Did the Housing Market Just Quietly Unlock?
Mortgage rates recently slipped below 6%, touching 5.99% — a small move numerically, but a potentially meaningful shift for both buyers and sellers. While the headlines tend to fixate on rate charts and Fed meetings, the real estate market is ultimately shaped by human behavior: confidence, timing, and the way families justify major life decisions.
And for the East Bay, that combination might finally be changing.
The Psychological Threshold
In 2023 and 2024, the biggest force suppressing the housing market wasn’t prices — it was psychology. Rates in the 7% range created what economists call the “lock-in effect,” trapping millions of homeowners in place because moving meant abandoning historically low 2020–2021 mortgages.
According to national surveys, 35% of potential sellers would consider listing their home in a 5% rate environment, compared to rates above 6%, where seller willingness drops almost seven-fold. That’s a massive behavioral spread.
When you combine that with more recent lender data showing purchase applications up more than 20% year-over-year as rates stabilized near 6% (Freddie Mac), you start to see the early outlines of a market thaw.
Where This Shows Up First: The East Bay Move-Up Market
In the East Bay, move-up buyers clustered in Danville, San Ramon, and Alamo have been stuck for nearly two years. They had the equity, the motivation, and the school district priorities — but not the rate environment to justify trading a 3% mortgage for a 7% one.
These are households that often wanted to:
- upgrade for more space,
- shorten commutes,
- move closer to SRVUSD schools,
- or access lifestyle amenities their current home couldn’t provide.
They weren’t unwilling — they were financially handcuffed.
Locked-In Inventory Could Finally Loosen
Most U.S. housing commentary focuses on affordability for first-time buyers, but in Contra Costa County, the move-up market is the engine that drives meaningful inventory circulation.
When move-up buyers move, they list their existing homes. Those homes often sit at accessible entry points for:
- first-time buyers,
- Bay Area transplants,
- or families relocating from San Francisco.
This creates a multi-tier unlocking effect:
Move-up buyer lists → first-time buyer purchases → new inventory cycle begins.
When rates were above 7%, that cycle stalled. When rates enter the high-5’s, it starts to make sense again.
Why 5.99% Matters (Even If It’s Not 3%)
For many households, the decision isn’t just “Can we afford it?” but rather:
“Does the long-term benefit outweigh the short-term rate tradeoff?”
At 7%, the answer was often no.
At 5.99%, the math — and the psychology — begin to tilt.
And unlike 2021, when buyers were pressured by bidding wars and scarcity, this next chapter may look more balanced:
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more inventory,
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less frantic pacing,
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more reasonable timelines,
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healthier contract structures.
Which brings us to the next question:
Who Stands to Benefit the Most?
1. Move-Up Buyers
This group gains the most leverage. They typically:
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already have equity,
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already know the neighborhoods they want,
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and don’t need perfect rate conditions — just reasonable ones.
2. First-Time Buyers
First-time buyers benefit indirectly from increased listing activity upstream. They finally get more options in the $900k–$1.4M range, especially in older neighborhoods of Danville, San Ramon, Pleasant Hill, and Walnut Creek.
3. Downsizers
In the LaMorinda and Alamo corridors, downsizers have been waiting for liquidity events. A rate drop increases demand at the price points they’re selling into.
4. Sellers
Sellers have not truly had “normal” selling conditions since before COVID. This year may be the first return to seasonality, pricing logic, and absorption patterns that resemble pre-pandemic cycles.
What Happens Next? (The Forecast)
There are three leading indicators I’m watching closely:
Indicator #1: Rate Stability
A temporary dip creates optimism. Sustained dips create behavior changes.
Watch the 60–90 day window.
Indicator #2: New Listing Volume
If spring listing volume rises meaningfully, that will confirm that the “unlock” is underway.
Indicator #3: Pending Sales
Pending sales act as the clearing mechanism. If pendings keep pace with listings, price support remains strong.
Right now, early pendings suggest buyers are moving faster than sellers — but that relationship may flip as we move into spring and summer.
If You’re on the Sidelines Right Now…
Timing the market perfectly is nearly impossible. But evaluating timing intelligently is not.
The best move-up and relocation decisions usually happen when:
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rates become tolerable,
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inventory becomes workable,
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and stress comes out of the process.
We may finally be entering that environment again.
If you’re trying to decide whether it makes sense to:
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move-up,
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downsize,
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relocate,
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or wait for a better window,
I’m happy to run scenarios specific to your household — equity, payment delta, school districts, tax considerations, and lifestyle included.
No pressure, no agenda — just clarity.
