Greater Oakland-Berkeley, Inner East Bay Real Estate

March 3, 2020

January 2020 Report

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Generally speaking, after years of high appreciation rates, annual 2019 Bay Area median home prices went down a little bit, went up a little bit or basically remained unchanged as compared to 2018. The Inner East Bay house market went up the most, outperforming all other major Bay Area markets.

For 2020, economist Ken Rosen at UC Berkeley has said he expects the Bay Area median price to remain basically flat, within a general range of up or down 2% – in other words, similar to what happened last year. We can’t predict the future, but that doesn’t sound unreasonable, and happily avoids the sensationalism of many other media-grabbing forecasts. Of course, it is certainly possible that the greater Oakland-Berkeley area will continue to exceed the general-region appreciation rate.

Median sales prices are generalities and not exact measurements of changes in fair market value. They can be affected by a number of factors and are sometimes subject to anomalous fluctuations. How they apply to any particular home is unknown without a specific comparative market analysis.

The Inner East Bay tracked the general Alameda County trend line (below) until this past year or so, when it continued to see median home price increases while the county as a whole saw year-over-year declines.

Oakland is now seeing a boom in new housing construction, exceeding that in San Francisco. The increase in new apartments and condos being built may affect the supply and demand dynamic in those segments, ameliorating future price increases.

Economic Factors Affecting

Real Estate Markets

While many local counties are experiencing increasing out-migration of residents and businesses due to a number of issues (including housing costs), the Inner East Bay remains a big destination for people relocating from San Francisco (where the median house price is $1.6 million). The relative affordability of its housing is a major factor in this dynamic.

Greater Oakland-Berkeley, Inner East Bay Real Estate

December 2019 Market Snapshots

Bay Area Home Prices by County

By number of sales, Alameda County is the largest market in the Bay Area. The greater Oakland-Berkeley region constitutes the largest market within the county.

Bay Area vs. U.S. Appreciation Trends

This next chart estimates percentage home price appreciation trends for the San Francisco metro area (red line) and for the country as a whole (green line). In the latest market up-cycle, which began in 2012, the divergence in trend lines is very dramatic. The chart does not delineate prices, only percentage changes based upon a January 2000 value of 100. Thus 260 = 160% appreciation since January 2000.

Market Seasonality – New Listings

Coming on Market

The market is currently in the midst of its annual plunge in new listing activity, which hits bottom in December. (This chart is updated with data through October. November saw its typical big drop in listing activity.)

Estimated Home Price Trends since 1996

The next 3 charts are based upon the calculations of an algorithm which estimates – in a smoothed out, seasonally-adjusted trend line – changes in median home values. According to its calculations, prices in some of our more expensive markets have dropped from recent peaks – a common phenomenon around the Bay Area.

Market Dynamics by City or District

As often mentioned in previous reports, many of our cities and districts display statistics indicating them as some of the highest-demand markets in the country.

Regional Market Statistics

Greater Oakland-Berkeley Region, Inner East Bay Real Estate Markets

Inner East Bay Real Estate

The Greater Oakland-Berkeley Region

Home Prices by City & Neighborhood; Migration In & Out of Alameda & Contra Costa Counties; Price Reductions; Supply & Demand Statistics

September 2019 Report

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After the heat of the spring market, activity typically slows down markedly in July and August. In September, listings start pouring on the market again to fuel the relatively short autumn selling season. What occurs in the next 2-3 months will be the next major indicator of market conditions and direction.

Median Home Price Appreciation Trends

Except for Piedmont, whose median house sales price was basically flat at about $2,300,000, all the other cities included in our Inner East Bay market have seen median sales price increases in 2019 YTD over those in 2018, though the scale of the increase varies from tiny to substantial. Full-year 2019 median prices may well vary from those for the first 8 months of the year.

Home Prices by City and City Submarkets

The way the local MLS system breaks out submarkets within Oakland and Berkeley – using zip codes and “map areas” – is not ideal, as they don’t correspond that well to specific neighborhoods. But we’ve included the submarket maps, as well as identifying, as best we can, the submarkets with their predominant neighborhoods.

Migration: People Moving In & Out

of Alameda & Contra Costa Counties

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from our county. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents, as seen between Alameda and Contra Costa Counties.

