The Interest Rate Panic Nobody Needs

If you’ve been putting off buying or selling because mortgage rates are “too high,” I need to share some perspective that might completely change how you’re thinking about the 2026 real estate market.

Current 30-year fixed mortgage rates are hovering around 6.24% as of

November 2025. I hear the frustration constantly: “We’re waiting for rates to drop back to 3%.” “Nobody can afford to buy at these rates.” “The market is frozen until rates come down.”

Here’s what almost nobody is talking about: 6.24% isn’t historically high. In fact, it’s below the 52-year average of 7.72%.

I’m not dismissing the real impact rates have on affordability and buying power. That impact is significant, and I’ll break down exactly what it means for both buyers and sellers in the East Bay market. But the narrative that we’re in some kind of rate crisis that makes real estate transactions impossible? That’s not supported by historical data or current market reality.

What You Need to Know:

• Current rates (6.24%) are actually below the 52-year historical average of 7.72%
• Buyers waiting for 3% rates are waiting for an anomaly that may never return
• For sellers, current rates are creating specific buyer behaviors that affect pricing strategy
• The “rate lock” effect means less competition for buyers who act now
• Strategic timing matters more than perfect rates for both buyers and sellers
• Understanding rate impact on monthly payments helps frame realistic affordability (detailed breakdown below)

What the Historical Data Actually Shows

Let me show you the context most people are missing when they panic about current rates.

The 52-Year Perspective

Since 1972, the average 30-year fixed mortgage rate has been 7.72%. That means our current 6.24% is actually 1.48 percentage points *below* the long-term average.

Look at what rates have done over the past five decades. In 1981, rates peaked at 16.63%. Throughout the 1980s, rates consistently stayed in double digits. Even in the 1990s, rates typically ranged from 7% to 10%. The 2000s saw rates mostly between 5% and 8%.

The 3% rates everyone is nostalgic for? Those existed for roughly 18 months during an unprecedented global pandemic when the Federal Reserve took extraordinary measures to prevent economic collapse. That wasn’t normal. That was an emergency monetary policy.

The Recent Rate Journey

Let’s trace what happened over the past few years because this context matters for understanding where we are now.

2021 saw the lowest rates in modern history, averaging 2.96% for the year. This created an absolutely extraordinary buying frenzy in the East Bay and nationwide. Buyers had massive purchasing power, which drove prices up significantly because everyone could afford to bid more.

2022 brought rapid rate increases as the Federal Reserve fought inflation. Rates climbed from around 3% in January to over 7% by November, one of the fastest increases in modern history. This shock to the system definitely impacted the market.

2023 saw rates stabilize in the 6-7% range with some fluctuation. The market adapted. Buyers adjusted their expectations and budgets. Sellers learned to price strategically for this new environment.

2024 and 2025, rates have remained fairly steady in the 6-7% range, currently sitting at 6.24%. This isn’t a temporary spike. This is the new normal, and it’s actually a historically reasonable normal.

What This Means for East Bay Buyers

Current rates create both challenges and opportunities if you understand how to navigate them strategically.

The Affordability Reality

Yes, 6.24% significantly impacts your purchasing power compared to 3% rates. A $700,000 home at 3% with 20% down costs about $2,359 per month in principal and interest. That same home at 6.24% costs about $3,444 per month, a difference of $1,085 monthly or $13,020 annually.

That’s real money that absolutely affects what you can afford. I’m not minimizing this impact.

But here’s the strategic perspective: if you’re waiting for 3% rates to return before buying, you’re waiting for something that may not happen in your homebuying timeline. Meanwhile, home prices continue to appreciate in desirable East Bay markets, and you’re paying rent that builds no equity.

The Competition Advantage

Many buyers have adopted a “wait and see” approach, convinced that rates will drop substantially. This creates an unexpected advantage for buyers willing to act now.

You’re facing less competition than you would in a lower-rate environment. Fewer buyers submitting offers means you have more negotiating power. Sellers are more willing to negotiate on price, cover some closing costs, or offer other concessions when they’re not fielding multiple competing offers.

