Fall is one of the busiest times for both selling and buying homes in the East Bay. This year, new listings are up 150% from Labor Day weekend to next week. However, this year is also one of the most challenging times to sell a home. The ranks of buyers appear to be thinning a bit as buyers face headwinds from high prices. These include higher insurance rates and mortgage rates that show no signs of falling just yet.
Buyers still want to buy real estate — this is the Bay Area, after all — and homes continue to attract competitive offers, with single-family homes selling for an average of 10% more than asking price in September. Red Oak Realty sees an average of three offers per transaction. But some homes for sale are languishing.
After taking a closer look at the current market, we found that each buyer’s and seller’s experience can vary greatly depending on at least four key factors:
House vs condominium
The vast majority of transactions in the East Bay involve single-family homes (SFRs), but for buyers considering a condominium, the two property types work very differently. The sale price of apartments is about half the price of single-family homes. Apartments are also sold at asking price and take significantly longer to sell. This may be due to factors that are important to buyers, including location, condition and features (many apartments don’t have a backyard, for example). This creates opportunities for buyers who want to enter a market with relatively lower levels of competition.
Sales time
The general consensus is that the “best” time to list a property is in the spring and fall, but the metrics don’t necessarily support that. For example, the earlier in the year a property is listed for sale, the more likely it is to sell. This is likely due to high customer demand and relatively low inventories:
In the new year, buyers are often ready to start shopping, but sellers often wait until winter to prepare their home for sale.
Additionally, although fall is a popular time to list properties for sale, the highest number of cancellations occur among properties listed for sale in September:
Although the market as a whole is competitive, timing can affect whether a seller faces high levels of competition from other sellers. If you are unable to list in the first half of the year, the property may still perform well, but expectations must be adjusted accordingly.
Location, location, location
Buyers and sellers should be wary of reading articles that analyze market performance across a metropolitan area or even a county—real estate can perform differently depending on the city and area. For example, 56% of single-family homes in West Oakland that were listed for sale in the third quarter of the year did not sell, but only 14% of homes in North Berkeley did not sell. These are very different areas and therefore attract different numbers of buyers.
Auckland has faced particular challenges in recent years. And while prices in the city as a whole are down 9% since last year, it’s uneven across the board. For example, Rockridge prices rose 3%. What’s more, prices in Oakland have risen more over the past 15 years than in any other city in the inner East Bay, an area along the Bay from San Leandro to Richmond. Buyers and sellers should consider whether there are still long-term opportunities in this market.
Price points
The selling price of a property largely depends on its performance in the market. Properties that sell for less than $1 million tend to sell below their asking price more often than properties that sell for more, likely due to factors that influence price such as condition and location.
In addition to these factors, the condition and appearance of a property can determine its performance: has it been improved and prepared for occupancy, and is it move-in ready? Is the list price set low enough to compete and attract buyers? As the saying goes, “There is no such thing as a bad property, only a bad list price.”
If you are interested in an in-depth analysis of the market and how it impacts your real estate goals, contact us.
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