Foreign in-migration is a huge issue in the Bay Area, but it will be another year before any impact of new U.S. immigration policy on foreign in-migration in 2018 shows up in census numbers.

Longer-Term Trends in Alameda County

Median House Price Values

As illustrated at the beginning of this report, the cities in the Inner East Bay region have generally seen 2019 YTD median home value increases over 2018, as compared to the small declines seen in Alameda and Contra Costa Counties in their entireties – graphed below.

Longer-Term Trends in Alameda and Contra Costa Median Dollar per Square Foot Values

Selected County Market Statistics

The inner East Bay market has been outperforming Alameda and Contra Costa Counties as illustrated in the second chart below, in which the the percentage of listings reducing price is broken out for the 2 counties and then just for Oakland.

The first chart below compares Alameda County supply, the number of active listings on the market, with its buyer demand, as measured by the number of sales. This is a seasonally adjusted graph that smooths out normal monthly fluctuations to provide clearer historical trend lines.

Again, for the most recent period, the Inner East Bay market, if broken out, would have a significantly smaller gap between listings and sales.

The percentage of listings reducing price in Contra Costa and Alameda Counties, and then just for Oakland (as an Inner East Bay indicator): For the full counties, the percentages jumped in the second half of 2018 and have remained somewhat elevated since. In Oakland, the increase was much less significant, illustrating its higher-demand market.

The next chart measuring unsold inventory in the 2 counties helps give greater context to market conditions and changes. The ups and downs since 2012 are relatively minor compared to the situation that prevailed during the 2008-2011 market recession, when monthly unsold inventory figures were highly elevated.

The Greater Oakland-Berkeley, Inner East Bay Market

Oakland, Berkeley, Piedmont, city of Alameda, Albany, Kensington,

El Cerrito & Richmond

Sales & Values by City, Market Seasonality, Luxury Home Sales, Market Dynamics by City & District, Foreign Homebuyers

August 2019 Report

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Inner East Bay Sales by Price Segment

Median House Sales Price Trends by City

Average Dollar per Square Foot Values

Remember that it’s not only the “quality” of a location that affects dollar per square foot value, it’s the size of the home: All things being equal (which they rarely are) smaller homes will sell for a higher dollar per square foot value than a larger one.

Piedmont’s average house size is usually over 3000 square feet, while in Central Berkeley, it is typically below 1500. However, size is only one of many factors at play in home values.

Market Seasonality

Market activity usually slows during the late summer months, then spikes back up for the relatively short autumn selling season. This typically begins with a surge of new listings coming on market in September, fueling fall sales. Come mid-November, activity commonly begins to plunge for the winter holidays, to hit its nadir in December. Of course, homes continue to sell in every season of the year.

Luxury Home Sales

Market Indicators by City & Neighborhood

Q2 is commonly the most active market of the year, and the statistics below reflect how strong the demand was this past spring.

It is interesting that some of our highest priced markets experienced some of the strongest buyer demand, as illustrated by these standard statistics – something also seen in San Francisco in Q2. This is a switch from recent years, when the heat of the market shifted to more affordable segments.

The overbidding percentages illustrated below were the highest in the Bay Area, and perhaps in the country.

Foreign National Home Buying Tumbles

According to a new report by the National Association of Realtors – based on a survey of its member agents – the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019.

California, and the Bay Area in particular, have been top destinations for international homebuyers.

Financial Markets Hit New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in real estate markets. A parallel dynamic has occurred with the swings in interest rates.

Oakland, Berkeley, Piedmont & City of Alameda Real Estate

Quantifying the Spring 2019 Market

Stock markets hit new highs, interest rates hit multi-year lows, unicorn IPOs rolled out in San Francisco, and the greater Oakland-Berkeley real estate market had another very strong spring selling season

July 2019 Q2 Report

Median Sales Price Trends

Median home sales prices typically fluctuate by season – partly due to the heat of buyer demand and partly due to the seasonal nature of luxury home sales – and it is not unusual for them to peak for the calendar year in Q2.

Year-over-year appreciation rates have clearly declined, but generally remain positive in our market area. Many Bay Area markets have seen small y-o-y median price declines. San Francisco, being at the heart of the spring surge in IPOs, saw the highest year-over-year increase – about 5%.

