The Greater Oakland-Berkeley Region November 2019 Report

Long-Term Median House Sales Price Trends –
Alameda County. Using a six-month-rolling average of Alameda County monthly median sales prices smooths out monthly fluctuations to illustrate broad, long-term appreciation trends with more clarity.

The greater Oakland-Berkeley Inner East Bay region has been out-performing Alameda County in the last year or so – with prices ticking higher – as illustrated in the second chart below.

This chart uses 4 cities as an example, but the trends apply to all 8 cities – in the region where northern Alameda County meets N.W. Contra Costa County – in our Inner East Bay market.

Sales & Median Values by City and Selected Oakland/Berkeley Neighborhoods

When looking at the median prices and median $/sq.ft. values below, remember that median house size can vary enormously between the different areas listed – and that, though other factors play big roles, all things being equal, a much smaller house will sell for a higher $/sq.ft. value. How these values apply to any particular home is unknown without a specific comparative market analysis.

Seasonal Trends in Market Activity

A dramatic illustration of the role of seasonality in the real estate market. Starting in November activity begins to plunge towards the mid-winter nadir. Remember that November sales mostly reflect October accepted-offer activity. Activity usually hits bottom in December, which then typically makes January the month with the lowest number of closed sales.

Sales vs. Listings for Sale by Price Segment

In virtually every other market in the Bay Area, there are significant imbalances in supply and demand in certain price segments, typically the highest-price ranges. But the greater Inner East Bay market remains remarkably balanced in comparison, and here the lowest price segment (under $500,000) has the somewhat weaker dynamics vis a vis the percentage of sales vs. the percentage of listings for sale. The higher price segments remain very strong.

Homes Selling for $1.5 Million+ by Month

Homes in the higher price ranges are a much better value in this region than in San Francisco across the bay, keeping demand strong.

Market Dynamics by Price Segment

All our price segments have strong dynamics relative to other Bay Area markets (or historical markets), but the demand for homes between $1 million and $2m is amazingly strong – on average, these homes are selling very, very quickly at tremendous percentages above list price.

Percentage of Sales Selling
without Prior Price Reduction

The 2 following charts illustrate comparative year-over-year market dynamics as well as market seasonality within the calendar year.

Ratio of Withdrawn (No-Sale) Listings
to Listings Sold

The ratio of listings withdrawn from the market, to sold listings – one indicator of pricing and buyer demand – ticked up in November 2018 – January 2019, but did not see the huge year-over-year jumps some other Bay Area markets experienced. Based on prevailing dynamics, we do not currently expect a large change in the inner East Bay market in the next few months.

People Moving in & out of CA in 2018

According to new census estimates, approx. 501,000 people from other states moved to CA in 2018, while 691,000 Californians relocated to other states – a net loss of 190,000. In addition, an estimated 284,000 foreign nationals moved into CA from outside the country. (Foreign out-migration numbers are not available.)

The top states for out-migration are Texas, Arizona, Washington, Nevada & Oregon, states with high-tech centers of their own and/or no state income taxes, and/or significantly lower housing costs – thus attracting working residents, local businesses, and retirees. Updated Bay Area figures are not yet available, though migration trends here have generally paralleled state trends in recent years.

The situation in our Inner East Bay region is somewhat different, affected by the migration of residents from much more expensive San Francisco (and, to a lesser degree, from San Mateo County).

The Greater Oakland-Berkeley Region September 2019 Report

Home Prices by City & Neighborhood; Migration In & Out of Alameda & Contra Costa Counties; Price Reductions; Supply & Demand Statistics.

After the heat of the spring market, activity typically slows down markedly in July and August. In September, listings start pouring on the market again to fuel the relatively short autumn selling season. What occurs in the next 2-3 months will be the next major indicator of market conditions and direction.

Median Home Price Appreciation Trends

Except for Piedmont, whose median house sales price was basically flat at about $2,300,000, all the other cities included in our Inner East Bay market have seen median sales price increases in 2019 YTD over those in 2018, though the scale of the increase varies from tiny to substantial. Full-year 2019 median prices may well vary from those for the first 8 months of the year.

