Quick Answer
Buying a home is still challenging, especially with mortgage rates remaining elevated. But affordability is not determined by rates alone. Income, home prices, available inventory, financing options, monthly expenses, and negotiating opportunities all affect what a buyer can realistically afford.
The right question is not simply, “Is housing affordable?”
It is, “What can I afford based on my finances and the opportunities available in my local market?”
Affordability Is a Real Concern
There is no reason to pretend buying a home is easy right now.
Mortgage rates remain above the historically low levels buyers became accustomed to several years ago. Home prices are also significantly higher than they were before the pandemic. Harvard’s 2026 State of the Nation’s Housing report found that median new and existing home prices remain above $400,000 nationally, with existing-home prices approximately 54% higher than in 2020. (Harvard SEAS)
Those numbers explain why many buyers feel discouraged before they even speak with a lender or real estate professional.
However, national headlines do not tell you what is possible for your income, down payment, credit profile, preferred neighborhood, or monthly budget.
Mortgage Rates Have a Major Impact
Your mortgage rate directly affects your monthly payment and purchasing power.
Even a relatively small rate change can influence how much home fits comfortably into your budget. That is why buyers should not begin their search by choosing a price based only on an online mortgage calculator.
A realistic affordability calculation should include:
- Principal and interest
- Property taxes
- Homeowners insurance
- Homeowners association dues
- Mortgage insurance, when applicable
- Maintenance and repair reserves
- Other monthly debts
The goal is not to qualify for the largest possible loan. The goal is to purchase a home while maintaining enough financial flexibility for savings, emergencies, and everyday life.
Income Growth Is Helping Some Buyers
One encouraging development is that wages have recently been growing faster than home prices in some datasets.
That does not mean homes have suddenly become inexpensive. It means the relationship between earnings and prices may be improving gradually for certain households. The improvement may be especially meaningful for buyers who have received raises, reduced debt, increased savings, or strengthened their credit over the past few years. (Keeping Current Matters)
Affordability can improve even when prices do not fall dramatically.
A higher income, better interest rate, larger down payment, lower insurance quote, or negotiated seller credit can all change the monthly-payment calculation.
Home Prices Are Not Moving the Same Way Everywhere
Real estate is local.
National data may show stable prices, modest growth, or declining asking prices, but conditions can vary significantly between cities, neighborhoods, property types, and price ranges.
In the East Bay, a single-family home in a highly competitive neighborhood may behave very differently from a condominium, townhome, fixer-upper, or property that has been sitting on the market.
Some East Bay market reports have shown a major difference between single-family home and condominium performance. That creates different challenges and opportunities depending on what a buyer is willing to consider. (Elevation Real Estate)
Instead of waiting for every home price to fall, buyers should look for specific opportunities such as:
- Homes with longer market times
- Properties that need cosmetic improvements
- Condos or townhomes with manageable HOA fees
- Listings that have already received a price adjustment
- Sellers willing to contribute toward closing costs
- Homes outside the buyer’s original search radius
- Properties with fewer competing offers
Affordability is often found through flexibility, not through perfect market conditions.
Buyers May Have More Negotiating Power
A more balanced market can give buyers something they did not have during the most competitive years: choices.
When a home receives fewer offers or remains available longer, a buyer may be able to negotiate on more than the purchase price. Depending on the property and seller, negotiations may include:
- Closing-cost assistance
- Repair credits
- Interest-rate buydowns
- Appliance inclusions
- Flexible closing dates
- Contingency protections
Not every seller will agree to these terms. But buyers should understand that the advertised price is only one part of the transaction.
A well-structured offer can sometimes improve affordability without requiring a major decline in the home’s price.
Do Not Wait for a Perfect Mortgage Rate
Waiting for rates to fall may sound like the safest strategy, but it comes with uncertainty.
No one can guarantee when rates will decline, how far they will fall, or what home prices and competition will look like when they do. Lower mortgage rates can bring more buyers back into the market, which may increase competition for desirable properties.
The better strategy is to determine whether buying works under today’s numbers.
If the payment is too high, waiting may be the responsible decision. But if the payment is manageable and the home supports your long-term plans, buying before the market becomes more competitive may be worth considering.
You may also have the opportunity to refinance later if rates decline, although refinancing is never guaranteed and should not be the only reason a purchase appears affordable.
What Buyers Should Do Before Starting Their Search
Before touring homes, take these steps:
1. Set a Comfortable Monthly Payment
Decide what you can comfortably pay each month—not simply what a lender may approve.
2. Review Multiple Loan Options
Compare conventional, FHA, VA, jumbo, adjustable-rate, and first-time-buyer programs when appropriate.
3. Shop More Than One Lender
Rates, fees, mortgage insurance, and underwriting standards can vary. Comparing lenders may produce meaningful savings over the life of the loan.
4. Protect Your Cash Reserves
Do not use every available dollar for the down payment and closing costs. Keep funds available for repairs, moving expenses, emergencies, and the normal costs of homeownership.
5. Study the Local Market
Review recent sales, current competition, days on market, price reductions, and seller concessions in the neighborhoods you are considering.
6. Build a Flexible Search Strategy
A slightly different location, property type, condition, or square footage may open the door to stronger opportunities.
The Bottom Line
Housing affordability remains difficult, and buyers should take that reality seriously.
But difficult does not automatically mean impossible.
Affordability is personal, local, and highly dependent on the structure of the purchase. The best way to understand your options is to combine accurate lending information with a clear picture of current market conditions.
You may discover that you need more time to prepare. You may also find that you are closer to buying than the headlines made you believe.
If you are considering buying a home in Castro Valley or the surrounding East Bay communities, let’s review the numbers, available inventory, and strategies that could make your next move more manageable.
Tim Fiebig
📞 510.708.8700
✉️ tim@timfiebig.com
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