Man it's crazy out there! The upward push on prices feels unrelenting. And I say that with a bit of trepidation. As you know, my view is that the "relocation" of tech ground zero from Silicon Valley to San Francisco/Oakland, together with absurdly low (but nationally set) interest rates for this super-charged region moves us up the supply-demand curve.
We saw 15 sales this quarter in Piedmont (as reported in the MLS), one-third of which were all cash. The average home sold for $2.32 million (median $1.975m) in only 7 days, at 16% over asking. This translates into $837/sf. Prices ranged from $1.28 million to $3.495 million (the latter with a price/sf of $997--this is consistently our high-end or small-house figure).
A year ago, we had so few sales that the information was trash--8 sales, $2.475 million average price, $730/sf, 12% over asking. I won't event talk about change 1Q16 over 1Q17.
But last quarter you might recall was consistent with, but a tad lower than, this quarter's activity: An average sales price of $2.15 million (median $1.85M), secured in an average 14 days at 8% over asking.
In addition to the ever rising prices and consistently low inventory (call me now to plan for this year's sales cycle!), we also see a shift towards all-cash offers. As I say to my buyer clients, there is "god's price"--the price that the market suggests--and then there is "the price that gets the house." These days, there's an increasing delta between those two figures. And buyers have realized that in a rising market, an all-cash offer eliminates the only major risk sellers now face: That the appraisal might come in lower than the sales price.
Most successful offers today are contingency free, but offers involving a loan require an appraisal, even if there's no appraisal contingency. And no buyer likes to be told by a professional that the house is worth less than their offer--even if the buyer has said over and over they are willing to run that risk. So a classic seller move is to go to the one all-cash buyer and say "we have an offer with a loan at $x; if you meet that price, you get the house." The corresponding buyer move is to borrow $x from mom and dad, and then get a purchase loan to "take out" mom and dad within the first 60 days of ownership.
Unfortunately for my hardworking buyers without family money, this strategy is in play across all price points throughout the "inner" East Bay, at least for highly prized homes and locations.
Expanding our view, the close-in neighborhoods of Oakland surrounding Piedmont (94610, 11 and 18) saw 88 sales of detached homes, an average sale price of $1.387 million, 12% over asking, $610/sf, in contract in 14 days, and a typical 5 offfers (when reported by the MLS). Note that $600/sf was the average in Piedmont back in 2006, and again only a couple of years ago. Looking at 1Q16, these same communities saw 81 sales averaging $1.15 million or $530/sf, and closing at 16% over asking. This suggests a price rise of about 20.6% over the past year.
Similarly, Berkeley, which saw the upward pressure before higher-end neighborhoods in Oakland, saw nearly 20% increases in prices 1Q16-1Q17: The average single family home in Berkeley sold for $1.248 million this past quarter, or $738/sf, at 15% over asking. A year ago homes were selling for $1.052 million or $650/sf, 14% over asking--an increase of 18.6%.
Key takeaway--the price gap among Piedmont, high-end Oakland, and Berkeley is narrowing compared to years past.
Across California, the CA Assoc of Realtors reports that in February, 2017, prices were up 7.6% year over year (to $479,000), total sales (#) were up about 5%, and days on market were down about 20% (to roughly a month, compared to our week in Piedmont). So higher interest rates (up about 1/2 percent to 4.18% for 30-year fixed financing) and tougher affordability (the ratio of costs to own to average income declined by just 1% during the year) did not create much drag on the housing market.
Selma Hepp, Pacific Union's economist, does really nice work in my humble opinion, published here. And if you want to scope out the region's markets, see these data covering areas in which Pacific Union operates--from Silicon Valley to Napa and Sonoma, plus Tahoe and, very soon, Los Angeles. Remember, I can help you find a great agent to work with outside my Piedmont/Oakland/Berkeley/El Cerrito/Albany turf (I know what I don't know!)--I've recently done that for clients buying in Contra Costa, as well as on the East Coast and in San Francisco.
Got Scrip? Renovating?
You thought your scrip days were over. They are never over! I was at Home Depot recently buying a vanity and sink for my new listing, and was able to benefit the Piedmont schools at 4% of the investment. Years ago, when I ran the program, I put together a factsheet that emphasized all the ways your classic renovation purchases could drive money to our local public schools. I don't think the factsheet is still around, but check out this website for more--those renovations involve big investments, compared to your weekly grocery bill--Pottery Barn/Williams Sonoma and family pays 8% to the schools!
And While We're Talking Doing Good for Kids----
The Children's Support League annual Heart of the Home Kitchen Tour comes up at the end of the month. Buy tickets online (through 4/21) here, and don't forget to order lunch. And give a shout out to colleague Julie Gardner, whose gorgeous Crocker Highlands home is on the tour this year. We still love her, even if technically she left town!