In Castro Valley specifically, I’m seeing properties sit on the market longer than they did during the 2021 frenzy. This gives buyers time to do thorough due diligence, negotiate thoughtfully, and avoid the pressure of bidding wars where every decision has to be made in 24 hours.

The Refinance Strategy

Here’s a perspective that often gets overlooked: you marry the house, you date the rate.

If you find the right property in the right location at a fair price, you can always refinance when rates drop. You lock in your purchase price and your position in a neighborhood now. If rates decline to 5% or lower in two or three years, refinancing becomes an option that immediately improves your monthly payment without requiring you to move, pay another down payment, or go through another purchase process.

But if you wait for perfect rates and home prices continue climbing, you might find yourself priced out of neighborhoods you could afford today. You can’t refinance your way into a lower purchase price.

The Cash Flow Analysis

Rather than fixating on rate percentage, focus on the complete cash flow picture. What are you paying in rent now? Factor in the tax benefits of homeownership, which include deducting mortgage interest and property taxes. Consider the equity you build with every mortgage payment instead of paying rent that builds nothing.

Run the actual numbers for your specific situation. Many buyers are surprised to find that ownership costs at 6.24% aren’t dramatically different from rent once you factor in tax benefits and equity building, especially in the Bay Area, where rents are substantial.

What This Means for East Bay Sellers

If you’re thinking about selling, current rate environment creates specific dynamics you need to understand for strategic pricing and marketing.

Buyer Behavior at Current Rates

Today’s buyers are more cautious and analytical than the 2021 buyers who had 3% rates and made offers sight unseen with no contingencies. Current buyers are taking their time, conducting thorough inspections, negotiating more actively, and being selective about which properties warrant their offer.

This doesn’t mean buyers aren’t active. It means they’re strategic. As a seller, you need to position your property to appeal to these more discerning buyers.

Pricing must be accurate from day one. Overpricing and hoping for the best doesn’t work in this environment. Buyers are running their numbers carefully, and they know what they can afford. If your price doesn’t align with current market reality, you’ll sit without offers while buyers purchase other correctly-priced properties.

The Competition Dynamic

Here’s what many sellers don’t realize: fewer transactions don’t mean no transactions. They mean the properties that are priced right, presented well, and marketed effectively are still selling, often with multiple offers.

In neighborhoods like Castro Valley, well-prepared homes are still generating significant buyer interest. The difference is that buyers have more options and more time to evaluate them, so your property needs to stand out through condition, presentation, and strategic positioning, not just through being available.

The Pricing Strategy

Current rates require sophisticated pricing analysis. You can’t simply look at what similar homes sold for in 2021 when rates were 3% and expect the same prices now. Buyers have different purchasing power, which affects what they can offer.

However, inventory remains relatively tight in many East Bay markets. This supply constraint supports prices even when rates are higher. The key is finding the intersection of what buyers can afford at current rates and what your property is worth in today’s market.

Properties priced at true market value are still selling within normal timeframes. Properties priced above market value sit and eventually require price reductions that often result in lower final sale prices than if they’d been priced correctly initially.

The Market Timing Question

Many sellers are considering waiting to list until rates drop, thinking they’ll get better prices in a lower-rate environment. This strategy has risks.

If rates do drop substantially, you’ll see a surge of both buyers AND sellers entering the market simultaneously. More competition from other sellers could offset any benefit from increased buyer activity. Additionally, if you need to buy your next home in that lower-rate environment, you’ll be competing with all those activated buyers for your next purchase.

The optimal time to sell is typically when it aligns with your life circumstances and goals, not when you’re trying to time rate fluctuations that are impossible to predict with certainty.

The Real Estate Reality Beyond Rates

Here’s what I’ve learned working in real estate through multiple rate environments: rates are one factor in a complex decision, not the only factor.

