Home Truths, a quarterly report on the state of the Berkeley real estate market, is brought to you by Red Oak Realty.
While Berkeley real-estate prices have risen along with the rest of the Bay Area, they are still a relative “bargain” compared to other parts of the region.
For example, a 3-bedroom home in Berkeley averages $949,000 compared to $1,115,000 in San Francisco, $1,225,000 in Mill Valley, and $2,040,000 in Palo Alto.
While some East Bay shoppers are reeling from perceived sticker shock, others may feel like they are getting a bargain.
Looking at comparable neighborhoods, it’s worth noting that a 3-bedroom single family home in San Francisco’s Noe Valley costs $1,800,000, while a similar home in Berkeley’s Thousand Oaks neighborhood costs 42 percent less, or $1,042,000. (Housing stock and walkability are quite similar in both. However, one can assume there is at least 42 percent less fog in Thousand Oaks.)
The price tag on an average Berkeley home reached $874,000 in Q3 2014. This is down from an all-time high of $910,000 in Q2 of this year, but up 8 percent compared to one year prior.
Compared to other East Bay cities, Berkeley remains one of the more expensive options: Oakland averaged $574,000 (+18% since last year), El Cerrito averaged $669,000 (+15%), Albany averaged $790,000 (+15%), Kensington averaged $798,000 (-7%), and Piedmont – reaching an all-time high – averaged $1,775,000 (+18%).
There is an increasing trend of San Francisco residents migrating to Berkeley in search of attractive neighborhoods and more affordable housing options. This year alone roughly five hundred single family homes have changed ownership. Berkeley hasn’t seen this level of activity since 2006.
Many of Berkeley’s neighborhoods are experiencing significant appreciation, but there is a trend favoring “walkable” neighborhoods. Where normally it was hill homes with sweeping views of the bay that demanded top dollar, there has been an increasing preference for areas that provide easy access to transit, shopping and amenities. This shift may be attributed to an increase in younger buyers: at Red Oak, over half of buyers are either Millennials or Generation X.
Take the popular neighborhoods of Live Oak, Elmwood and Claremont for example. Live Oak has experienced a 42 percent increase in value (Jan-Sep 2014 vs. 2013), with an average price of $1,300,000. The Elmwood and Claremont neighborhoods have increased in value 20 percent and 35 percent respectively. An Elmwood home will cost on average $1,550,000, while homes in the Claremont neighborhood run $1,750,000.
Rest assure there are still relative “bargains” in the Berkeley. The average home in the emerging CalJulia neighborhood runs $677,000. This neighborhood has experienced a 38 percent increase in value since last year, partially driven by several new restaurants, cafes and stores in the area.
In comparison, some neighborhoods in the hills have not appreciated as quickly. Home values in Terrace View have fallen by 8 percent to $808,000 since last year, and values in Cragmont were flat at $920,000.
What does it take to score a property in such a competitive market these days? We’ve tracked that winning bids run an average of 13.3 percent over the asking price, with 80 percent of the properties on the market being sold over the list price.
Berkeley is the second most competitive city in the Bay Area; only Albany is higher at 17.6 percent over asking.
The market is expected to slow during the winter holidays, but if these trends continue, Berkeley should see prices increase further through 2015.
Data is sourced from the Multiple Listing Service and analyzed by Red Oak Realty.
Home Truths is written and sponsored by Red Oak Realty, one of the largest independent real estate brokers in the East Bay, serving the community since 1976. If you are interested in learning more about the local real estate market, or are considering buying or selling a home, contact Red Oak at email@example.com, tel: 510-250 8780.