And while we're Talking the End of the Month----
It's the Heart of the Home tour, so I have a great new Piedmont listing. Level-living once in the front door, four bedrooms (including a big master with not one but two large closets), two baths, 2161 sf, lots of charming details and a nice big private flat yard.
Looks like we'll have a special collaboration with Farrow & Ball paints and wallpapers--Piedmonter Terri Ashton is helming their new shop on 4th Street in Berkeley. More details later, but for now, be the first to email me and receive a copy of the firm's big How to Decorate idea book, by Joa Studholme and Charlotte Cosby!
Another Strategy when Buying
We and your loan officer often recommend looking at a home equity loan to solve the "do I buy first or sell first?" conundrum. Take a home equity line out on your long-held home, buy the new home outright (looks like all-cash--see above--to the seller) or at least make a hefty downpayment, and then circle back to sell the long-held home and close out your position. Following this approach typically eliminates the need to move to a rental for a while, pack up twice, board the dog, worry if you will ever find a new home, and so on.
But home equity lines can take a long while to wrap up. You could sell stocks, but then you'll pay capital gains taxes. If you happen to have extensive equity holdings, you could alternatively borrow against your stocks for that short-term liquidity--as an example, Schwab calls this their Pledged Asset Loan. See this factsheet for their approach, which most firms offer. Again, once you sell the big house, you circle back and close out the short-term loan.
All this applies if you happen to be thinking about helping the next generation buy into the market--lucky them------
The OBAR is collecting clean used baby clothes (up to 12 mos) for distribution by local hospitals, social workers and clinics to homeless families and others in need. If you have clothes languishing in the attic--or have a neighbor who's recently wrapped up that phase of life--just bring the clothes to our office (1900 Mountain Blvd. in Montclair) or to Holmgren and Associates (same address) during business hours. And if that's inconvenient, email me and I'll pick up! And....drumroll... this year's clothes are distributed on Mother's Day, so reach out soon.
East Bay Plant Sales!
It's that time of year! Now that the drought appears to be broken, maybe it's time to invest in the garden.
The East Bay Parks District sale is coming up this weekend at the District's botanic garden near the Brazil Room--click here for more details and a provisional list of available plants.
Merritt College's great sale is coming the first weekend in May. For more details, click here.
My annual pitch to get out into the East Bay's fabulous parks. My fave is Sibley Volcanic Regional Preserve (as the guides say, it's not a hip red pepper jelly). I've spent way too many hours up there thinking about how best to represent my buyers and sellers while walking the dog(s). (No bad news; Gus is at college with the Youngest Son, so it's Doc and me these days.)
But with this year's dramatic rains, the wildflowers are more numerous, varied and later than usual. The lupines and farewell-to-springs are just coming into their prime, the blue dicks and poppies are ubiquitous, and the shooting stars have shot their wad already. If you're working on steps, miles and staircases, it's the place to go!
This blog covers issues related to real estate and your home in Piedmont, California. We cover the local market, renovation ideas (particularly those of a green nature), some gardening material, local housing/taxation/development debates, what buyers and sellers want, and national trends.
Lots of good info and insight; no cattiness.
The blog includes my e-newsletter articles dating back to 2006, and blog posts while ActiveRain.Com was my blog platform. Feel free to subscribe to the blog here (go to the top of the page), or email me (Kennedy@MaureenKennedy.net) and I'll add you to my quarterly e-newsletter list. And don't forget to forward this link to your friends and colleagues thinking about moving to town, or ready to move on to the next stage of their lives. I always have time for your referrals!
I look forward to your comments, suggestions, and new information you think Piedmonters, and those thinking about moving to town, should know.
My job is to inform, listen, analyze, market, and above all close your transaction promptly and at a price with which you are comfortable. I grew up in the Washington, DC area and graduated from Mount Holyoke College and the Kennedy School of Government at Harvard University. After working on housing and tax issues in Virginia, Alaska, and in the halls of Congress, I managed the nation's single-family and multi-family rural housing loan programs and advised HUD Secretary Henry Cisneros on housing and urban policy as Deputy Assistant Secretary for Policy. I’m a licensed broker, serve on the Advisory Board of the Institute for Luxury Home Marketing (based in Dallas), and have earned designations from e-Pro, EcoBroker, the National Trust's architectural program, and the NAR’s At Home with Diversity program. I'm a member of the Council of Residential Specialists, and of course the National, California and Oakland Associations of Realtors.
No other agent or broker practicing in Piedmont has such a strong professional background.