Location Still Matters Most

The fundamentals of real estate value haven’t changed. Location, school districts, commute access, neighborhood characteristics, and property condition—these factors drive long-term value regardless of rate environment.

A well-located property in a desirable East Bay neighborhood will appreciate over time, whether you bought it at 3%, 6%, or even 8% rates. The location creates the value. The rate affects your monthly payment and initial affordability, but it doesn’t determine whether the property itself is a good long-term investment.

Life Circumstances Drive Timing

Sometimes you need to buy because you’re relocating for work, your family is growing, or you’re tired of renting and want stability. Sometimes you need to sell because you’re downsizing, moving for a new job, or dealing with life changes.

These life circumstances often matter more than trying to perfectly time the rate market. Missing out on a great property or staying in a house that no longer serves your needs while waiting for perfect rates can cost you more than the rate difference in the long run.

Market Adaptation Is Real

The real estate market adapts to rate environments. When rates rose from 3% to 6%+, we saw initial shock and slowdown. But then the market adjusted. Buyers recalibrated their budgets. Sellers adjusted their pricing expectations. Transactions continued happening.

We’re now in that adapted market. This is the new normal, and it’s actually not that abnormal from a historical perspective. Markets function at 6% rates. They function at 7% and even 8% rates. The activity level and price dynamics change, but real estate transactions continue when properties are positioned correctly.

What You Should Actually Do

Whether you’re buying or selling in the East Bay, here’s my strategic guidance based on current rate reality.

For Buyers

Stop waiting for 3% rates that may never return. Run your numbers at current rates and determine what you can comfortably afford monthly. Factor in all ownership costs, including property taxes, insurance, and maintenance, not just the mortgage payment.

Get pre-approved with a reputable lender who can show you exactly what your purchasing power is at today’s rates. Having this pre-approval makes you a stronger buyer when you do find the right property.

Focus on finding the right property in the right location. Remember, you can refinance the rate later if conditions improve, but you can’t refinance your purchase price or your location. The home itself is what matters long-term.

Be prepared to negotiate. Sellers in this market are often more willing to discuss price, closing costs, or other terms than they were during the low-rate frenzy. You have more leverage than you think.

Consider properties that have been on the market

longer. These sellers may be more motivated to negotiate, and you’ll have time to conduct thorough due diligence without the pressure of competing offers.

For Sellers

Price your property correctly from day one based on current market reality, not 2021 prices. Work with an agent who can provide detailed comparative market analysis showing what properties are actually selling for in today’s rate environment.

Invest in presentation. With buyers being more selective, your property needs to show exceptionally well. Address deferred maintenance, consider strategic updates, and ensure professional photography and marketing showcase your home’s best features.

Be realistic about the timeline. Properties may take longer to sell than they did during the 3% rate era. This doesn’t mean your property won’t sell. It means you need realistic expectations about market time.

Respond to market feedback. If you’re getting showing activity but no offers, that typically signals a pricing issue. Be willing to adjust strategy based on what the market is telling you.

Understand your next move. If you’re selling to buy another property, factor in how current rates affect both transactions. This complete picture informs your pricing and timing strategy.

The Bottom Line on Rates

Current mortgage rates around 6.24% are not the crisis many people perceive them to be. They’re below the historical average and represent a normal, functional real estate market.

Both buyers and sellers can successfully achieve their real estate goals at these rates with strategic planning and realistic expectations. The key is focusing on the fundamentals—location, property value, life timing—rather than waiting for perfect rate conditions that may not materialize on your timeline.

My role is helping you navigate the current market reality, not some theoretical perfect market. Whether you’re ready to buy your first home, sell a property that no longer fits your needs, or make a strategic real estate move, we can create a plan that works at today’s rates.

The market isn’t frozen. It’s adapted. And with the right strategy, you can take advantage of current conditions rather than being paralyzed by them.

---

Ready to Discuss Your Specific Situation?

