A Summary of Sales as the Year Ended: Part II of the Year End Real Estate Market Snapshot
Even though Berkeley, CA has largely been a bastion of strength relative to other housing markets, in December we really felt a change, with a significant slow down in sales, and an increase in distressed properties. Over the holidays I’ve had several interesting conversations with folks who speculated about why it took so long for the decline to hit the Berkeley market. Is it because so many people here essentially “have tenure,” either literally through U.C., or essentially, being funded on grants, working for various government entities, or being retired? Obviously we were buffered by not having massive amounts of new construction. Is part of it simply the Berkeley cachet? I welcome your suggestions!
Of the single family homes under contract in Berkeley in November, 1/3 were foreclosures. Sold prices per sq. ft. in Berkeley started the year around $375, rose to a high of $430, and are now back down to approx. $380. The all-time high was over $575/sq. ft. Berkeley-wide, and over $650/sq. ft. in North Berkeley at the beginning of 2006.
Berkeley Median Prices 2010
In the past three weeks less than one property has closed per day in Berkeley. Of those 20 sales, 6 closed above list, 8 closed at list, and only one was more than 10% below–indicators of strong market activity. However, thirteen of those sales were between $200K and $510K, with high price at $1,175K (two of those). Sold prices are more than $100K below last Dec., and for the first time in several years our median list price Berkeley-wide is below $500K ($498K median vs. $603K a year ago) and down substantially from November’s median of $745K.
Homes seem to take one of two divergent paths:Â The high road is business as usual, with the property receiving multiple offers on a predetermined schedule and closing quickly. A good neighborhood is important, but so is the condition of the home. It needs to be updated, and have the usual combination of being well-priced and well-presented. Buyers are increasingly fussy about condition and sensitive to price.
The second path is more common now: if the home is priced even a tad too high it sits on the market for a month without interest, then requires a price reduction to generate an offer. In both Berkeley and Rockridge sometimes the price reduction will generate multiple offers!
So we all wait to see what our 2011 market will bring. There is great speculation about whether prices will continue to drop. But as interest rates rise, the advantage to most buyers who need loans may be mitigated. When will our market truly stabilize? If only Santa had brought me a crystal ball!
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