Oakland Condo Prices Hitting Bottom?

There continues to be a lot of confusion and disappointment in the buying public in the bay area as we hear of record lows in values across the country but competing offers for properties here. Asking prices sometimes seem random, but closed sales, even though they might be over asking, tell the real story. Those closed prices continue to trend down when compared to similar closed sales last year. It is the wide variation in asking prices that is frustrating buyers. It's like the difference between settlement demands and jury verdicts. Both provide sets of numbers, but only one provides real guidance about the value of a case.
I just generated two charts for some of my buyer clients. They track closed sales prices, meaning real value, only; not the asking prices which are really only marketing ideas. The charts show the trend of median prices for condos in zip codes 94610, 94611, and 94612 (basically the areas Piedmont Ave., Grand Ave., Adams Point, Lake Merritt, and down town). The point of these charts is not the values because it includes all condos, but the change over time. On the two year trend we see an 18% decline, but the one year trend is basically flat with no decline between April 2008 and April 2009.
I can't predict what will happen next month or next year, but these charts might be the first pictures of the bottom of this market. E mail me and I will be happy to share these charts, or create others that pinpoint your particular interests.

Can you hear the market conditions?

You can always tell when conditions are shifting by the noise of the freeway. In a seller’s market the noise is insignificant; in a buyer’s market it’s a major nuisance and possibly a deal killer. Yes, you might get a better price due to the freeway noise, but don’t be surprised if the next buyer wants to offer you a very low price when it’s your turn to sell. Best practice: evaluate your prospective purchase by comparing it to closed sales, current offerings, and recently expired/withdrawn properties that are similarly affected by the same freeway noise. Right now I have a listing on a very busy street, close to a freeway. My clients bought it in the fever of a seller’s market. Now, with the tide turning in favor of the buyers, there are 3 properties sitting unsold on that block even though the prices have been repeatedly reduced. When buyers are able to find similar properties at affordable prices without the impediment of freeway noise, why wouldn’t they choose the other property . . . unless, of course, the noisy property was price lower, much lower.

Price, price down, price up again? Huh?

Yes, well that does bear some explaining. The price of my listing at 4021 Edwards Ave. just went up. Let me explain why. Our original price of $449,000 was simply not working. Market conditions are such that it was not attracting buyers. We lowered it to $389,000, with the disclosed caution that this would be subject to the approval of a "short sale". Please see my earlier article "A Short Sale In Not Discounted Beachwear". We did get some interest at that price, but the lenders, particularly the holder of the 2nd deed of trust, did not co-operate. We now have worked out a plan that will allow us to avoid the uncertainty of a "short sale", avoid foreclosure, and to offer the property at a reasonable price to the buyer. $417,000 is a special number. It is the upper limit of conforming loans. Loans that are most available and affordable. Loans that can still be made in "zero down" or "100% financing" situations. The seller has taken a bold step, at considerable expense, to create an environment that is both friendly to the buyer and offers himself some relief as well.

Market conditions: Oakland, 94619 a modest decline

Oakland's 94619 zip code takes in a wide swath of the eastern portion of Oakland: from the modest bungalows of the Allendale, below MacArthur, starting around Brookdale Ave., extending eastward across 580 ,and up-hill through the Laurel, across highway 13, and then ending in the dizzying heights and prices of luxury hillside homes around Skyline Blvd.

The average sales price can jump or slide depending on the particular mix during a short period of time. On a monthly basis, for instance, a comparison between 2006 and 2007 closed sales for the area can show an upward spike 24% in March or a plummeting -22% slide the following month.

We get a more temperate, and accurate, picture when we expand our view over the entire calendar year. Comparing 2006 with 2007 through July, the average listing price dropped by 1% for the year, but the average sold price dropped by 3%. That 2% gap seems to indicate that some of the sellers are just not getting the message.

Does this mean that buyers can low-ball anything by 3%? Not at all. There are still multiple offer and overbid situations in the area. A modest home in Oakland's Montclair district just closed for $91,000 over the asking price. Then should a buyer offer more than the asking price in a declining market? Not necessarily; it all depends on the particular property. Value is always the key concept. Price is an amalgam of free opinions: what the agent thinks, what the seller thinks, sometimes what the agent thinks will get the listing signed, and sometimes what the seller thinks is needed in order to "have room to come down". Value is established only when the buyer pays and the seller accepts. There is no substitute for a detailed and thoughtful comparative market analysis of your property. Would you like one for your property? Call or e-mail me and let's talk.

Coming soon: similar reports on other key East Bay areas like Oakland 94602, North Berkeley, El Cerrito, Richmond North & East, and Pinole.

Average sales price comparison January 2006 vs. 2007 (94619)

Smaller samples create less reliable results, so let's look to the next group of 580/13 neighborhoods in zip code 94619. Average sales price for single family homes in Oakland’s 94619 zip code including parts of the following neighborhoods: Laurel, Redwood Heights, Maxwell Park, Leona Heights, and Allendale.

The most consistent result is the reduction in the number of closed transactions:24 in Jan. 2006, but only 14 in 2007. Average marketing time also reflects what we see in 940602: 28 days in 2006, but 53 days in Jan. 2007. Interestingly, however, the number of home sales as just reported nationally seems to be headed up.
Existing Home Sales Improve in January
Not all commentators agree that these figures represent a real improvement in the housing market.
This is an improvement?
In a reversal of the results we saw in 94602 the average sold price increased slightly in 2007. Closed prices, which slightly exceeded list prices in 2006, were slightly less than more than list prices in 2007. Click on the picture for a larger view of the report.
2006 Report

2007 Report

This information is based on reported sales in the local MLS database.
It is believed to be generally reliable, but there are no guarantees. Please contact me directly for a report on a more narrowly defined area or a specific evaluation of your home’s market value

Average Sales Price Comparison January 2006 vs. 2007 (94602)

Yes, I know it's hard to believe, but the average sales price appears to be rising, not falling. Also suprising is the fact that the average closed price was higher than list for Jan. 2007, but lower in Jan. 2006. Sales volume is drastically down compared to a year ago: 22 homes sold in Jan. 2006, but less than half that amount sold in Jan. 2007. The average marketing time (DOM) for properties also lengthened significantly from 38 days of the market to 56 days; a 47% increase. What's going on? I have some ideas and will explore them in other articles, but I welcome your insight as well.

Average sales price for single family homes in Oakland’s 94602 zip code including parts of the following neighborhoods: Dimond (sometimes mistakenly called Diamond), Laurel, Glen View, Oakmore, Temple Hill, Lincoln Heights, and Redwood Heights.

CLICK ON THE PHOTO FOR A LARGER VIEW:

2006 Report

2007 Report:

This information is based on reported sales in the local MLS database. It is believed to be generally reliable, but there are no guarantees. Please contact me directly for a report on a more narrowly defined area or a specific evaluation of your home’s market value.