By Jennifer Riner
Many Berkeley home sellers enjoyed a lucrative 2016. Real-estate search site Estately.com reports that the number of Berkeley homes selling above asking price jumped 16.8% in December compared to the same period in the previous year.
Back in December 2015, 74.1% of homes sold above asking. In December 2016, that number was 90.9%.
“When you see that percentage — where so many houses are selling above list price — that’s an indicator of rising popularity,” said Ryan Nickum, marketing manager at Estately. “I would assume that in a place like Berkeley, where 90% of homes are selling above listing, prices will continue to rise and support a sellers’ market.”
Take 1963 El Dorado Ave., a 3-bedroom, 3-bathroom in the heart of Northbrae, which went on the market for $1 million in late October. Just a few weeks later, in mid-December, the property sold for $1.75 million – 75% above its asking price.
There’s also 1347 Curtis Street in Westbrae, which initially listed for $895,000 and went under contract less than two weeks later. The 3-bedroom, 2-bathroom home closed in early December for $1.28 million, or 43% more than list price.
As illustrated in Estately’s chart (left), Berkeley beat out South San Francisco and Palo Alto, where sellers benefited, respectively, from an average 13.5% and 6.5% surge in homes selling above asking price.
But not every area across the Bay saw an increase in the gap between asking and selling price. In the city of San Francisco, 67.3% of homes sold above list price, down 12.3% year-over-year.
“San Francisco has long been popular, which is why you are seeing a decline in what people are pricing their homes at — they have the market figured out,” said Nickum.
Locals recognize Berkeley’s appeal, of course, but admiration is growing among newcomers from across the Bay and beyond.
“For buyers, I get coming from San Francisco or other parts of the Bay Area, their no. 1 destination is Berkeley because of the schools, diversity, and rentability,” said Tracy Palma, an East Bay real estate agent with Bay Sotheby’s International Realty, adding that home sellers have maintained a sizable advantage for about three years.
Although Berkeley’s attraction is nothing new, this one-year price boost is nonetheless impressive. Conducting her own research, Palma saw that, at the very minimum, homes in Berkeley were closing 20% to 30% above list price last year. A few even sold 150% above asking, she said.
Wide disparities between list and sale price in sought-after communities can also boil down to the sales culture. Listing low with the expectation of selling high to intentionally trigger multiple offers is a widespread practice, says Palma.
For newcomers, these market tactics can be discouraging. Buyers need to be able to put at least 20% of the list price down just to compete, Palma says. In some cases, even 30% to 40% upfront – seen as a minimum for consideration – isn’t enough. Berkeley has a high percentage of all-cash buyers waiting to jump at the next opportunity. Another way to gain an advantage is to eliminate all contingencies on the home sale — this helps buyers stand out in a sea of eager bidders.
In North Berkeley, where sometimes only a handful of properties become available every few weeks, those looking to buy often forgo their must-haves to get a piece of the pie while there’s still some left to go around. Palma prepares her North Berkeley sellers to expect multiple offers or preemptive (off-market) sales.
Not every home in Berkeley acquires 10 offers within the first 30 days, though. There’s still the risk of a stale listing, particularly for the “quirkier” homes requiring work on the buyers’ end. Location, too, still drives demand. Further up in the hills, where walkability and public transit are sparse, one or two offers is the status quo. And homes off the beaten path are priced more accurately to avoid drastic drops or increases.
Data from online real-estate brokers Redfin shows Berkeley’s median list price currently at $979,000, while the median sale price is a cool $1.1 million. Fifty-seven homes sold in the last month alone. Redfin also shows for-sale supply down 8.7% annually, epitomizing a nationwide inventory issue forcing buyers to act quickly and craftily.
Despite mid-summer reports of a decelerating market, a review of 2016 paints a profitable picture for Berkeley home sellers.
Although market conditions favor sellers, it’s always worth bearing in mind customary selling practices. With the spring selling season just around the corner, gearing up to list with fresh interior paint and improved curb appeal can’t hurt.
“I definitely think it’s a sellers’ market and will continue to be a sellers’ market. But, how long it will sustain that way – we’ll see,” said Palma.