In the charts below, we separated Piedmont from the other 3 cities, because its home prices are so much higher.

Home Sales by Property Type & Bedroom Count

Higher-Price Home Sales, $1.5 Million+

Q2 dominates sales of more expensive homes. This year’s sales volume is similar to the peak hit in spring 2018.

Selected Measurements of Buyer Demand

As illustrated below, the statistics of demand in Q2 2019 compare favorably with the hottest markets of recent years. Spring is typically the most active selling season of the year, and, generally speaking, the market gradually cools down thereafter until hitting its low point at the end of the year during the mid-winter holiday season.

Overpricing: Negative Effects for Sellers

& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing – as indicated by the need for price reductions before the property sold – on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale – and the hotter the market, the larger the percentage decline in dollar per square foot that accompanied price reductions.

This is almost certainly due to missing out completely on the sales-price-enhancing effects of overbidding.

So, overpricing lowers values for sellers, which also signifies opportunities for buyers who keep an eye out for price reductions and react accordingly.

The statistics illustrated below for homes that sold without prior price reduction reflect buyers jumping very quickly and bidding fiercely on new listings they deem appealing and fairly priced.

2-4 Unit Multi-Family Property Values –

Alameda County

This is an active market segment in our area. Appreciation trends are similar to those seen in single family homes, partly due to the large increase in rents over the period measured.

We not only mapped Bay Area median house sales prices, but ranked them, lowest to highest. What stands out clearly is that, though our home prices are indeed higher than ever, how much more affordable they are when compared to communities of comparable quality in San Francisco and Silicon Valley. If interested, click on the button link below. The ranking list can be found below the map.

Bay Area Home Prices

Mortgage Interest Rate Trends

Interest rates fell dramatically from the end of 2018 to multi-year lows in Q2 2019, playing a huge role in the cost of housing for home buyers, and energizing demand.

Oakland, Berkeley, Piedmont

& City of Alameda Real Estate

The Strongest Market in the Bay Area: Median Home Sales Prices & Luxury Home Sales Hit New Peaks

June 2019 Market Report

Alameda County: Long-Term Median Price Trends

The greater Oakland-Berkeley area is now actually out-performing Alameda County as a whole, but this is an excellent illustration of overall home-price trends since 1990.

Oakland, Berkeley, Piedmont, City of Alameda:

Short-Term Median Home Price Trends

The combined median house sales price for the 4 cities in May 2019 ticked above the previous peak in June 2018. In the last 2 years, June has seen the annual high in median price, so perhaps we shall see another increase in June 2019. (June closed sales mostly reflect accepted offers in May.)

Year-over-Year Comparisons, March-May

Many Bay Area markets have been distinctly cooler as compared to the very hot spring 2018 market, and some have seen declines in median home sales prices. San Francisco and San Mateo have remained strong year over year – we may be seeing the IPO effect here – but by virtually every standard measurement, the greater Oakland-Berkeley region is the highest-demand market in the Bay Area.

Annual Median Home Price Changes by City

Comparing annual median home prices to partial year prices is not really an apples-to-apples comparison because of the effect of market seasonality on sales prices, but the below analysis is still an interesting indicator of home-price trends. However, full-year 2019 median home prices may be significantly different than the year-to-date figures.

Luxury Home Sales, $2,000,000+

May 2019 saw the highest monthly number of homes selling for $2 million and above ever. San Francisco and San Mateo Counties also hit new highs in luxury home sales.

Median House Sales Prices by Market Area

& Bedroom Count

Click on the button-link below to go to our updated map of Bay Area median house prices.

Bay Area Home Price Map

Selected Market Indicators

Homes selling very quickly, with high overbidding percentages above list price – both due to buyers competing aggressively for new listings.

Selected Economic & Demographic Snapshots

This chart illustrating unemployment rates is updated through January. Since then, rates around the Bay Area half dropped about another half percent – to some of the lowest rates in history.

The Bay Area counties with the highest percentages of millennials are those most affected by the high-tech boom. Alameda County has the second highest percentage of residents aged 25 to 34 (16.3% behind SF’s 23%), and the second lowest median age (37.3 years to Santa Clara’s 37 years). Marin County has by far the highest median age at 46.1 years.

