Berkeley, CA

For those of us active in the real estate market in Berkeley, CA, and the adjoining communities, 2009 was frustrating. I kept telling myself it was primarily because of low inventory. With not enough properties to show our clients we had buyers who were disappointed not to be able to find the home they wanted here. Others found their desired home, only to have it elude them as one of the several other offers received was the winning bid. In a surprising number of cases in Berkeley in 2009, the winning offers were all cash (see my post below from Dec. 2009).

Some took their disappointment to other East Bay cities where they were able to find distressed properties at attractive prices. But for those who want to live in this community because of the rich architectural heritage, the physical beauty, the active "life of the mind" and the tremendous variety of ethnic restaurants and ingredients -- few places will compare. University towns are special that way! Palo Alto has some similar attributes, but with a substantially higher median price. For many of my buyers, only Berkeley, or the adjoining communities of Albany and Kensington, or adjoining neighborhoods such as Rockridge in Oakland, will do.

You can scroll down to read an earlier blog post about what I think are the reasons for the lower inventory. Whatever the reasons, the fact is that our inventory was down in Berkeley anywhere from 13 to 21% from 2008, depending on the quarter, and that had been similarly down from 2007. Statistically that doesn't sound enormous, but the absolute numbers were quite small. Through 2008 the average number of single family properties on the market per month was 164; all property types averaged 199 per month. That same numbers for 2009 were 141 and 169, down 14.5% and 15% respectively. For sold properties the figures are 38 through 2008, and 36 through 2009, a remarkably small difference, on an equally small sample size. Total residential properties sold in 2008 was 461; in 2009 it was 434, a decrease of just under 6%. I must say that as one of the fewer than 600 members of the Berkeley Association of REALTORS(R) it is rather daunting to realize that at least in single family homes, there were a grand total of 868 sides of transactions for the year. Divided by the number of BAR members (584 at last count) that means on average each association member did 1.5 deals in 2009, and it only goes to 1.6 deals considering all residential sales! If you consider all property types, then each agent did an average of two deals for the year.

The chart below shows median list price and median sold price. You can see it varies by month, but median sold prices exceeded list prices from February 2008 through February 2009, and then again in October the sold prices again began to exceed list. It takes a great deal of overbids for the median sales price to exceed the median lists price! But while at the end of 2008 we were looking at median sales prices in the low to mid-$700K range, as the end of 2009 approached we saw median prices at $700K in November take a full $100K hit in the two subsequent months. For the month of December, the median sold price was $595K. More significantly, the year-to-date median was $658.6K, almost a $100K drop from the previous year's rolling median. Obviously we are all anxious to see what the new year will bring!

Berkeley, and the surrounding communities of Albany, Kensington as well as strong neighborhoods of Oakland such as Rockridge are experiencing the problem of low inventory, and did through most of 2009. I hear that the same condition applies to several neighborhoods in San Francisco. We're not just talking about the seasonal slowdown we would expect in the winter months.

We know that the high unemployment rate we're experiencing, especially in California, means that many home owners are concerned about whether they'll continue to have salaries to support their current mortgage. When a job could be at risk it's hardly a time that inspires people to sell, unless it is to a situation with a lower cost home or lower taxes. That probably means moving away from the Bay Area!

But I believe a dominate reason for the low inventory is misinformation on the part of sellers. There are many sellers who read the national, or even state-wide news about a "glut of inventory" and sluggish sales in many areas, and become frightened of placing their property on the market. Much of the general news has been that the real estate market is in the doldrums, with price declines. If sellers do not take the time to consult with a local expert REALTOR, who can inform them of the conditions in their micro-market, they may be harboring very false impressions.

In Berkeley we've become accustomed to overbidding, and except for a few months in early 2009, overbidding has continued to be a common occurrence. This is so much the case that in Nov., and Dec. 2008, and Jan. 2009 the median sold price was higher than the median list price in Berkeley. That was also the case in three out of the past five months of 2009.

It is true that on average, prices have dropped about 12% in Berkeley within the past year, but within those averages are a small percentage of distressed properties. With low inventory, those properties can pull down the averages and give the impression of a market that is less robust than what we as agents are experiencing.

My buyer clients in Berkeley must be prepared for overbidding in the range of 10% over list on the well-located, well-priced homes, depending on the number of offers. My last buyer of the year needed to pay almost 20% over list when competing against three other buyers, one of them all cash, and this in the $1M range. A client buying a foreclosure had to do the same, at a lower price point but competing against 16 other buyers.

So if we had to explain in one word why there is low inventory, I would use the word fear. Fear on the part of the sellers that their financial situations could change; fear that the buyers' situations could be shaky and a sale might not go through; fear that when it's time for them to be a buyer, they'll find it difficult to acquire the home they want. But at least in our area, if the sellers have the courage to bring their home on the market, and price and prepare it following the advice of their REALTOR, the odds are excellent that it will sell, and command a fine price.

I look forward to hearing about the experiences of other agents in different areas. Happy New Year!

Yes, there are REO's available for purchase in Berkeley. The inventory fluctuates, but as of 1/5/2010, there are ten current REO listings:

1. 1648 Curtis Street, 3/2, 1423 sq.ft, listed at $499,900

2. 1055 Amito Drive, 4/3, 4160 sq.ft, listed at $1,025,900

3. 827 Channing Way, 3/1, 1007 sq.ft, listed at $399,900

4. 1050 Creston Road, 4/3, 2953 sq.ft, listed at $950,000

5. 1239 MLK Way, 3/1, 1211 sq.ft, listed at $634,900

6. 452 Boynton Avenue, 4/2, 2301 sq.ft, listed at $859,000

7. 1687 Thousand Oaks Blvd, 3/2, 2244 sq.ft, listed at $859,900

8. 6946 Bristol Avenue, 4/4, 4120 sq.ft, listed at $999,900

9. 3227 Boise Street, 4/1, 1129 sq.ft, listed at $309,900

10. 1243 Ashby Avenue, 4/2, 1614 sq.ft, listed at $254,000

For more details about any of these listings, or to receive free automated emails with new REO listings in Berkeley, please email Andy Read at aread@caldecott.com or call him at 510.594.2400 x 222.

