Spring 2022

Your Real Estate Expert for Berkeley and Beyond

  • Deep Market Knowledge
  • Analytical, Strategic, Creative
  • Honest, Adept, Direct

“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

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, Spring 2022 results

There has been a lot going on in the real estate market since my last newsletter, when I wrote that competition between buyers was looking especially intense.  The prospect of increasing interest rates always motivates buyers to find something before rates go up, so they bid extra hard for available properties.  As a result, we saw more incredible sale prices during the spring, and the market reached a new peak. **** NORTH BERKELEY There were 39 properties on the market in North Berkeley over the spring season (March through the end of May), and 27 properties sold.  Of these, all [...]

REAL ESTATE ANSWERS: How much difference do higher interest rates make for home sales in our area?

How much difference do higher interest rates make for home sales in our area? Over the spring, the Federal Reserve announced a plan for multiple interest rate hikes this year to try to get inflation under control, and we’ve seen three rate increases already this year. As I write this, interest rates on home loans are approaching 6%, up from about 3% at the start of the year.  Interest rates are at their highest level in 10 years, and there may be additional increases to come. Increasing rates make a lot of difference in the purchasing power of individual buyers.  [...]

By |June 28th, 2022|Buyers, General Interest, Interest rates, Resources, Sellers|

Bulky Waste and an E-Waste Resource

Did you know that, as a Berkeley homeowner, you can schedule one free bulky waste pick-up per calendar year?  Just call (510) 981-7270 to schedule for an upcoming Wednesday. They’ll pick up a maximum of 3 cubic yards, which they say is the equivalent of about 20 large trash bags. Everything they pick up goes to the landfill, so be sure to separate out recyclables, green waste, and consider Urban Ore for  items that can be re-used. Some things are not eligible for the bulky waste pick up. Included on the “not OK” list are things like hazardous waste items, [...]

By |June 28th, 2022|Berkeley, Data, General Interest, Resources|

THE OUTLOOK: North Berkeley & the Berkeley Hills, Spring 2022 results

There has been a lot going on in the real estate market since my last newsletter, when I wrote that competition between buyers was looking especially intense.  The prospect of increasing interest rates always motivates buyers to find something before rates go up, so they bid extra hard for available properties.  As a result, we saw more incredible sale prices during the spring, and the market reached a new peak.

****

NORTH BERKELEY

There were 39 properties on the market in North Berkeley over the spring season (March through the end of May), and 27 properties sold.  Of these, all but two sold for more than list price, on average by 35% above list. Nine of the 27 sales (so 1/3 of them) were at prices more than 50% above list. Only one property (a condo on Oxford Street) reduced its price before it sold.

The median sold price for Spring 2022 in North Berkeley was $1,761,348, which is up 14% from the winter, and 11% from Spring 2021. More of the sold properties during the spring were larger homes than we typically see, so that pushed up the median price, and that also pushed down the average for sold price per square foot. At $1040, sold price per square foot was a bit lower than over the winter, but it was still 8% higher than last spring.

****

BERKELEY HILLS

There were 95 properties on the market in the Berkeley hills in the spring, and 70 properties sold.  Of these, all but four sold for more than list price, on average by 40% above list. Just like in the North Berkeley area, about a third of the sales were more than 50% above list price (23 of the 70 sales)! There were no price reductions in the hills, but four properties increased their list price before they sold. This typically means that the property was originally listed below market value, but didn’t get the offers they were hoping for, so they raised the list price to a price the seller would actually accept.

The median sold price in the hills was $2,005,000 over the spring — this is the first time it’s been over $2M.  This median price is up 4% from the winter, and 20% from Spring 2021.  Sold price per square foot was also quite high, at $1077 per square foot.  This figure is up 20% from both last quarter and from spring 2021.

****

Interest rates on home loans are up dramatically, in response to higher inflation and current and expected future rate increases by the Fed.  Most recently, on June 16th, the Fed announced a big 0.75% increase in the Federal funds rate, and home loan rates shot up even more.  Rates on home loans are now at the highest level in the last 10 years (more on this in “Real Estate Answers”).