Oakland, Berkeley, Piedmont & City of Alameda Real Estate

May 2019 Report

With April’s end, we now have 2 months of spring season data unaffected by market activity at the end of 2018, when financial markets plunged. By early May 2019, stock markets had recovered to hit new highs (though there has been some subsequent volatility), interest rates are far lower than last year’s peak, and local unicorn IPOs have begun to roll out after a media frenzy of speculation regarding their potential effects on real estate markets.

The greater Oakland-Berkeley area market remains the strongest in the Bay Area. Many local counties have seen significant softening in their supply and demand dynamics, sometimes accompanied by year-over-year declines in median home sales prices. So far, this has not happened here: Its relative affordability compared to SF, San Mateo and Santa Clara Counties is certainly a major factor.

Monthly Median House Sales Prices – 2 Years

This first chart looks at the combined median house sales price for the 4-city region. No single month’s median price should be regarded as a definitive indicator of market conditions, and 2 more months of spring sales data are yet to come before summer, when the market usually slows.

In 2018, median house sales prices continued to increase to hit an all-time peak in June. Comparing year-over-year Q2 – April through June – statistics will be a major indicator of market trends.

This table compares the March-April market statistics of 2018 and 2019. Individual city median house sales prices have ticked up, and sales have increased, both in the overall market and in higher price segments. The huge jump in Alameda County price reductions delineated below is likely concentrated in cities closer to Santa Clara County (which has seen considerable cooling in its market since last summer).

Home Sales by Price Segment & Bedroom Count

An illustration of the last 12 months of house and condo sales broken out by price range and number of bedrooms. These sales are spread among a large number of very different markets within the 4-city area covered by this report.

House Sales Volumes, Median Prices & Sizes

The next chart breaks out the number of house sales over the past 12 months by city or sub-market, with median house sales prices and median square footage. (Median means half the sales were for more, or larger size, and half for less, or smaller size.) Note that the Oakland and Berkeley neighborhoods listed represent larger MLS areas or zip codes.

Condo Sales Volumes, Median Prices & Sizes

Higher-Price Home Sales, $1.5 Million+

Q1 2019 Highest-Priced Homes Market

The highest priced home segments of most Bay Area markets – which start at varying price thresholds – are significantly weaker than that market segment here.

Q2 is typically the most active quarter of the year for luxury home sales.

Home Size & Era of Construction

Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, buyer age, land costs, population growth, natural disasters, bridge construction, etc. Generally speaking, the median sizes of houses built in the Victorian and Edwardian eras were somewhat larger than those constructed in the 1920’s and 1930’s. From 1940 on – after the completion of the Bay Bridge in 1936 – they began increasing again until reaching the current median size of just over 2200 square feet.

The figures below are based on recent home sales, and over the intervening decades since original construction, adding a second bathroom and/or a third bedroom behind the garage to older homes were popular renovations.

Over the past few decades, condos have become a major alternative for people purchasing homes of smaller size.

Selected Demographic & Economic Factors

Population Growth

Increases in population obviously play a large role in housing markets, as they pressurize demand. Alameda County is not the most populous county in the Bay Area – that is Santa Clara County – but, since 2010, it has seen the highest growth rates by number and percentage increase (10.4%) in residents. For the latest 12-month period measured by the census, through July 1, 2018, its increase in residents has far outstripped other Bay Area counties, i.e. Alameda continues to be a big destination for those relocating to or within the region.

Commuting

Venture Capital Investment

In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country – and probably the world. These tens of billions of dollars have constituted a massive factor in the local economy, supercharging the creation of new companies, hiring, and, eventually, IPOs. Ultimately, venture capital is seed money that in the last decade has exploded into the creation of stupendous amounts of new wealth.

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

Oakland, Berkeley, Piedmont & City of Alameda Real Estate

Home Prices, Sales & Statistics; Stock Markets; Interest Rates and Unicorns

April 2019, Q1 Report

A substantial portion of Q1 statistics reflect new listings and accepted offers occurring during the mid-winter market doldrums (Thanksgiving to mid-January). In November and December 2018, the stock market plunged drastically from its all-time high in September, and interest rates hit their highest point in years: these factors negatively affected buyer demand. Then both turned in dramatically positive directions in early 2019. So, Q1 statistics reflect economic conditions in both Q4 2018 (very negative) and Q1 2019 (very positive). It is also the quarter with the lowest sales volume.

