THE OUTLOOK: North Berkeley & the Berkeley Hills, Q3 2023 results

The main feature of the Berkeley real estate market in the third quarter of 2023 was the combination of rising interest rates and low inventory of homes for sale. Interest rates on home loans have climbed to the high 7% range, reaching almost 8% as I write this. This is more than double what rates were at the beginning of 2022, so it’s not surprising that we’ve seen a reduction in demand for properties compared to last year.

At the same time though, there has been a decline in the number of homes on the market. For Berkeley as a whole, the inventory of homes for sale in the third quarter of 2023 was the lowest we’ve seen since before 2000.

This reduction in inventory offsets the reduction in demand, so we’re still seeing multiple interested buyers for the few properties that are listed, and prices have been pretty solid. That said, when we look at the stats for the past quarter and compare them to the same period last year, we are comparing to prices that had just started falling off the crazy peak at the beginning of 2022.

• The median sold price in the hills was $1,810,000 for the third quarter this year, which is actually higher than for the same period last year. Average sold price per square foot ($850), was 3% lower though. There were 59 active listings in the hills, which is more than for the third quarter of 2022, but it’s way down from the 93 properties for sale in Q3 2021. 35 properties sold this past quarter, in an average of 21 days on the market. 83% of the sales were over list price, on average by 24% for those that went over. Of the 35 sales, 5 needed a price change before finding a buyer.

• In North Berkeley, both the median sold price and the average sold price were down from Q3 last year. The median sold price in North Berkeley was $1,537,500, which is down 5%, and average sold price per square foot was 6% lower at $997. Like in the hills, there were slightly more active listings (47) in North Berkeley compared to the third quarter of 2022, but the number was also down a lot from Q3 2021, when 60 properties were on the market. 30 properties sold in North Berkeley in the third quarter this year, in an average of 26 days on the market. 83% of the sales were over list price, on average by 32% for those that went over. 4 of the sold properties had price reductions before selling.

Who are the buyers who are still out there these days? They’re not move-up buyers — most people are not willing to give up a 3% mortgage to get more space. The types of buyers who are in the market now are first-time buyers (who are mostly shopping in a lower price range than they would have been last year), buyers who have all cash or high enough income that the higher rates don’t matter, investors looking for projects, or people who have to move for some reason, like a job change.