The third quarter of 2010 in the East Bay saw a continuation of the strong and stable spring market (as agreements struck in the spring closed 30-45 days later) in combination with signs of slowing at the end of the quarter.
Across Oakland, 810 homes closed (compared to 1051 in 3Q09 and 961 in 2Q10). The median price for these was $257,000 while the average was substantially higher at $359,000. This differential suggests a large number of homes selling at the lower end of the market, likely distressed properties (in fact, 30 percent of all Oakland sales were for all-cash, and of the all-cash sales, the average price was $276,000). Prices ranged between $2 million and $38,000, with about two dozen selling for over $1 million.
Average “days on market” was a brisk 37 days, (34 days for single family homes excluding condos, etc.). Thirty-three homes sold in 94610 (roughly Crocker Highlands) and 39 in 94611 (roughly Montclair) with roughly the same days on market as the city-wide average, and with sold prices just a tad below the last listing price.
Berkeley, meanwhile, saw 143 sales (compared to 146 in 3Q09 and 177 in 2Q10). Prices ranged between $1.8 million and $220,000 (for a single-family home rather than a condo, by the way), and typical days on market was 27 days. Twenty homes sold for over $1 million, and about 20% of all sales were all-cash.
The California Association of Realtors reports that across California, as of September, that sales (# of purchases) are off 12% and prices are up 4.5% compared to a year ago, while median time on market and inventory levels (and the time it will take to put a home into a new household’s hands) are both up substantially. Also less-than-comforting are the county data: Alameda County saw a 10% drop in median prices from August to September, though a 5% drop in prices since September, 2009. The number of overall sales throughout the county is down by 25% compared to a year ago, though up by nearly 10% between August and September of 2010.
Zeroing in on Piedmont, we saw a total of 39 homes close in the third quarter (compared to 30 in 3Q09, and 37 closings in the second quarter), and they closed after an average 30 days on market. Prices ranged from $593,000 to $2.3 million. The average price was $1.435 million ($508/sf) compared to $1.495 million last quarter, and $1.433 million a year ago. the final sales price was typically about 3% below the original asking price, though that final vs. asking ratio varied from 115% to 80%. Median prices were consistent across the periods and at a somewhat lower number.
Sales seemed to slow quite a bit in the late summer (very few homes went into contract after July 15--usually we see the slowdown kick in a few weeks later) but activity has picked up again since Labor Day.
Thirty homes are currently on the market. When you look only at these homes for which buyers have not yet made a successful offer, the average days on market is 92 days. Two homes have been sitting on the market for about two years, while four are coming up on 6 months to a year on market, which drags up the average--homes that sell, sell promptly, while those that aren’t meeting serious buyer interest sit.
Thirty-four homes have left the market during the entire year, though in a few cases they return to market or have sold privately.
Low interest rates continue to be an extraordinarily significant factor in buttressing the pace of sales--I did a quick exercise last week to compare the ''how much house'' a household with $100,000 in income could purchase at today's low rates compared to 6%, which we were happy to see about 18 months ago. Ignoring things like car payments and student loans, etc., that buyer's monthly take-home pay can accommodate a $600,000 home today following standard underwriting guidelines, but could ''reach'' only to about a $500,000 price point at 6%. The flip side of the equation is that a seller can interest that buyer to pay $600,000 today, but would have to drop the price down to $500,000 to entice that same buyer if rates were at 6% (because the lender would not sign a pre-approval letter for that same buyer in a higher interest rate environment. Of course there will always be buyers able to pay $600,000, but there will be many fewer of them.)
Bottom line--home prices in Piedmont have stayed strong this quarter; saw an early slow down in demand at the end of the summer, but appear to have recovered for a good fall season. One home formally closed in October (reflecting that slow market in the late summer) while nine are currently pending.
Call me if you’d like the detailed Market Metrics report on the Piedmont market over the past two years; I’ve developed reports city-wide, and for the higher-end price band. (You know that when looking at value, you need to consider the price ''band'' or sub-market, in which you sit, right?)