Home Prices by City and City Submarkets

The way the local MLS system breaks out submarkets within Oakland and Berkeley – using zip codes and “map areas” – is not ideal, as they don’t correspond that well to specific neighborhoods. But we’ve included the submarket maps, as well as identifying, as best we can, the submarkets with their predominant neighborhoods.

Migration: People Moving In & Out
of Alameda & Contra Costa Counties

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from our county. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents, as seen between Alameda and Contra Costa Counties.

Foreign in-migration is a huge issue in the Bay Area, but it will be another year before any impact of new U.S. immigration policy on foreign in-migration in 2018 shows up in census numbers.

Longer-Term Trends in Alameda County
Median House Price Values

As illustrated at the beginning of this report, the cities in the Inner East Bay region have generally seen 2019 YTD median home value increases over 2018, as compared to the small declines seen in Alameda and Contra Costa Counties in their entireties – graphed below.

Longer-Term Trends in Alameda and Contra Costa Median Dollar per Square Foot Values

Selected County Market Statistics

The inner East Bay market has been outperforming Alameda and Contra Costa Counties as illustrated in the second chart below, in which the the percentage of listings reducing price is broken out for the 2 counties and then just for Oakland.

The first chart below compares Alameda County supply, the number of active listings on the market, with its buyer demand, as measured by the number of sales. This is a seasonally adjusted graph that smooths out normal monthly fluctuations to provide clearer historical trend lines. Again, for the most recent period, the Inner East Bay market, if broken out, would have a significantly smaller gap between listings and sales.

The percentage of listings reducing price in Contra Costa and Alameda Counties, and then just for Oakland (as an Inner East Bay indicator): For the full counties, the percentages jumped in the second half of 2018 and have remained somewhat elevated since. In Oakland, the increase was much less significant, illustrating its higher-demand market.

The next chart measuring unsold inventory in the 2 counties helps give greater context to market conditions and changes. The ups and downs since 2012 are relatively minor compared to the situation that prevailed during the 2008-2011 market recession, when monthly unsold inventory figures were highly elevated.

The Greater Oakland-Berkeley, Inner East Bay Market August 2019 Report

Oakland, Berkeley, Piedmont, city of Alameda, Albany, Kensington, El Cerrito & Richmond. Sales & Values by City, Market Seasonality, Luxury Home Sales, Market Dynamics by City & District, Foreign Homebuyers.

Inner East Bay Sales by Price Segment

Median House Sales Price Trends by City

Average Dollar per Square Foot Values

Remember that it’s not only the “quality” of a location that affects dollar per square foot value, it’s the size of the home: All things being equal (which they rarely are) smaller homes will sell for a higher dollar per square foot value than a larger one.

Piedmont’s average house size is usually over 3000 square feet, while in Central Berkeley, it is typically below 1500. However, size in only one of many factors at play in home values.

Market Seasonality

Market activity usually slows during the late summer months, then spikes back up for the relatively short autumn selling season. This typically begins with a surge of new listings coming on market in September, fueling fall sales. Come mid-November, activity commonly begins to plunge for the winter holidays, to hit its nadir in December. Of course, homes continue to sell in every season of the year.

Luxury Home Sales

Market Indicators by City & Neighborhood

Q2 is commonly the most active market of the year, and the statistics below reflect how strong the demand was this past spring.

It is interesting that some of our highest priced markets experienced some of the strongest buyer demand, as illustrated by these standard statistics – something also seen in San Francisco in Q2. This is a switch from recent years, when the heat of the market shifted to more affordable segments.

The overbidding percentages illustrated below were the highest in the Bay Area, and perhaps in the country.

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors – based on a survey of its member agents – the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019. California, and the Bay Area in particular, have been top destinations for international homebuyers.

Financial Markets Hit New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in real estate markets. A parallel dynamic has occurred with the swings in interest rates.

