THE OUTLOOK: North Berkeley & the Berkeley Hills, Q4 and full-year 2023 results
2023 was an interesting year in Berkeley real estate, where the driving factor was interest rates. Rates climbed to almost 8% during 2023, from around 3% at the start of 2022, with two main effects.
On the demand side, higher interest rates reduced demand by increasing costs for any buyer needing to get a loan. To give you a sense of the impact, a loan of $1M at an interest rate of 3% costs $4216/month; at 8%, the monthly payment on that same loan is $3122 more (or $7338/month).
Demand for homes fell, but, as discussed in previous newsletters, supply was down too, as potential sellers chose to stay put so they could keep their low-interest-rate loans. The number of homes listed for sale in 2023, in both Berkeley as a whole, and in the Berkeley hills specifically, was lower than in any year since before 2000 (which is how far back my personal database extends).
With low inventory offsetting the decrease in demand, the market was slow all year, but there wasn’t big downward pressure on prices. Looking at the data though, 2023 is not going to look as good in comparison to 2022, which had crazy high price results during the upward spike in the first part of that year.
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North Berkeley, 2023 (full-year) and also Q4 results:
The median sold price in North Berkeley was $1,600,000 for 2023, and the average sold price per square foot was $989. Both figures are down from 2022 (by 3% and 5% respectively). Among the 75 properties that sold in North Berkeley in 2023, only 8 had price changes (all were price reductions rather than increases), and properties sold on average after 23 days on the market. 81% of the sales were above list price.
The market was especially quiet in the 4th quarter (Q4) of 2023. There were only 13 North Berkeley sales, and 9 of those went over list price. The median sold price was $1,420,000 (up 1% from Q4 in 2023), and average sold price per square foot in the 4th quarter was $937 (down 6% from Q4 last year).
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Berkeley Hills, 2023 (full-year) and also Q4 results:
In the Berkeley hills, the median sold price for 2023 was $1,725,000, with an average sold price per square foot of $867. Both are down from 2022 (by 8% and 9% respectively), but both are a bit higher than in 2021. 113 properties sold in the hills over 2023, and there were only 17 price changes (14 price reductions, and 3 price increases). Properties in the hills sold on average after 23 days on the market, and 80% of the sales were above list price.
Looking at just the 4th quarter (Q4) of 2023, there were only 28 sales in the hills. 21 of those sold for more than their list price. The median sold price for the hills in Q4 was $1,545,000 (up 4% from the 4th quarter of 2022), and average sold price per square foot was $824 (which up 1%).
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The good news going forward is that interest rates have come down, and might continue to head down over the coming year. Since late October when interest rates peaked at a bit below 8%, they’ve drifted downward into the mid-to-high 6% range. This is still double what rates were in early 2022, but hopefully we are heading in the right direction.
