Common wisdom among male agents is that the market starts after the Super Bowl. I’ve always described the market opening when the daffodils bloom. That major commercial event just occurred — and my first daffodil just bloomed! So if this year is like most, we should start to see more inventory appearing very soon. As always at this time, I’m wondering whether the new market will be very similar to the past year.
So far in the East Bay we have been experiencing Econ 1A behavior: low supply and high demand=increasingly high prices. Two data points summarize the market in this six-city area: From Q4 2013 to Q4 2014 inventory was down 8% and median prices were up 16%. Last year at this time I predicted that inventory would rise in 2014, and prices would rise in the 5-10% range. So my first two predictions were proven too conservative! In the last quarter of 2014 new records were set for median sales prices in most of the cities in this East Bay region. Only in Kensington, with a very small volume, and Oakland, with a very high volume, are median prices still below the highs set in the 2007 pre-crash period.
The process of buying continues to require stamina and courage on the part of buyers. And the willingness to accept that in our area, the practice of pricing below market value to elicit over-bidding is simply the norm. Interestingly, as the list price increased, so did the percent on average that was required to overbid in order to get an offer accepted, with 24% being the average required  in the $1-2M range. Wow! Only when the list price exceeded $2M did that pattern change.
Affordability really took a nose-dive last year as prices increased. How the substantially higher prices are changing the demographics in Berkeley was one topic of a thoughtful analysis by our Red Oak Realty staff that just appeared in Berkeleyside. Written for that blogsite, the discussion referenced Berkeley specifically, but many of the concerns apply to all of our local cities.  We’ve all heard about the foreign investors outbidding locals; I personally didn’t see many of those in the mix here. But I did see quite a few homes being purchased by young, dual-income tech worker families, paying all-cash. This was especially common in Rockridge and North Berkeley, where the Latté Factor is high, and where there is at least decent public transit options, if not terrific ones in Rockridge. And we are feeling the continued pressure of San Francisco and Peninsula buyers of all ages and descriptions seeking relative bargains in our part of the East Bay.
Right now interest rates are about a half point lower than a year ago, likely to encourage even more buyers to commit to purchasing soon.  Last year I’d predicted that rates would go UP slightly–so I’m three for three for last year’s predictions!  So I think as the 2015 market begins I will just get ready for whatever it brings, looking forward to giving good guidance to buyers, and helping match them with homes that suit them in this wonderful area. And I look forward to representing sellers with enthusiasm, attention to the details, and excellent marketing.
Here’s the new market…same as the old market??
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