As home prices continue to soar in the East Bay, and many would-be home buyers find themselves priced out of the market, real estate agents say buying in up-and-coming neighborhoods is one way to find relatively affordable homes.
Buying in an emerging neighborhood has long been a strategy for coping with high home prices, not to mention eventually making a tidy sum off the investment. The trick is making the right call, so you can find the right place and enjoy the area as it improves, without ending up stuck in a less-than-optimal location with no future.
Prices in the Bay Area ripple outward from San Francisco, the region’s job center. As highly paid tech workers in the city compete for housing, driving prices up, more and more home buyers are looking to Berkeley and Oakland.
This in turn drives up prices in cities closest to San Francisco. As those prices soar, areas that were formerly shunned are getting a second look, especially those with access to public transit.
“Let’s take West Oakland as a scenario,” said Jana Cloud, an Oakland real estate agent with Redfin. “If you told someone five years ago, ‘I’m buying a house in West Oakland,’ they would have said, ‘Oh, my God,'” because of concerns about such things as the crime rate, Cloud said.
“At that time, the median price there was $500,000, and now some prices are upward of a million and there’s new construction all over West Oakland,” Cloud said.
The East Bay’s
up-and-comers include Fruitvale and Millsmont districts and some neighborhoods in Richmond
Nowadays, the East Bay’s up-and-comers include Oakland’s Fruitvale and Millsmont districts and some neighborhoods in Richmond, according to local real estate agents. Some agents also include Vallejo’s Mare Island on the list.
“Richmond is the biggest,” said Nancy Duff, a former Berkeley zoning commissioner who has been an East Bay broker for 40 years.
The city was dogged for decades by a reputation for crime and such things as deferred maintenance on properties, “but now, just look at neighborhoods like the North and East and the Annex and, of course, Point Richmond,” Duff said.
The city has several characteristics of an up-and-comer: public transit, new construction and, of course, rising prices.
The median price for Richmond homes was $380,000 in the three-month period from January through March 2017. In the three-month period from December 2017 through February 2018, the latest numbers available, the price soared to $548,000, according to Redfin.
Sheri Madden, a real estate agent with Marvin Gardens Real Estate, said she wasn’t surprised at the jaw-dropping jump in prices.
“A year ago, low sixes was very unusual” for a home in Richmond’s North and East neighborhood, Madden said. “Now we’re starting to see houses in the mid-sixes and high sixes. I had a person make an offer on a house — she came in second place on 11 or 12 offers and the house went for $695,000.”
The agent said that, as prices in Oakland escalated, this drove buyers to Richmond, where prices have historically been lower.
Ample public transit options have helped amp up prices. Ferry service is expected to begin from Richmond’s Craneway Pavilion to San Francisco this fall. Richmond is also served by an AC Transit commuter bus, the L line, and a BART station.
“There are some incredible buys around the BART station,” Duff said. “You can get 1,500-square-foot houses with double-car garages for under $500,000,” an alluring value given that Berkeley’s median price currently hovers around $1.3 million.
New housing in Richmond, Fruitvale
Hundreds of housing units are planned in Richmond. In just one example, developer SAA/EVI is planning between 300 and 400 units along Macdonald Avenue between 11th and 12th streets, about 70% of them market-rate.
Crime in Richmond has dropped and in recent years the city has become a national model for community policing. New businesses are coming to Richmond, too, such as Catahoula, which opened some years ago on San Pablo Avenue.
Nearby Pinole, as well as Hercules, another West Contra Costa County city, are also up-and-coming cities, agents said.
Similarly to Richmond, Oakland’s Fruitvale district was once dismissed as high-crime but is seeing an upsurge in popularity.
“When (Oakland’s) Maxwell Park gets more expensive, people spill into Fruitvale and the Millsmont area,” Madden said. “Those are the areas where prices are going up,” the agent said.
Madden said a recent listing of hers on the border of Millsmont and Eastmont Hills drew 27 offers. Millsmont is a neighborhood in the vicinity of Mills College.
Two years ago, a home in Fruitvale would fetch around $200,000 or $300,000 “and now it’s $500,000 or $600,000,” Duff said.
As with Richmond, Fruitvale has many public transportation options, including a BART station. AC Transit transbay lines run from Fruitvale to the downtown San Francisco Transbay Terminal.
New housing is going up in Fruitvale. In March, ground was broken on Casa Arabella, a 94-unit affordable housing transit village on a surface parking lot just south of the Fruitvale BART station. The project was developed by the Unity Council and the East Bay Asian Local Development Corp. and will be followed by another 181 units projected to be built in 2019.
Richmond and Oakland are close to San Francisco, making them attractive to commuters. Some areas that are further out, such as Vallejo, are also seeing a jump in prices.
The median price for the Vallejo metro area was $398,000 in the three-month period from January through March 2017. In the three-month period from December 2017 through February 2018, the latest numbers available, the median increased to $425,000, according to Redfin.
The San Francisco Bay Ferry provides year-round weekday and weekend service between Vallejo and the San Francisco Ferry Building, one of the biggest draws for the city, according to Cloud.
At present, there are 346 homes in Mare Island, including new homes, condos and apartments. Construction on new homes is underway by builder Lennar Homes, which is completing a new 38-home phase of development and beginning work on an additional 56 new homes expected to be completed this year, according to the company.
An advantage of buying in an outlying area, Cloud said, is that homes are listed for around the price for which they are expected to sell. In Berkeley and other parts of the East Bay, homes are often listed for as much as 25% to 30% lower prices than expected, the agent said.
“Whereas, if you go into outlying areas, if a house is listed for $500,000, say in Vallejo, that is probably what it will go for,” Cloud said.