Why No One Doubts It is a Seller’s Market Right Now in the East Bay
So many people throw around the expression “seller’s market,” it might be helpful to come to some kind of understanding about what those words actually mean. A seller’s market means there is more demand for homes than there is supply. But let’s dig a little deeper.
During a seller’s market, buyers have little room to negotiate prices because demand is high. Seller’s markets usually occur when the economy is good and there is low housing inventory available in the area. When this occurs, prices rise, more buyers offer non-contingent contracts, and buyers are less likely to ask sellers to make subsidies, such as paying points or closing costs.
Serious Seller’s Market Facts & Information
But things are not just arbitrary or else everyone everywhere would simply declare that every town, city and region of the country is a seller’s market and there would be no way to disprove this.
Fortunately, there is something called an absorption rate that helps us quantify matters. The term absorption rate refers to a metric used in the real estate market to evaluate the rate at which available homes are sold in a specific market during a given time period.
It is calculated by dividing the number of homes sold in the allotted time period by the total number of available homes. Therefore, if the time period happened to be the month of June, for example, simply divide the number of homes that sold in the month by the number of homes for sale at the end of the month. An absorption rate of 20 percent or higher is generally considered a seller’s market.
Seller’s market specifics of the East Bay
Now that we are clear on what is meant by the term “seller’s market,” let’s see what the experts are saying about conditions in the East Bay.
Abio reports with some hysteria that “The state of the East Bay real estate market is off the chain, in spite of – and because of – the pandemic.”. The tracking Abio does in Alameda and Contra Costa counties shows that homes are getting purchased in record time. “Many single-family homes,” they report, “sold faster and at higher prices in July 2020 versus July 2019 with the greatest jumps in Pleasant Hill, Moraga, Concord, Lafayette, and Oakland.”. In the month of July 2021, homes in Albany were selling in an average of 15 days. The same is true in Concord and Alameda. In Walnut Creek, the average is 16 days and Berkeley took an average of only 17 days.
Anomaly or Not?
Back in March 2021, SFGate reported a house in Berkeley selling for more than $1,000,000 over its asking price. The million was more than double the listing price and the home received twenty-nine offers.
But was this merely an anomaly? Certainly not. When the offers are that high, the accepted bid is often cash. A five-bedroom home in the Elmwood neighborhood of Berkeley closed in April 2021 for $3.15 million, all cash, with a listing price of $1.995 million. According to MLS data, since March there have been at least 20 properties that have sold for more than $800,000 over the listing price in the East Bay and six of those went for $1 million or more over the asking price.
Manage Casa tells its readers that new listings may be lagging, but compared to last year, a lot of sales are happening and sellers are getting more for their property.
Mosaik ties this economic favoring of the seller to the East Bay Area economy as a whole. During March 2021 in the Greater Bay Area, the median single-family home price rose to another all-time high. Year-over-year, Greater Bay Area prices increased considerably, up 21%.
They go on to report with some specificity: “Prices in every region and county were up in March. The North Bay, East Bay, and Silicon Valley reached all-time highs in March. San Francisco is still slightly off peak prices for single-family homes. The sustained price appreciation emphasizes the demand in the area.”
Final thoughts on the East Bay’s Seller’s Market
It is difficult then, if not impossible, to find any experts who refute the notion that the East Bay Area is experiencing a profound seller’s market–right now.
But “right now” can be gone in a flash. The Bay Area could still be a real estate seller’s market in 2022. Housing supply has risen a bit, and sales actually dipped slightly last month. But there is still a lopsided supply and demand situation that tends to favor sellers over buyers. Ultimately, the inventory shortage is expected to keep things as they are and the only change is an anticipated uptick in selling price.
But even if all the experts are wrong, even if we wake up tomorrow to find that new homes have been constructed overnight and now instead of a dearth of properties we are facing a sea of uninhabited houses all across the Bay–even if the impossible became true–and especially because it won’t–sellers more than ever need a professional Bay Area Realtor® to help guide them through the often complicated processes of selling a home, to handle negotiations, and in the final analysis to make good and certain that you, the client, gets as much for your home as possible, and with as little expense and aggravation along the way. This is what Professional Bay Area Realtors® do every day.