When Will Home Prices Be Affordable Again? The Answer May Surprise You…

The question on everyone’s mind—especially those looking to settle in the Hayward and Castro Valley areas—is, “When will home prices be affordable again?” It’s a question that resounds in coffee shops, dinner tables, and office spaces, fueled by headlines bemoaning the current state of the real estate market. With interest rates climbing and median home prices hitting record levels in 2022, the common wisdom seems to be that homes are increasingly out of reach for average buyers. But what if I told you this perception might not capture the complete picture?


As counterintuitive as it may sound, the dream of owning a home might be closer to reality than you think. If you’re basing your concerns solely on list prices, you may be missing critical components of making a home “affordable.”


If you’re on the fence about entering the property market, fearing that you’ve been priced out, read on. You may find that now is actually a great time to buy—and I’ll explain why.


Market Trends of Hayward & Castro Valley


In Hayward, the median home price peaked at $965,000 in May 2022. As the Federal Reserve started hiking interest rates, a ripple effect impacted the housing market. Prices took a nosedive, with the median home cost bottoming out at $775,000 by November 2022. Now, remember that other factors were involved, primarily a lack of inventory that led to this sharp decline. This doesn’t necessarily mean that the price per square foot was so heavily affected.


Currently, the median home price in Hayward has rebounded to $862,000—despite mortgage interest rates being even higher than before.


In Castro Valley, the story bears similarities but with its unique figures. The median home price here peaked a month later than Hayward, reaching $1,400,000 in June 2022. Then it dramatically fell to $950,000 by September 2022—a stunning $450,000 decrease in just three months. Since then, the market has stabilized, and the median home price is climbing again, currently sitting at $1,161,000.


What’s most astonishing is the role of interest rates. Currently hovering around 7-8%, these high rates are often cited as the boogeyman scaring potential buyers away. However, despite high interest rates, demand remains strong, and we are still in a seller’s market. Home prices have stabilized and are once again on the rise.


The Domino Effect of Lower Interest Rates

When interest rates fall, it won’t just be you celebrating; it’ll be every potential homebuyer who’s been sidelined by the current rates. Lower interest rates mean more people can afford a mortgage or qualify for higher loan amounts. This leads to a surge in demand, driving up home prices due to increased competition. So, while you may be able to secure a loan with better terms, you’ll likely face steeper home prices, more bidding wars, and less room for negotiation.


The Hayward and Castro Valley Reality

Let’s revisit our previous data for a moment. When interest rates began rising, we saw home prices drop in Hayward and Castro Valley. However, the moment the market stabilized—even with high interest rates—prices started to climb once again. This is a classic indicator of a high-demand area. Now, imagine injecting even more buyers into this environment due to lower interest rates. The logical outcome? A rapid increase in home prices, likely even surpassing previous peaks.



The moral of the story is: Don’t let high interest rates scare you into inaction. Instead, recognize that when interest rates do drop, the market could become even more competitive, pushing prices higher than they are today. That means a higher purchase price and higher property taxes for years to come. Is it worth it?


So, when will homes become affordable? The answer is that they are affordable when you can afford them. Remember that loans can always be refinanced, but property values will continue going up. If you’re considering buying, assess your finances and what you can afford, and be realistic with your expectations.