Stephanie Ferrara grew up in El Cerrito, and she wants to raise her children there. The technology professional and her husband have bid on five homes recently, but “every time, we got beat out,” she said.
Ferrara, who currently rents in Mountain View, is one of many frustrated potential East Bay buyers caught in a nearly five-year drought in the number of homes on the market. Real-estate agents cite the scarcity of new home construction, high prices and lack of options for senior sellers as causes, among other things.
“It’s tough out there for buyers,” said Anna Bellomo, a real-estate agent with Thornwall Properties in Berkeley. “There is a lot of demand for homes but not very many for sale.”
There is about one month’s worth of inventory on the market in Berkeley at present. This means that if no new homes went up for sale, it would take about a month to sell every home on the market. Inventory in Oakland and Hayward also hovers around one month.
Three or four months of inventory is considered a balanced market in the East Bay, though in other parts of the country, “you are going to see four to six months of inventory maybe,” said William Doerlich, president of the Bay East Association of Realtors.
There were 50 single-family homes for sale in Berkeley March 31, with 212 in Oakland and 72 in Hayward, according to data from Doerlich’s association.
The inventory of homes on the market is so low, when good properties come on the market, buyers like Ferrara often find themselves competing against multiple offers.
“There was one house that got over 20 offers. It’s crazy what we’re seeing,” Ferrara said. She and her husband Craig have been looking since September.
The competition drives prices up. “The sale price is almost always higher than the list price,” Bellomo said.
Average Berkeley sale price 20% higher than average list price
In March, the average sale price for a Hayward home was about $654,121, which is 4% higher than the average list price. The average sale price for an Oakland home was $940,199, which is 14% higher than the average list price, and the average sale price for a Berkeley home was $1,195,898, 20% higher than the average list price.
It’s a classic case of supply and demand, agents said, and it’s not likely to ease up anytime soon. One reason: few single-family residences are being built.
“California has been so far behind in building, we don’t have any new inventory,” said Patricia Bennett, president of the Oakland-Berkeley Association of Realtors.
“On Shattuck Avenue (in Berkeley), you see a lot of multifamily new construction, but you are not seeing a lot of new houses,” said Ira Serkes, an agent with Pacific Union and Christie’s International Real Estate in Berkeley.
“For single-family homes, there is no place to build. Any single-family construction is going to be infill or a rehab and fixer,” Serkes said, referring to run-down homes purchased relatively cheaply to be renovated.
This is true in cities other than Berkeley, according to an Oakland real-estate agent.
“There is no land to build on in our immediate area,” said agent David Gunderman. While condominium units are coming online in downtown Oakland, as far as single-family dwellings, “there is just no place to grow,” he said.
“You see some spec housing going up in steep infill lots in the hills and there has been some development in west Oakland,” Gunderman said, but it’s not enough.
“The only single-family developments I’ve seen are around Alameda Landing,” he said.
Downsizing baby boomers face lack of choice
“There is not much building going on in Hayward, not enough to feed the demand,” said Anna May, an agent with Realty World Neighbors in Hayward.
“What is being built is two- or three-story homes,” May said. “This does not appeal to an aging demographic.”
May said, “There are baby boomers who want to sell the home they have lived in for decades and buy a single-level home without stairs. But if they want to stay in the area, that’s hard to find.”
Along those lines, Bennett said, “People can’t downsize, and the population that would be doing that is large.”
Kim Ott, an agent with Alain Pinel in Pleasanton, said, “If a senior wants to go to a retirement community, most of the time they will have to move to the outlying areas, because that’s where most of the retirement communities are.
“But then they will be far away from downtown with its walkability and amenities,” so they elect not to sell, she said.
Affordability is also a factor, according to Bennett.
A homeowner who would normally sell his or her home to take advantage of a big chunk of equity can’t do so because prices are so high, she said.
“If they get $500,000 of equity out of their home, there is nothing they can buy for $500,000,” Bennett said.
Only 22% of people who live in Alameda County can afford to buy a median-priced home, while 39% of Contra Costa County residents can afford to do so, according to the California Association of Realtors’ affordability index.
Entry-level homes flying off the shelf
The affordability factor is evident in the current market. Entry-level homes are selling fast, while the high-end market has slowed, Doerlich said.
“The $300,000 to $650,000 homes are just flying off the shelf,” Doerlich said. “There’s a month and a half of inventory on the market for the $700,000 to $1.2 million homes.”
First-time buyers like Ferrara and her husband are all too aware of the frenetic competition.
“It’s really frustrating,” she said. “It’s not like we want a mansion. Just a three-bedroom house in a safe neighborhood.” The couple will keep trying, she said, though they’re tired of driving to El Cerrito from Mountain View every Sunday.
“I went to a good school, UC Davis, and I work really hard. We both have good jobs,” she said. “The next step is to buy a house and have a family. But I can’t grow up. I can’t buy a house in the Bay Area.”