Home Truths, a quarterly report on the state of the Berkeley real estate market, is brought to you by Red Oak Realty.
At long last, 2020 is almost behind us. It’s a perfect time to take a look at the Berkeley real estate market and determine what we should expect in 2021.
Before we delve into the future, let’s see what we can learn from the past. Typically, the real estate market has a reliable cadence over the course of a year which peaks during the spring and fall markets. Needless to say, COVID-19 threw 2020’s expectations out the window. Right when we were planning for the market to spike, shelter in place brought activity to a halt with the number of active listings falling dramatically in just two weeks, down 44% by the end of March.
But the Berkeley real estate market remained incredibly resilient. While the unemployment rate rose dramatically, grocery stores were laid bare and the economy seemed uncertain, Berkeley began to rebound. The number of listings and sales increased steadily, with lines pointing “up and to the right.” As a result, October single family home sales were their highest since 2003 and median price reached $1,540,000, the highest on record.
Looking forward, we expect the winter to be quite active. Many buyers put their searches on hold during the election, and over the past two weeks that pent up activity has roared back to life. And there is inventory available. As of Nov 23, Berkeley has 56% more listings than last year and the number of homes that are under contract is 18% higher than last year. This means we should expect to see a sizable wave of sales closing in November and December.
So where does this leave us for 2021? We think the market will continue to remain highly competitive. There should be a steady stream of new listings as owners face economic hardship due to COVID-19, look to increase their living space, or move out of the area to live in less expensive areas. Whatever the reason, there will not be enough inventory to match demand, which has been the case for years.
Similarly, buyers will search for homes that offer more space (especially after being indoors during the winter), take advantage of low mortgage rates, and look to Berkeley’s strengths like schools, community, proximity to San Francisco and great weather. We expect this will continue even as more tech companies encourage their employees to work from home. This dynamic will reinforce a sellers’ market with most homes continuing to sell above asking in just a few weeks time. On the flip side, however, it will be difficult for buyers who must compete for limited inventory.
For those looking to time the market, we think 2021 will remain consistently active through the course of the year. This should mean less extreme changes during both the typical winter slowdown and spring market uptick. However, as vaccines become increasingly available, there might be a surge in summer vacations, which means the market could slow during that time. COVID-19 or not, below you can see how the Berkeley market typically behaves by analyzing activity according to the month properties are listed. There is some variation, but this is mostly due to the fact that high-quality listings tend to be put on the market in spring and fall.
How do you think the market will perform? Have questions? Drop us a line and share your thoughts.Thanks to Red Oak agents who shared their knowledge for this article, including Tim Cannon, Sari Cooper, Ruth Goldstone, Pat Leaper, Jeanne Lengsfelder, Ann Arriola Plant, Negar Souza and Catherine Stern. It goes without saying that we don’t have a crystal ball, so these projections are not guaranteed. We shall see how the market unfolds!Home Truths is written and sponsored by Red Oak Realty, the largest independent real estate broker in the East Bay, serving the community since 1976. Read more in this series. 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 hello@redoakrealty.com, 510-250 8780.