Of all the Bay Area housing markets, the greater Oakland-Berkeley market has cooled the least over the past 3 quarters.

The spring selling season – whose data starts to show up in March, but is mostly reflected in Q2 – is the most active of the year, and often sees the highest rates of appreciation. As always, there are many economic factors at play impacting Bay Area markets, some of which are discussed below.

Year-over-Year & Longer-Term Trends

Median Sales Prices

This long-term median house sales price trend chart reflects the entire county of Alameda.

In the two charts below, we focus on the cities of Oakland, Berkeley and Alameda. Piedmont has a much higher median house sales price ($1 million higher than Berkeley) and a much lower quarterly volume of sales (sometimes 15 or fewer sales): the first means its dynamics are somewhat different than the other cities, and the second means its quarterly statistics are less reliable. However, we do have median price statistics specific to Piedmont if you are interested.

Year-over-year quarterly appreciation rates remain extremely strong. In many other Bay Area counties,y-o-y appreciation has dropped to zero, or even turned negative – i.e. their Q1 2019 median prices were below Q1 2018 prices.

Selected Market Indicators

Overall, our market area has seen much less significant changes in standard statistics of supply and demand than other Bay Area regions. Which does not mean our market is immune to larger economic trends at play around the Bay. Q2 will give us critical data regarding the market’s direction.

The charts below are not only indicators of historical trends, but illustrations of the considerable role seasonality plays in the market.

Our overbidding percentages are the highest in the Bay Area – in many other counties, sales prices are now averaging below asking prices. Sales price to list price percentages typically peak during the spring selling season when buyer demand is usually strongest.

Against state and national norms, average days on market here in recent years have ranged from relatively low – during the mid-winter slowdown period – to extremely low during the spring selling season.

Homes Selling for $1,500,000+

Selected Economic Factors

A major factor underlying Bay Area housing markets has been the staggering increase in employed residents since 2010. Outward-bound migration trends of residents and businesses – often citing housing costs as one major motivator – have been an increasing concern in recent years, but for the time being, employment numbers have continued to grow.

Financial Markets

A wild ride in stock prices, particularly in high-tech: Prices soared to new peaks in summer-early autumn 2018, plunged drastically in Q4 2018, and then saw the biggest Q1 jump in 20 years. Huge amounts of wealth appearing, disappearing and reappearing – another major influence on consumer confidence and home-buyer demand.

A new surge of large, high-tech unicorn IPOs – mostly of firms headquartered in SF – has just started to roll out. IPOs have historically created vast quantities of new wealth in the Bay Area, though the magnitude of effect of this new wave on specific local housing markets is yet unknown. However, if there is a large impact in SF, there will probably also be a substantial effect in our markets.

New Construction

Alameda County took the lead in 2018 for Bay Area homes authorized for construction – most of which are in multi-family projects (apartments and condos). Oakland, in particular, is in the midst of a construction boom. As larger quantities of new housing units are built – there can be a substantial lag between authorization and completion – it affects the supply and demand dynamic in the market.

Interest Rates

There has been a stunning decline in mortgage interest rates from mid-November 2018 through the end of March, from 4.94% to 4.06% – to the enormous advantage to buyers. Big drops such as this have helped to recharge buyer demand in the past.

Housing Affordability & Household Incomes

This chart calculates the income required to buy a median-price house in Q4 2018. Median condo prices are substantially less in every county and would require lower incomes. One of the critical factors in our real estate market is its relative affordability compared to nearby SF, San Mateo and Santa Clara Counties.

County median household incomes are broken out below for homeowners and tenants. Comparing the chart below to the one above illustrates the disparity between prevailing incomes and the incomes required to purchase in the Bay Area.

Health & Economic Indicators

According to CountyHealthRankings.org, Bay Area counties are at the top of the list within CA for Overall Health Outcomes: Marin, San Mateo and Santa Clara rank 1, 2 & 3, while Alameda County ranks 12th. (Within larger regions, it is not unusual for more urban areas to have lower rankings than more suburban ones.)

Greater Oakland-Berkeley, Inner East Bay Real Estate

Greater Oakland-Berkeley, Inner East Bay Real Estate

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