I’m going to shift focus somewhat for this issue of The Outlook. We’re living in a time right now when many of our usual concerns seem trivial. Compared to the importance of the growing calls for an end to systematic racism and violence against black people and reforms in the way we police our communities, and compared to coping with a global pandemic and its effect on our lives and livelihoods, real estate market statistics seem like a side note.
However, there are a variety of reasons why people still want to know what’s happening in the local real estate market. Some people need to make a move, and others, given all the economic uncertainty we’re living with today, would like to know the status of what may be their biggest investment. For those people, and for anyone who might be curious, I’m going to give a rundown on how the market is doing in these uncertain times.
I will get into the actual data for both North Berkeley and the Berkeley Hills shortly, but overall, the market is doing surprisingly well, with a lot of adjustments for current circumstances. Some buyers have dropped out of the market, but there are also fewer listings, so these things have balanced each other out and we haven’t seen significant changes in values. We always have a good number of buyers from San Francisco, and this is even more true now. With so many people working and spending more time at home, the desire for more space and a private yard is greater than ever.
Safety and Marketing in the time of COVID-19
The real estate community as a whole has been very focused on keeping everyone safe. The biggest change in how we do business is that there are, of course, no gatherings: no in-person open houses, no in-person brokers tours, no in-person office meetings. Our office meetings and brokers tours are now online Zoom meetings, which allow agents to network and share information while everyone stays safely at home. Listing agents are making more information available online, so that buyers can evaluate properties and decide what they’re seriously interested in without leaving home. There are far fewer people walking through homes that are for sale, which I think is a good thing from a public health perspective. From a marketing perspective, this has not hurt the process, because it’s the people who are not actually thinking of buying a property who are not seeing it in person.
Serious buyers can and are still touring homes, but there are specific protocols that are followed for everyone’s safety. All showings are by pre-arranged appointment with an agent, so that only one party is at the property at a time. Only two people from the same household can visit a property at one time, and all visitors sign a disclosure about safety, risk, and protocols up front. Masks are worn, 6-foot distancing is maintained, everyone uses hand sanitizer, and properties are cleaned before and after showings.
Spring market data, North Berkeley
During the spring season (March through the end of May), there were 30 active listings in North Berkeley, and 20 closed sales. Both of these numbers are lower than the previous spring, when there were 36 active listings and 25 sales, but not by as much as one might think given the circumstances. On average, properties sold in only 10 days on the MLS.
The median sale price in North Berkeley for the spring was $1,337,500, which is down 3.6% from Spring 2019. However, the average sold price per square foot was up 10% from last spring, at $914 per square foot. One property had a price reduction before it sold, one property increased its price, and 3 out of 4 properties sold above list price. For the properties that sold above list price, the average was 25% over asking.
Spring market data, the Berkeley Hills
For Spring 2020, there were 40 active listings in the Berkeley hills, and 28 closed sales. These numbers are significantly lower than usual; a year ago in the spring there were 73 active listings and 46 sales. Properties in the hills sold on average in 21 days on the MLS.
The median sale price in the hills for the spring was up 3.6% from Spring 2019 at$1,500,000. The average sold price per square foot was $729, which is up slightly (1%) from the winter season, but down 5.6% from last spring. Five of the sold properties had price reductions, but 7 out of 10 properties sold above list price. For the properties that sold above list price, the average was 13% over asking.
The summer season looks like it could be more active than usual in both the hills and in North Berkeley. Market activity usually slows a bit over the summer, as many buyers are out of town traveling, and for that reason, not as many listings come on the market. This year, however, people are not doing much traveling, so the buyers are around, and there are a good number of sellers who delayed coming on the market in the spring.
I want to end by acknowledging the continuing demonstrations against violence and bias against blacks in policing, and more broadly against systematic bias and racism in general. The housing industry has a horrible history of systematic racism. I would like to think that it has been vastly better since the implementation of fair housing legislation, in California with the 1959 Fair Housing and Employment Act and the 1963 Rumford Fair Housing Act (thank you, William Bryon Rumford, whose statue sits on the median of Sacramento Street at Ashby), and nationally with the Fair Housing Act of 1968. In the realm of California home sales (which is the part of the housing market I see directly), I think the fair housing laws have been pretty effective, both because of ongoing training throughout the real estate community, and because of ongoing vigilance and enforcement. There is however still work to be done, and the legacy of past discrimination lives on in many ways, including in the wealth gap between black and white Americans. [See for example https://www.epi.org/blog/housing-discrimination-underpins-the-staggering-wealth-gap-between-blacks-and-whites/ .] I hope that, in time, we can look back at the current protests and see that they led to not only widespread and honest self-examination, but also lasting and meaningful change at a societal level.