What is Really Going on in the Housing Market in the East Bay

A few weeks ago, the Marketing Department at St. Paul’s Towers, a CCRC/Life Care facility in Oakland, asked me to speak to a group of potential residents about what is really going on in the real estate market in the East Bay.  Many of the people considering moving to St. Paul’s need to sell their homes first.  There are a lot of articles in the newspapers here that exaggerate the problems in the local housing market.  In Berkeley and many parts of the East Bay, the housing market has not experienced the crisis that other parts of the country have.  I had collected very recent statistics from our Multiple Listing Service so I felt confident that the information I had was accurate and relevant for them.

Following is my talk and the slides I made for each of the zip codes and neighborhoods in which the audience live.

Good afternoon everyone.  Thank you for coming today.  I am sure you would rather be out playing golf or working in your garden so I am really glad you are here and  I hope you find my information useful.  My name is Joann Sullivan.  I am a realtor at Thornwall Properties in Berkeley.    In my business, I work with many seniors and their families.  St. Paul’s invited me here today to talk with you about what is really going on in the Bay Area Real Estate Market.

I came about the same time last year, too.  Then, the newspapers were full of doom and gloom stories about the housing market.  Headlines read:

“Housing Declines Match 20 year record,” “Free Fall Misery in Housing.”  “Bay Area Home Prices off 30.8% in November, Bottom not in sight yet.”     According to recent articles, the 2010 median home price in the Bay Area is $350,000, down almost 50% from $665,000 in July 2007.

There are  areas in California and even in the Bay Area that are experiencing housing problems like this, but you should not generalize from these reports to your own neighborhood.  Housing problems are much more severe in Southern California than Northern California.  In certain parts of the Bay Area-namely, parts of Contra Costa County, some neighborhoods in Oakland and Berkeley and southern Alameda County where the foreclosure and short sale rates are still high–the housing crisis is very real.  Foreclosures are bank owned properties that have been taken over by the bank.  Another name for a foreclosure is an REO.  Short sales are  properties that are sold for less than the balance owed.

That being said, many neighborhoods in the Bay Area have remained pretty stable.   The number of short sales and REOs is low, inventory is relatively low and prices have not fluctuated very much.  These include Alameda, Albany, El Cerrito, North Berkeley and  Rockridge.  Many sellers are reluctant to put their homes on the market now, but they are usually pleasantly surprised at the response.  There are still houses that receive multiple offers and sell for more than the asking price.

The most important thing to remember about real estate other than location, location, location is that real estate markets are very specific.  I have broken down our East Bay region into more homogeneous areas so we can talk about them today, but when you are thinking about selling your house, you need to know what is going on in your own neighborhood and your own block.  The best indicator for what you are going to get for your house is what a similar house down the street sold for a couple of months ago.

Now let’s look at the real estate statistics for the East Bay.  St. Paul’s sent me the zip codes for all of you who were coming today.  Those are the areas we will look at.

Generally speaking, most East Bay areas saw an increase in the number of properties sold from 2008-09 to 2009-10.  The number of days on market ranged from a low of about 3 weeks up to a maximum of 2 months.  The higher priced neighborhoods (Elmwood, Moraga, Montclair and Piedmont) experienced longer marketing periods.  Nonetheless, even the longest marketing periods in the East Bay are  very low compared to other parts of the country.

Most East Bay areas experienced a decrease in both list price and sales price with the higher priced markets witnesing a greater decrease in both list prices and sales prices than the lower priced markets.

Exceptions are Livermore and several neighborhoods in Oakland which experienced price increases over the two periods.  I think that many neighborhoods in these areas were targeted by first time homebuyers as good places to buy.  Prices were right and the buyers were eligible for a tax credit, as well.

All of this being said, the market today feels much more vibrant than last spring.  There are more properties on the market now than last spring and buyers are ready.  Sellers still seem a little  nervous, but it all depends on the house.  Houses that look good, in a good location and are priced right will do very well.  Many are selling with multiple offers and going over asking.

