Your Real Estate Expert for Berkeley and Beyond
“Marilyn is exceptional. Her knowledge base, enthusiasm for her job, professional ethics, organization, sensitivity to our aesthetic requirements, loyalty and gentle perseverance set her apart.”
-- Bill and Carol Seidel
Marilyn Garcia, PhD Broker Associate, Realtor® CA DRE LICENSE #01355514
The Grubb Company 1656 Shattuck Avenue Berkeley, CA 94709
Direct: (510) 390-5406
THE OUTLOOK: North Berkeley & the Berkeley Hills, Annual 2021 & Winter 2021-22 results
It’s time as usual to look at the previous year’s results for our local real estate market, and also talk about the results for the winter season just ended. 2021 started off with a bang. A big upswing in buyer interest led to major competition between buyers, which led to big price increases. The craziness moderated somewhat later in the year as interest rates started increasing and more homes came on the market for sale, but values stayed at the new higher levels. In 2021, there were more properties on the market in both North Berkeley (127 active listings) and [...]
Variations in Sold Price per Square Foot
If you are a regular reader of this newsletter, you have many times encountered the notion that, everything else being equal, the amount a property sells for per square foot of living space tends to be lower for large homes, and higher for small homes. To illustrate this point, I grouped the detached homes sold in North Berkeley and the Berkeley hills* over the course of 2021 by size category, and found the average sold price per square foot for each category. The results are above. As you can see, the pattern holds as a general rule: the larger the [...]
REAL ESTATE ANSWERS: Why are most sellers in our area no longer accepting “love letters” from buyers?
Why are most sellers in our area no longer accepting “love letters” from buyers? In our market, where buying a home is a super-competitive process, it used to be the case that buyers would include a “love letter” with their offer in hopes that it would influence the seller in their favor. The letter would tell the seller about the buyers, their qualifications, and why this property would be the perfect home for them. It also often included a photo of the buyers. The idea was that, because many (even most) sellers have some emotional attachment to the property they’re [...]
THE OUTLOOK: North Berkeley & the Berkeley Hills, Annual 2021 & Winter 2021-22 results
It’s time as usual to look at the previous year’s results for our local real estate market, and also talk about the results for the winter season just ended.
2021 started off with a bang. A big upswing in buyer interest led to major competition between buyers, which led to big price increases. The craziness moderated somewhat later in the year as interest rates started increasing and more homes came on the market for sale, but values stayed at the new higher levels.
In 2021, there were more properties on the market in both North Berkeley (127 active listings) and in the Berkeley hills (272 active listings) than we’ve seen for years, but it was still not enough inventory for all the interested buyers.
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NORTH BERKELEY
115 North Berkeley properties sold over the year, and 79% of the sales were for more than list price. List prices have not increased as much as values have, so all last year (and continuing now) we saw even more serious overbidding than is typical for this area. For the properties that sold over list price, the average was 30% over, but more than 50% above list was not uncommon. Some Berkeley properties sold as high as double the list price.
The median sold price for 2021 in North Berkeley was $1,650,000, which was an increase of 22% over 2020. Sold price per square foot, at $984 per square foot, was 11% higher than the previous year.
The winter season just ended (December 2021 through the end of February 2022) was very similar to the start of last year, with intense buyer interest. Inventory was back to its usual low level (there were only 18 active listings, and 17 sales for the 3 months), but buyers again seemed extra motivated and there were some epic bidding wars.
The median sold price for the winter season was $1,550,000. This figure is lower than for 2021 because more small properties sold, but it is 30% higher than last winter. The average sold price per square foot from December to February was a whopping $1091, which is up 10% from the fall, and up 29% compared to last winter.
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BERKELEY HILLS
234 properties sold in the hills during 2021. 52% of them sold above list price, by 25% over on average, but again, far far greater overbids (by $1 million or more) were also happening.
