In this ‘very inconsistent’ real estate market a home’s condition sets the price – Berkeleyside

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A confluence of forces is making the East Bay real estate market increasingly difficult to predict. On one hand, high levels of tech layoffs, interest rates and insurance rates would seem to keep buyers away from purchasing. Yet California prices recently reached an all-time high, and the Bay Area remains one of the most attractive places to live in the country. 

The result is a “very inconsistent market,” said agent Sheri Madden. “Some homes draw a lot of attention and sell for as much as $1 million over asking, and other homes are languishing and requiring price reductions.”

These inconsistencies can be seen in the balance between supply and demand in different inner East Bay cities, the communities ranging along the bay from San Leandro to Richmond. This is reflected in the chart below in the metric “months’ supply of inventory.” That determines the length of time it would take to sell all available homes on the market; the higher the number, the more power the buyer holds over the seller. For example, the news of crime may be driving buyers away from Oakland and into cities like El Cerrito.

But even looking at activity on the city level can be too broad — the challenges faced by the Oakland market aren’t expressed in all neighborhoods. Looking at the median price of 3-bedroom, 1,000-2,000 square-foot single family homes by neighborhood in the chart below, we find that values in Montclair are up only 1% Jan-May this year compared to last year, likely driven by an increase in insurance rates. But prices in North Oakland are up 32%. What’s more, North Berkeley is up 9% and El Cerrito is up 15%.

In the face of these unusual conditions, sellers are having to work harder to attract buyers. This requires them to take a different approach than in years past. 

“Sellers should expect that the buyers these days are much pickier about the condition of the house,” said agent Lisa Robesch, a member of the TTL Team

“Their offer prices reflect the condition of the house much more so than in previous years when rates were low and competition was high. To mitigate this, as a seller or a future seller, you should make sure you are not deferring maintenance on your home.”

Home condition extends beyond aesthetic improvements. The inner workings of a house can significantly impact the sale of a property. For example, knob-and-tube wiring or an old roof can impact the cost of insurance and the overall salability of a property. This is why Red Oak recently expanded its Enhance offering to help homeowners improve their property — from electrical systems to kitchen remodels — and pay at close of escrow. You can see recent projects here.

Buyers need to be more flexible, too. “There are amazing opportunities for buyers who are willing to be a bit more flexible on location,” said agent Jeff Rosenbloom. “Really nice houses that are a bit farther away from core East Bay neighborhoods are not selling and can be had without competition.”

The market will likely slow as we head into the summer months, then peak again in the fall. Buyers and sellers should prepare for similar factors as they continue through their real estate journeys. Reach out if you have questions or would like custom reports.

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