellers. If your home needs work, you might do better listing in slower months.
The Pricing Sweet Spot Keeps Shifting
What buyers could afford with 3% rates looks very different at 6.5% rates. Buyers are accepting smaller homes, stretching budgets, or looking in different neighborhoods.
Properties priced just under major psychological barriers like $1 million get more attention. The fact that sellers received 111.9% of asking in November shows strategic pricing still generates premiums.
First Time Buyers Face Different Math
First time buyers face tough conditions. Higher rates increase monthly payments. The $1,050,000 median price hasn't dropped enough to offset rate increases.
This requires different strategies. Longer commutes. Smaller homes. Creative financing like gifts from family or down payment assistance programs.
The buyers succeeding are those adjusting expectations to current reality.
Move Up Buyers Have the Advantage
Homeowners with substantial equity have significant advantages. They can make non-contingent offers. They have large down payments. They're less rate sensitive.
If you're a move up buyer, 2026 might actually be better timing than waiting. You face less competition from first time buyers priced out by rates. With only 420 homes available, sellers prefer qualified move up buyers.
What to Watch as Indicators
Days on market. November stayed at 15 days. If this climbs to 25 or 30 days, demand is weakening.
Percentage selling over asking. Currently 70.3%. If this drops below 60%, buyer leverage is increasing.
Average percentage of list received. November's 111.9% was up from 111.2%. This reveals actual negotiating outcomes.
New listing volume. With inventory at just 420 homes, watch whether new listings increase.
Strategic Timing for Sellers
Don't wait for perfect conditions. Prepare your home properly and list when timing works.
Late February through April for maximum competition. The bigger risk than imperfect timing is overpricing. With 70.3% selling over asking, the market rewards realistic pricing. Overprice and you'll sit while well priced homes move in 15 days.
Strategic Timing for Buyers
Waiting for dramatically better conditions means missing appreciation and paying higher prices later.
Buy when you find a property that works at a price supported by comparable sales. The 269 monthly closed sales show transactions are happening. The buyers succeeding are those accepting current conditions.
The Honest Forecast
I expect 2026 to look a lot like late 2025. Modest appreciation in the 2% to 4% range. Inventory staying constrained around 400 to 500 homes. Rates fluctuating in the 6% to 7% range. Well priced homes selling in 15 to 20 days with 70% plus selling over asking.
The November data showing minimal price per square foot decline (0.6%) despite a larger median price drop (10.6%) suggests market composition is shifting but underlying values remain stable.
The most successful buyers and sellers will work with current reality rather than hoping for conditions that won't materialize. That means pricing correctly, preparing properties well, making strong offers, and moving forward when opportunities align.
If you want to discuss your specific situation and timing for 2026, reach out. Individual circumstances matter more than general forecasts.
Kelly