Wondering how best to incorporate Green ideals into your holiday preparations? That was the challenge discussed at the recent meeting of the Berkeley Association of REALTORS® Green Council, concluding its first year as a group. I am proud to have founded this group of dedicated agents, and to serve as their Chair.

Following the basic principles of reduce, reuse and recycle, the Green Council came up with these practical suggestions:

If you’re going to decorate with lights, use LEDs (Light Emitting Diodes). They’re much more readily available now than in previous years, and in many great styles and colors. They use only 10% of the electricity used by incandescent lights, and in general they are much better made and more likely to last longer. The bulbs are advertised to last up to 100,000 hours, and many are Energy Star approved, and are cool to the touch.

Decorations for the tree can be inexpensive and fun to make as a family. How many of us remember stringing popcorn (much of which got eaten in the process!) and cranberries? Or making garlands from loops of colored paper? Snowflakes cut from recycled paper are always a favorite on windows or on the tree. Bring out your inner Martha Stewart and use dried flowers, such as hydrangeas or babies-breath, to place on the branches to give them a snow-laden effect.

Shop Local: if possible, shop for any gifts at local, independent stores. When possible, support a local business that displays a Bay Area GREEN Business Program sticker in their window.

The East Bay is especially fortunate to have so many active artists, and this weekend many studios will be open. Buying directly from the artist is an especially satisfying way to do your holiday shopping. Check BerkeleyArtisans.com for a map and schedule.

The iconic local shopping experience is at an organic Farmers’ Market. Possibilities include:

• gifts of preserves made from locally harvested fruit. A local favorite is marmalade from Kensington Marmalade Company, made by Alexandra and sold at the Sunday market (10 – 2, at Colusa Circle). Flavors include Blood Orange, Meyer Lemon with Bergamot, and Tangerine.
• Bouquets of flowers from the market are always welcome, or get creative and make bouquets of various veggies and fruits mixed with evergreens.
• Handcrafted soaps or beeswax candles are often available at the markets, as well as olive oil or spice mixes. Each market tends to have its own local craftspeople selling their wares.

This Saturday, Dec. 19th from 10 - 4 the annual Holiday Craft Faire will be held at the Berkeley Farmers' Market. You'll have many vendors offering solutions to your holiday shopping challenges, and a full lineup of musicians will be there to entertain you while you shop! For the schedule check the Ecology Center Calendar.

Buy organic: look for organic cotton or hemp products, such as linens, towels, socks or other clothing. If at all possible purchase organic and fair trade chocolate, tea or coffee products. For very local chocolates consider Charles Chocolates in Emeryville.A tour of the facility is also a fun activity.

Consider the double reuse: shop at thrift or consignment stores for “gently used” items.

Check back tomorrow for Green Tips, Part 2!

We continue to read in the national news about the "glut of inventory" that exists in many parts of the country. In my area, in the East Bay region of the San Francisco Bay Area, specifically in in Berkeley, CA, we have struggled with too little inventory all year. Last month we had 41 single family residential sales, while 42 residential properties appeared on the market. We could use more than a net of just one property! We currently have under two months' inventory on the market.

If we take a more detailed look at our market and compare to what we experienced last November, we see that the Berkeley, CA market inventory is down substantially from this time last year, but up from only 1.5 month's inventory last month. Those are fairly subtle changes. What I can tell you as someone out on tour every week: we need more homes to sell in our area!

Take a look at the second chart and we see that list prices in Berkeley are unchanged from a year ago, quite a different situation than in many parts of the state. More importantly, our Sold prices are down only 5% from November last year. I'm guessing that an even more unusual market statistic is that in Berkeley CA the median SOLD price was higher than the median list price. This quantifies what we experience every week: with the low inventory, our buyers must compete against multiple offers on the vast majority of listings that are well-located, well-priced and well-presented. On average my clients are competing against four offers. The range seems to be from just two to about ten. Clearly this is not the buyers' market that we see elsewhere. But since prices are down from last year, even by only a bit, many of our sellers are still unhappy. I am doing a great deal of counseling about how relatively fortunate are our sellers!

Finally let's take a look at the supply vs. demand in the Berkeley, CA real estate market: we had 28 fewer homes to sell this November than last, and we sold 17 more this November than last. That doesn't sound so remarkable, does it? But given how small is our total inventory, the percentages are impressive: While our Berkeley CA supply is down from this time last year by 18%, the demand is up by 68%. Our solds per month has stayed in a fairly constant range this year: since the spring market picked up we've seen between a high of 48 and a low of 35 sales each month.

So if any potential sellers are reading this you can see that at least in Berkeley CA we have very little inventory to sell, properties sell on average in about one month or less, and median prices, while down a bit from last year, have been on an upward trend the past several months. It's a great time to be getting your house ready to sell. And buyers: it's a great time to take advantage of remarkably low interest rates and those tax credits, before our prices go up any further! I'm always delighted to talk further about Real Estate in Berkeley, CA and the surrounding communities of Alameda, Albany, El Cerrito, Kensington, Oakland and Piedmont!