Oakland, Berkeley, Piedmont Q2 Report – Compass

Quantifying the Spring 2019 Market. Stock markets hit new highs, interest rates hit multi-year lows, unicorn IPOs rolled out in San Francisco, and the greater Oakland-Berkeley real estate market had another very strong spring selling season

July 2019 Q2 Report
Median Sales Price Trends

Median home sales prices typically fluctuate by season – partly due to the heat of buyer demand and partly due to the seasonal nature of luxury home sales – and it is not unusual for them to peak for the calendar year in Q2.

Year-over-year appreciation rates have clearly declined, but generally remain positive in our market area. Many Bay Area markets have seen small y-o-y median price declines. San Francisco, being at the heart of the spring surge in IPOs, saw the highest year-over-year increase – about 5%.

In the charts below, we separated Piedmont from the other 3 cities, because its home prices are so much higher.

Home Sales by Property Type & Bedroom Count

Higher-Price Home Sales, $1.5 Million+

Q2 dominates sales of more expensive homes. This year’s sales volume is similar to the peak hit in spring 2018.

Selected Measurements of Buyer Demand

As illustrated below, the statistics of demand in Q2 2019 compare favorably with the hottest markets of recent years. Spring is typically the most active selling season of the year, and, generally speaking, the market gradually cools down thereafter until hitting its low point at the end of the year during the mid-winter holiday season.

Overpricing: Negative Effects for Sellers
& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing – as indicated by the need for price reductions before the property sold – on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale – and the hotter the market, the larger the percentage decline in dollar per square foot that accompanied price reductions. This is almost certainly due to missing out completely on the sales-price-enhancing effects of overbidding.

So, overpricing lowers values for sellers, which also signifies opportunities for buyers who keep an eye out for price reductions and react accordingly.

The statistics illustrated below for homes that sold without prior price reduction reflect buyers jumping very quickly and bidding fiercely on new listings they deem appealing and fairly priced.

2-4 Unit Multi-Family Property Values –
Alameda County

This is an active market segment in our area. Appreciation trends are similar to those seen in single family homes, partly due to the large increase in rents over the period measured.

Mortgage Interest Rate Trends

Interest rates fell dramatically from the end of 2018 to multi-year lows in Q2 2019, playing a huge role in the cost of housing for home buyers, and energizing demand.

Oakland, Berkeley, Piedmont & City of Alameda Real Estate June 2019 Market Report

Alameda County: Long-Term Median Price Trends. The greater Oakland-Berkeley area is now actually out-performing Alameda County as a whole, but this is an excellent illustration of overall home-price trends since 1990.

Oakland, Berkeley, Piedmont, City of Alameda:
Short-Term Median Home Price Trends

The combined median house sales price for the 4 cities in May 2019 ticked above the previous peak in June 2018. In the last 2 years, June has seen the annual high in median price, so perhaps we shall see another increase in June 2019. (June closed sales mostly reflect accepted offers in May.)

Year-over-Year Comparisons, March-May

Many Bay Area markets have been distinctly cooler as compared to the very hot spring 2018 market, and some have seen declines in median home sales prices. San Francisco and San Mateo have remained strong year over year – we may be seeing the IPO effect here – but by virtually every standard measurement, the greater Oakland-Berkeley region is the highest-demand market in the Bay Area.

Annual Median Home Price Changes by City

Comparing annual median home prices to partial year prices is not really an apples-to-apples comparison because of the effect of market seasonality on sales prices, but the below analysis is still an interesting indicator of home-price trends. However, full-year 2019 median home prices may be significantly different than the year-to-date figures.

Luxury Home Sales, $2,000,000+

May 2019 saw the highest monthly number of homes selling for $2 million and above ever. San Francisco and San Mateo Counties also hit new highs in luxury home sales.

Median House Sales Prices by Market Area
& Bedroom Count

Click here to go to our updated map of Bay Area median house prices.

Selected Market Indicators

Homes selling very quickly, with high overbidding percentages above list price – both due to buyers competing aggressively for new listings.

Selected Economic & Demographic Snapshots

This chart illustrating unemployment rates is updated through January. Since then, rates around the Bay Area half dropped about another half percent – to some of the lowest rates in history.

