What’s happening in our Oakland, Piedmont and Berkeley Real Estate Market?
Buyers market, seller’s market, or a bit of both?
I’m asked how the real estate market is here in the greater Oakland, Piedmont and Berkeley markets at least once to twice daily. With interest rates continuing to hover in the 7% range, political uncertainty, increased crime activity in certain areas, and so many other stories regarding real estate making news headlines, it can be hard to decipher what’s happening. In the news industry, the adage goes, “If it bleeds, it leads”, but the market is more complex than that. Although some homes are sitting on the market longer and we’re seeing more price reductions, a parallel market of homes are flying off the shelf in multiple offers at the same time… why is this?
Over the last few years
Here’s what I’m seeing in our East Bay real estate market. A few years ago when interest rates on home mortgages hit 6%, it’s suggested that as many as 20 million home buyers stepped back from the market due to the new cost of a monthly mortgage. But even at 6% we continued to see relatively solid buyer activity here in our Oakland, Piedmont, and Berkeley markets. But we hit a threshold this last September when rates topped out at 8%+. It happened almost overnight, we were setting records home sale prices in August of ’23 but all changed in September when the 8% rates acted as the straw that broke the camel’s back. September and October of ’23 ended up being two of the hardest months I have had since entering the real estate industry in 2000 (with the exception of the subprime mortgage crisis of 2007-2010).
Reprieve from the Fed
In November of ’23 the Feds announced that they would potentially be making as many as three to four rate cuts in 2024. The market responded to this news and rates dropped down from their highs, loosening up the market and giving buyers the confidence to once again pursue homes with a more aggressive tenacity. Due to this, January thru March of this year were relatively strong months with multiple offers and homes selling at prices we did not see coming (based on Q4 of 2023).
Drats…The Fed Stikes Back
But, as spring was upon us, the Feds announced that due to continued issues with inflation, the anticipated rate cuts may not be happening and rates shot back up into the 7%+ range. Again, buyers were discouraged.
Rates are the new seasonality
In a normal real estate market, the spring months are the best for selling, as you get into summer the market slows and it picks back up again in September. I’ve always had great selling experiences in January as well when buyers come back to the market after holiday distractions accompanied by a slim housing inventory. With that said, this past year plus has been more rate driven than season driven, making interest rates the dominant seasonality.
So is it a seller’s market or a buyer’s market?
Concerning whether it’s currently a seller’s market or a buyer’s market, my answer is that it’s both. With rates still hovering in the 7% range we continue to see ready willing and able buyers in our East Bay marketplace, but not as many of those buyers are willing to make concessions on the home they buy. Gone are the days of the land grab, where buyers were desperate to win a house (even if it was not the house they truly wanted) just to get equity. When a home that comes to market has all the bells and whistles, i.e., great floor plan, usable level-out yard, updated kitchen and baths, as well as curb appeal, it will still be descended upon by multiple buyers, and often a bidding war will ensue. But, if the home needs to be fixed up, has a less desirable floor plan, no usable yard or hidden structural issues, it is much more likely to be passed on. Additionally, if it does sell, the discount based on the actual defects will be much greater than any discount related to general market depreciation that other, more desirable homes will experience.
What to do with this information
The moral of the story is to make sure your home is the “Best of Show” when coming to market in this current climate. Do the prep work up front to maximize your homes appeal to the largest audience and don’t make the mistake of assuming your house will easily sell just because you are here in our amazing East Bay.
Make sure you are in the seller’s market, not the buyer’s market, and feel free to reach out should you have any questions regarding my observations
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Need Proof of Concept? Here’s how “Best of Show” plays out in the market.
Best Regards and Happy 4th of July,
David Higgins
Realtor and Founder, Cush Real Estate