Because of the higher rates, we’ve seen a definite shift in the market as we head into summer.  Buyers are still out there, but they are more cautious and more picky.  We’re still seeing multiple offers, but not as many offers for each property. In this sort of environment, strategic pricing and well-conceived preparation are absolutely crucial, but when it’s done right, sale prices are as high as ever. My recent listing on Buena Vista Way (2580BuenaVista.com) got 4 offers, fewer than we would have seen earlier in the year, but it still sold for a price the seller was thrilled with!

REAL ESTATE ANSWERS: How much difference do higher interest rates make for home sales in our area?

How much difference do higher interest rates make for home sales in our area?

Over the spring, the Federal Reserve announced a plan for multiple interest rate hikes this year to try to get inflation under control, and we’ve seen three rate increases already this year. As I write this, interest rates on home loans are approaching 6%, up from about 3% at the start of the year.  Interest rates are at their highest level in 10 years, and there may be additional increases to come.

Increasing rates make a lot of difference in the purchasing power of individual buyers.  For sellers and property values in our market, where we have excess demand, the impact is not as extreme, but it does definitely affect the market.

Consider individual buyers who are qualified for at most a $1 million dollar home loan (to choose a round number) when interest rates are 3%.  This means that they are qualified, given their income and other debts, for a maximum monthly loan payment of $4216.  When rates go up to 6%, assuming the buyers can afford that same payment, they now only qualify for a loan of $703K (so they can spend $297K less on a home, compared to when rates were at 3%).  As a very rough rule of thumb, the maximum loan amount people can qualify for goes down about 10% each time the interest rate goes up by one percentage point.

Another way to think about this – a particular buyer might need something like $230K of household income to qualify for a $1M home loan when the interest rate is 3%.  (The actual income requirement will depend on things like credit rating, other debt, etc.)  When the interest rate rises to 6%, that same buyer would now need over $300K in income to qualify.

How do buyers respond to increasing interest rates? With less purchasing power, buyers need to adjust their expectations.  They could look for a smaller home, a less expensive location, or a home that needs more repairs or improvements.  Other buyers, who were not already planning to spend their max, might decide to go closer to their limit, and still buy the same thing.

In thinking about how higher interest rates affect our market as a whole, the crucial question is, will there be fewer buyers at particular price points after all this happens?  In our market, we have had an excess of buyers at various price points, and a good number of cash buyers as well. Some buyers will need to move down a price category, but there should be other buyers (moving down from higher price points) to take their place.  And yes, some buyers will be unwilling to compromise on their purchase and may choose not to buy now at all.

Overall, I would expect there to be somewhat fewer buyers in each price point. There was so much excess demand before, though, that there should still be enough buyers out there to keep the market stable.

By |June 28th, 2022|Categories: Buyers, General Interest, Interest rates, Resources, Sellers|Tags: , , , , |

Bulky Waste and an E-Waste Resource

Did you know that, as a Berkeley homeowner, you can schedule one free bulky waste pick-up per calendar year?  Just call (510) 981-7270 to schedule for an upcoming Wednesday. They’ll pick up a maximum of 3 cubic yards, which they say is the equivalent of about 20 large trash bags. Everything they pick up goes to the landfill, so be sure to separate out recyclables, green waste, and consider Urban Ore for  items that can be re-used.

Some things are not eligible for the bulky waste pick up. Included on the “not OK” list are things like hazardous waste items, mattresses and large appliances, tires, auto parts, and items (other than sofas) that are more than 5’ long or 50 pounds in weight. They also do not take electronic waste, but there is a non-profit that does.

The Ewaste Collective, located at 620 Page Street, is a non-profit committed to household electronics and computer recycling  (ewastecollective.org).  They accept monitors, TVs, computers, keyboards, cell phones, tablets, wires & cables, microwaves and toasters, printers, scanners, fax machines, game consoles and games, and more. This is a great resource, not only because you can be confident that your electronic waste is being handled properly. They also refurbish computers and give them away to those in need. Your drop-off may be tax deductible, and they will wipe the memory of your computer for a $10 fee.

 

 

By |June 28th, 2022|Categories: Berkeley, Data, General Interest, Resources|Tags: , , , , , |

Your Real Estate Expert for Berkeley and Beyond

  • Deep Market Knowledge
  • Analytical, Strategic, Creative
  • Honest, Adept, Direct

“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

Marilyn Garcia, PhD Broker Associate, Realtor® CA DRE LICENSE #01355514

The Grubb Company 1656 Shattuck Avenue Berkeley, CA 94709

Direct: (510) 390-5406

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