Now let’s talk about getting your house ready to sell.  The first thing you should do is talk with a realtor.  He or she will provide information on property values in your neighborhood which will help you decide whether this is a good time for you to sell.  Don’t try to generalize from what you read in the papers.  This is true whether your home is in Salinas, Kansas or El Cerrito , California.  If you do not have a realtor, you can call me and I will either get this information for you or refer you to a realtor who knows your neighborhood.

Your realtor will help you decide what needs to be done to get your home  ready for market.  One option is to sell it “as is.”  There are lots of buyers looking for this type of property that they can fix up themselves.  If you choose this option, you should price your home accordingly.  You probably will not get top dollar for your home and it may take longer to sell.

For most homeowners in our area, their homes are their most important investments and they want to get the best price they can.  For many seniors, the proceeds from the sale of their home will support them for the rest of their lives.

You will need to decide how much work you want to do.  You may need to make repairs-for example, replace the roof or gutters, install a new water heater, replace broken windows and damaged floors.  You may choose to upgrade the kitchen or bathroom, paint inside and/or outside, replace your roof, refinish your hardwood floors, and landscape your yard.  Your realtor will help you find contractors and may supervise their work for you, if necessary.

Your most important marketing decision (after choosing your realtor) will be determining the list price.  If you price it too low, the offers you receive may not be as high as you want; it you price it too high, you may reduce the number of potential buyers.  Your realtor will provide you with information on recent comparable sales in your neighborhood.   At my office, when one of us has a new listing, all of the agents visit it before it comes on the market to give additional input for determining the list price.

The goal of your marketing plan is to get as many potential buyers into your home as possible.  When it  comes on the market, there is usually an open house for realtors and two Sunday open houses for buyers.  At my office, we list the property on the MLS, put a sign in front of your house, make pretty flyers with pertinent information, send out postcards to the neighbors and advertise in the local newspapers.  Because so many buyers are now using the internet to find properties, we set up a unique website for the property.  It has lots of nice photos or a video and information about the property and neighborhood.  There are also other internet sites like Realtor.com, Trulia.com, craigslist, SFGate and agency websites (e.g. thornwallproperties.com) where we post information about our listings.

If you live in an area which is not doing so well, you should first talk with your realtor to find out how the market is actually doing in your specific neighborhood.  Remember, you should not generalize from what you read in the newspaper.  You may be surprised.

You will follow the same steps as we discussed before, but your marketing efforts will need to be more aggressive.

Your house needs to be in excellent condition, look great to buyers and be priced competitively.   Your house needs to look good on the outside and on the inside.  People are going to drive by to see what they think before they decide to go inside.  You want them to come inside.

Setting the list price is even more important here.  You and your realtor will need to analyze recent sales to determine what you can get for your house.  If you do not have any interest with the original list price, you will need to reduce the price quickly and significantly.

Many of you are selling homes that you bought a long time ago that have appreciated considerably.  If you have lived in your home for more than five years and have not sold a home in the past two years, you are eligible for a $250,000 (or $500,000 for a married couple) tax exemption.  If you want to reduce your tax liability, you might think about an installment sale or a lease option.  These financing alternatives might appeal to young buyers who are not able to obtain traditional financing.  Your realtor, accountant or the staff here at St. Paul’s can help you figure out your best option.

I have covered the changing East Bay real estate market today.  There are several messages that I want you to take with you.  Don’t believe what you read in the newspaper.  The housing market in the East Bay is actually much better than other parts of the country.  I talked a little about getting your house ready to sell and marketing it in both healthy and not-so healthy markets.  A house that is in good condition, priced right and in a good location will always do well.

Following are the slides I made for the presentation.  I compiled data on all of the zip codes and neighborhoods that were home to the people attending the talk.

Alameda

North/Berkeley Hills

Central Berkeley

West Berkeley

South Berkeley

Elmwood

El Cerrito

Livermore

Moraga

Oakland 94602

Oakland 94605

Oakland 94606

Oakland 94608

Oakland 94610

Oakland 94611

Oakland 94618

Oakland 94619

Piedmont

San Leandro

San Pablo

Walnut Creek