The median sold price in 2021 for the Berkeley hills was $1,700,000, which was an increase of 13% over 2020. Average sold price per square foot, at $861 per square foot, was 12% higher than the previous year.
For this past winter season (December 2021 through the end of February 2022), inventory was low (there were 44 active listings, and 38 sales for the 3 months), but buyer interest was intense. The median sold price for the winter season was $1,925,000, which is 24% higher than last winter. The average sold price per square foot was $899, which is up 11% from the fall, and up 12% compared to last winter.
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So far spring, 2022 is looking like more of the same. Inventory is picking up somewhat, but the prospect of higher interest rates to come (because of higher inflation) is keeping buyers motivated and the competition for available properties very high.
Variations in Sold Price per Square Foot
If you are a regular reader of this newsletter, you have many times encountered the notion that, everything else being equal, the amount a property sells for per square foot of living space tends to be lower for large homes, and higher for small homes. To illustrate this point, I grouped the detached homes sold in North Berkeley and the Berkeley hills* over the course of 2021 by size category, and found the average sold price per square foot for each category. The results are above.
As you can see, the pattern holds as a general rule: the larger the home, the lower the sold price per square foot, everything else being equal. For specific properties though, everything else isn’t equal, and characteristics such as a large lot, architectural pedigree, views, etc., still push up the value in general, and in price per square foot.
REAL ESTATE ANSWERS: Why are most sellers in our area no longer accepting “love letters” from buyers?
Why are most sellers in our area no longer accepting “love letters” from buyers?
In our market, where buying a home is a super-competitive process, it used to be the case that buyers would include a “love letter” with their offer in hopes that it would influence the seller in their favor. The letter would tell the seller about the buyers, their qualifications, and why this property would be the perfect home for them. It also often included a photo of the buyers.
The idea was that, because many (even most) sellers have some emotional attachment to the property they’re selling, providing more information about the buyers and how much they appreciate the property could highlight commonalities and make it easy for the sellers to picture a particular set of buyers as the new owners. Maybe the seller would think “Oh, these buyers are a cute young couple who want to raise their family here like we did!” Or, “Look, we both work for X Company!” Or “These people love to garden, so will maintain the yard I put so much effort into!” Buyers hoped that these commonalities might lead the seller to choose their offer over others (maybe even if their price wasn’t quite as high).
The problem with these letters is that they can reveal information about the buyers that the seller cannot legally consider in choosing between offers.
Sellers are prohibited by law from choosing a buyer based on any of these criteria: race, color, ancestry, national origin, religion, sex, sexual orientation, gender, gender identity, gender expression, marital status, familial status, source of income, disability, medical condition, citizenship, primary language, immigration status, military/veteran status, age, criminal history, and any arbitrary determination.
Notice that my “cute family” example above is on the list of prohibited criteria (familial status), and “We both work for the same company” is related to source of income.
Even the best-intentioned seller, who would never knowingly violate Fair Housing laws, could be subconsciously influenced, and even if this is not the case, it is still safer as a seller to not have information related to the prohibited criteria at all. In our super-competitive market, there are routinely multiple unsuccessful buyers, and there is always the risk that an unhappy buyer whose offer was not accepted could claim that a decision was influenced by something that is in a protected category.
The safest choice is to “just say no” to buyer letters. If you as the seller do not have information the about buyers’ characteristics, it’s hard for someone to say that you made a decision for the wrong reasons. I think skipping the buyer letters is not just the safest choice, but it’s also the right choice, because it levels the playing field for everyone.
Your Real Estate Expert for Berkeley and Beyond
“Marilyn is exceptional. Her knowledge base, enthusiasm for her job, professional ethics, organization, sensitivity to our aesthetic requirements, loyalty and gentle perseverance set her apart.”
-- Bill and Carol Seidel
Marilyn Garcia, PhD Broker Associate, Realtor® CA DRE LICENSE #01355514
The Grubb Company 1656 Shattuck Avenue Berkeley, CA 94709
Direct: (510) 390-5406