The Bay Area counties with the highest percentages of millennials are those most affected by the high-tech boom. Alameda County has the second highest percentage of residents aged 25 to 34 (16.3% behind SF’s 23%), and the second lowest median age (37.3 years to Santa Clara’s 37 years). Marin County has by far the highest median age at 46.1 years.

Oakland, Berkeley, Piedmont & City of Alameda Real Estate May 2019 Report

With April’s end, we now have 2 months of spring season data unaffected by market activity at the end of 2018, when financial markets plunged. By early May 2019, stock markets had recovered to hit new highs (though there has been some subsequent volatility), interest rates are far lower than last years peak, and local unicorn IPOs have begun to roll out after a media frenzy of speculation regarding their potential effects on real estate markets.

The greater Oakland-Berkeley area market remains the strongest in the Bay Area. Many local counties have seen significant softening in their supply and demand dynamics, sometimes accompanied by year-over-year declines in median home sales prices. So far, this has not happened here: Its relative affordability compared to SF, San Mateo and Santa Clara Counties is certainly a major factor.

Monthly Median House Sales Prices – 2 Years

This first chart looks at the combined median house sales price for the 4-city region. No single month’s median price should be regarded as a definitive indicator of market conditions, and 2 more months of spring sales data are yet to come before summer, when the market usually slows.

In 2018, median house sales prices continued to increase to hit an all-time peak in June. Comparing year-over-year Q2 – April through June – statistics will be a major indicator of market trends.

This table compares the March-April market statistics of 2018 and 2019. Individual city median house sales prices have ticked up, and sales have increased, both in the overall market and in higher price segments. The huge jump in Alameda County price reductions delineated below is likely concentrated in cities closer to Santa Clara County (which has seen considerable cooling in its market since last summer).

Home Sales by Price Segment & Bedroom Count

An illustration of the last 12 months of house and condo sales broken out by price range and number of bedrooms. These sales are spread among a large number of very different markets within the 4-city area covered by this report.

House Sales Volumes, Median Prices & Sizes

The next chart breaks out the number of house sales over the past 12 months by city or sub-market, with median house sales prices and median square footage. (Median means half the sales were for more, or larger size, and half for less, or smaller size.) Note that the Oakland and Berkeley neighborhoods listed represent larger MLS areas or zip codes.

Condo Sales Volumes, Median Prices & Sizes

Higher-Price Home Sales, $1.5 Million+

Q1 2019 Highest-Priced Homes Market

The highest priced home segments of most Bay Area markets – which start at varying price thresholds – are significantly weaker than that market segment here.

Q2 is typically the most active quarter of the year for luxury home sales.

Home Size & Era of Construction

Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, buyer age, land costs, population growth, natural disasters, bridge construction, etc. Generally speaking, the median sizes of houses built in the Victorian and Edwardian eras were somewhat larger than those constructed in the 1920’s and 1930’s. From 1940 on – after the completion of the Bay Bridge in 1936 – they began increasing again until reaching the current median size of just over 2200 square feet.

The figures below are based on recent home sales, and over the intervening decades since original construction, adding a second bathroom and/or a third bedroom behind the garage to older homes were popular renovations.

Over the past few decades, condos have become a major alternative for people purchasing homes of smaller size.

Selected Demographic & Economic Factors
Population Growth

Increases in population obviously play a large role in housing markets, as they pressurize demand. Alameda County is not the most populous county in the Bay Area – that is Santa Clara County – but, since 2010, it has seen the highest growth rates by number and percentage increase (10.4%) in residents. For the latest 12-month period measured by the census, through July 1, 2018, its increase in residents has far outstripped other Bay Area counties, i.e. Alameda continues to be a big destination for those relocating to or within the region.

Commuting

Venture Capital Investment

In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country – and probably the world. These tens of billions of dollars have constituted a massive factor in the local economy, supercharging the creation of new companies, hiring, and, eventually, IPOs. Ultimately, venture capital is seed money that in the last decade has exploded into the creation of stupendous amounts of new wealth.