Current rates create both challenges and opportunities depending on your circumstances, goals, and timeline. I analyze these factors systematically for each client, using current market data and your specific financial situation to develop a strategic plan.

Whether you’re wondering if now is the right time to buy, questioning your selling timeline, or just trying to understand how rates affect your specific East Bay neighborhood, let’s schedule a consultation where I’ll walk through the numbers and strategy relevant to your situation.

You can reach me by phone, text, or email. I’m also happy to meet for coffee to discuss your questions in detail. Understanding the current market reality is the first step to making confident real estate decisions.

Contact Raina Petrov

East Bay Real Estate

DRE#02039495

650.642.5609 | raina.petrov@gmail.com

---

Frequently Asked Questions

Will mortgage rates go back down to 3%?

While rates could potentially decline from current levels, expecting a return to 3% rates requires anticipating another economic crisis similar to the 2020 pandemic. The Federal Reserve implemented emergency monetary policy to achieve those historic lows. In normal economic conditions, rates typically range from 5% to 8% based on historical patterns. Planning your real estate decisions around waiting for 3% rates means you might wait indefinitely.

How much does each percentage point in mortgage rates affect my monthly payment?

On a $700,000 loan (what you’d borrow with a $175,000 down payment on an $875,000 East Bay home), each percentage point in rate changes your monthly payment by approximately $430. So the difference between a 5% rate and 6% rate is about $430 per month, or $5,160 annually. This impact is significant but not insurmountable when you factor in the complete financial picture, including equity building and tax benefits.

Should I buy now or wait for rates to drop?

This depends on your specific circumstances, but waiting for perfect rates has costs. Home prices continue appreciating in most East Bay markets, so waiting could mean paying more for the same property even if rates drop slightly. You’re also paying rent that builds no equity. If you find the right property at a fair price, you can refinance later if rates improve, but you can’t refinance your purchase price down if home values increase while you wait.

As a seller, should I wait to list until rates drop?

If rates drop significantly, you’ll see both more buyers AND more sellers enter the market simultaneously. Increased competition from other sellers could offset any benefit from more active buyers. Additionally, if you need to purchase your next home in that lower-rate environment, you’ll be competing with all those activated buyers. The optimal time to sell typically aligns with your life circumstances and goals rather than attempting to time rate fluctuations.

How do current rates compare to what my parents paid for their mortgage?

If your parents bought a home in the 1980s or early 1990s, they likely paid significantly higher rates than 6.24%. Rates in 1981 peaked at 16.63%, and throughout the 1980s typically ranged from 10% to 15%. Even in the 1990s, rates were commonly 7% to 9%. Today’s rates are actually much more favorable than what previous generations experienced, yet they still built wealth through real estate because property values appreciated over time, regardless of the rate they initially paid.

Can I refinance later if rates drop?

Yes, refinancing is a common strategy when rates decline. If you purchase now at 6.24% and rates drop to 5% or lower in two or three years, refinancing can immediately improve your monthly payment without requiring you to move or make another down payment. This “marry the house, date the rate” approach lets you secure the right property and location now while keeping the option to improve your rate later. Just ensure you don’t plan to move within a few years, as refinancing costs need time to be recouped through lower payments.

Are East Bay home prices dropping because of higher rates?

East Bay markets vary by neighborhood, but generally, prices have stabilized rather than dropped significantly. Some areas have seen modest price adjustments from 2021 peaks, but inventory constraints in desirable neighborhoods continue supporting prices. Properties priced correctly for current market reality are still selling, often with multiple offers. The key difference is that buyers are more selective and analytical, so properties must be positioned strategically to attract offers at full value.

What rate should I expect to actually get?

The 6.24% average rate reported by Freddie Mac represents the rate for borrowers with excellent credit (740+ scores), making conventional conforming loans with 20% down. Your actual rate depends on your credit score, down payment size, loan type, and lender. Buyers with lower credit scores or smaller down payments typically receive higher rates. Getting pre-approved with a reputable lender provides your personalized rate quote based on your specific financial profile.