As we enjoy the guilty pleasures of a warm, extremely dry January, besides asking if it will ever rain again, I’m making my guesses about what the East Bay real estate market will bring in this new year. Usually January is a decidedly slow month. In the past I’ve told clients that the spring market will begin when the daffodils bloom (many male agents say after the Super Bowl…similar timing!) And with this warm weather, those daffodils are getting ready to bloom early!
Already this month I have put a set of buyers into contract, have taken my first listing, have two buyers in contract from December that should be closing soon, and I’m already meeting with buyers who want to start their searches. I’m hearing from several colleagues that they are having a similarly, and uncharacteristically, early and active start to 2014.
So what do I expect for this year?
- Our market will be active sooner than normal this year–unless a deluge finally arrives!
- After a year of very low inventory in 2013, I do expect that more sellers will have decided it is time to bring their properties on the market, meaning a very active spring.
- The increases in median price last year were remarkable, and I will guess not sustainable. With several cities seeing price increases last year of more than 30%, a slowdown is inevitable. But pundits are still predicting increases in the 5-10% range, with the cities hit hardest in the downturn seeing the higher increases.
- Interest rates will rise. Now in the mid-to high-4′s, most anticipate increases that will take them to the low-to mid-5′s by year end. Both factors continue to decrease affordability.
- The exuberance of the technology activity in Silicon Valley will continue to drive demand up to San Francisco, and there will be a continued trickle-over effect to us in the East Bay, where our prices are still relatively affordable.
- I do not see the burst of any local bubble in 2014. There’s lots of talk at the national level about whether the housing sector right now is overheated. In our East Bay market I see continued demand for inventory that cannot be dramatically increased with new housing stock.
Let’s check back later this spring and see how accurate my crystal ball has been!
With warmest wishes for a happy beginning to your 2014.
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As the weather turned cold our East Bay market heated up further as inventory shrunk. Lower inventory is normal given the season. What’s unusual is that buyer demand has increased, if anything, over the past couple of months. Right after Labor Day we saw a small deluge of listings, especially in the hills where I recently had two listings. I am delighted that they have both closed, with multiple offers and above list price! But those were tougher sales than expected, and the increased competition was a factor. As autumn leaves fell so did the number of available homes. Using Berkeley for a snapshot: in mid-October, we had 90+ listings and were experiencing a brief period of greater balance. That number has now been cut in half…and there are now more buyers pursuing those few properties. That picture is much the same in all of the cities I serve.
