THE OUTLOOK: North Berkeley & the Berkeley Hills, Q2 2024 wrap-up

It has been a wild real estate market out there this spring. Buyers were very picky, and many were looking for properties that were close to shops, campus and transportation. Buyers in this category seem to have adjusted expectations and accepted that higher interest rates are the new normal, and they are back in the market. As a result, we saw some big bidding wars for desirable homes, and some high price results.

Since much of the area I’m calling “North Berkeley” is close to shops and transportation, it was a strong quarter there. At the same time, other good properties further up in the hills languished. The homeowners insurance crisis in California also impacted sales in all of Berkeley, but homes in the hills fire zone were affected the most. Pricing strategies also were a big differentiator.

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Berkeley Hills, second quarter 2024 results:

The numbers of active listings and sales in the Berkeley hills during the second quarter were pretty low, with 62 active listings and 31 sales.

The median sold price in the Berkeley hills for the second quarter of 2024 was $1,600,000, which is down 7% from the same period last year. This is a little misleading, because the average size of the homes sold was smaller than is typical (and smaller than last year), which pushes down the median price. A better measure in this case is the average sold price per square foot, which, at $899, is also down, but by just 1% compared to the second quarter last year.

Two of the sold properties needed price adjustments before selling (one reduced its price, the other increased it), but most properties sold fairly quickly, in an average of 23 days on the market. 84% of the sales were above list price, and those went on average 20% over list. Two properties in the hills got more than 10 offers each; both were fixers. Four properties got 4 or 5 offers; the remaining 25 sold properties had 1 to 3 offers.

The strategy of choosing a low list price was clearly the most successful one. The properties that got the most buyer attention and sold for the highest price per square foot were definitely listed low relative to their value. The two properties in the hills that sold for the highest price per square foot this spring sold for more than $1100 per square foot. Each of these sold for more than 30% above their (strategically low) list price. The properties that sat on the market longer and didn’t go as high in price were those that had list prices around (or in some cases, above) their value.

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North Berkeley, second quarter 2024 results:

Unlike in the hills, there were pretty normal numbers of active listings and sales in North Berkeley in the second quarter: 42 active listings and 28 sales.

The median sold price in North Berkeley in the spring was a $2,292,500, which is up 26% from the same period last year. In North Berkeley, it was the reverse of in the hills — more large homes sold than usual, which was part of the reason for the big increase in median price. Average sold price per square foot, at $1,071, was also up, but by a more realistic amount (3%). There were no price reductions or increases for the sold properties, and properties sold quickly, in 16 days on average.

96% of the sales—all but one—were above list price, and those sold, on average, 36% above list. There were more offers in North Berkeley properties compared to in the hills. The number of offers ranged from just 1 up to a high of 18 in North Berkeley. Other “walkable” areas of Berkeley also saw high demand.  Two properties in other parts of Berkeley got 20 or more offers.

Two properties in North Berkeley sold for more than $1500 per square foot. One of these sold for 75% above its list price, and the other sold 47% above list. The only property in North Berkeley that sat on the market for some time before selling during this quarter was listed very close to value.

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Bottom line: Insurance challenges have impacted the market everywhere, but especially in the hills. Well-prepared and well-priced properties are still selling well though. Strategic pricing, as always, is incredibly important. Buyers continue to compare properties based on list price, even though many or most things don’t sell for that price. To sell well, a property needs to be listed for a price that makes it desirable in comparison with other homes at the same (list) price range.