Saturday, February 4, 2012

Piedmont Market Firms Up in 2011

While the number of homes sold in 2011 surged a strong 22% over 2010's 99 sales, prices inched up three percent to an average $1.446 million from last year's $1.401 million. The homes sold in an average 29 days, a sales window that remains the shortest in the East Bay market.

Prices ranged from $550,000 to $4.5 million, and while the average price per square foot remained right around $500, the top price was $727 per square foot. Through the year, the typical home sold for one percent below the asking price, though that ratio ranged from a low of 74% of the asking price (typical of “problem” or distressed properties) to a bidding-war high of 33% over the asking price (an occasional outcome with fixers).

Buyers brought all cash to the closing table for 11 sales, while eight homes sales were “distressed.”

Turning to the 4th quarter of 2011, prices softened, as is typical after the spring and summer flurry. We saw 22 sales close (compared to 25 last year) averaging $1.383 million (compared to $1.413 million in 4Q10). The average days on market was flat at 30, and only one home sold was distressed.

Thusfar in 2012, however, the market seems to be heating up again: In the first ten days of the year, two homes I know of are pending off-market, and one end-of-the-year special slipped into contract and closed in ten days.

The Fed's low interest rates mean that, to buyers, homes feel like they are on sale: A million dollar mortgage (translating into a $1.3 million home with 25% down) can be had for well under $5,000/month. When interest rates were in the 6s, that same home would have required $6,300 a month, and the jobs to generate it.

I anticipate another firm market in the coming year, and perhaps even a bump up in prices. Typical slowdowns in the housing market (in the early '80s and early '90s) last about six years. If that pattern is reliable--a big question of course--we should see slow increases this year as the top of the market in Piedmont was November, 2005.

Across Oakland, the number of homes sold last year bumped up 8% over 2010, though the average price dropped 9%, reflecting distressed sales. Similarly, the number of Berkeley sales increased 8% while average prices dropped 6%. Looking at all six East Bay cities, prices were flat at all price ranges, while the number of homes sold under $1 million slumped about 5%, but was flat above $1 million.

Be sure to let me know if you'd like more detailed information on a neighborhood, and/or price band. With today's tools, it's easy to give you a clear snapshot of our submarkets. And take a look at Pacific Union's hot-off-the-press regional update here.

Moving to the state level, California expects about a 3% decline in average prices across 2011 among all home sales. Just over 520,000 homes traded hands last year. The California Association of Realtors anticipates a 1% increase in the number of homes sold, and 2% increase in the price of homes sold through 2012. The amount of unsold inventory (that is, the number of homes on the market) declined 16% during the course of 2011, meaning that the supply of homes has dropped while demand (based on the number of closed transactions) has remained rather steady compared to last year.

Alameda County remains the most affordable county in the ''inner'' Bay Area--a household income of $58,000 is required to purchase the typical entry level home here.

Click here for home-by-home information on this quarter's Piedmont sales, and for a Clarus Market Metrics analysis of 2011.

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