Let’s talk about the current market...as we all have noticed, home sale prices have increased astoundingly since last year. If you are a seller, you probably feel like you’ve hit the jackpot and if you are a buyer, you are probably feeling pretty frustrated.
Homes are selling faster and receiving more offers than ever before. In the first quarter of this year we saw the median sales price for the inner East Bay jump to $1.1 million, which is 25% higher than last year’s first quarter median price of $885,000. This means that the typical inner East Bay buyer now will need over $1 million to purchase almost any home in this area. Last year, a home that sold for $1 million would now go for $1.25 million, and a home that sold for $1.5 million last year would now go for $1.875 million this year. We thought prices were crazy high back then!
Recently, there was an article published about a home in Berkeley that sold for $1 million over the asking price. How can this possibly be? Well, there is actually a listing trend happening that not many realtors are talking about - since the median sales price went up 25%, the median list price is the lowest we have seen since the first quarter of last year. If prices have gone up so high, why are homes being listed so low?
The reason why we are seeing such a large gap between list and sales price is attributed to agents starting out each year with some uncertainty about what the market has in store for the year. Agents tend to be more conservative in their list prices and valuations the first quarter of every year as we wait for the market to reveal itself. Typically February and September are months that determine how the first and second halves of the year will look. This is not intended to be deceitful or neglectful, but is a way for agents to ensure they do not list too high. As the year progresses, we predict that agents will start to experiment with listing higher to see what direction the market is going in.
As a buyer, how do you navigate this market? It is incredibly important you have an experienced local agent who you trust and is well-networked. The most telling data is in pending sales - if an agent is networked with other good agents in the area they will know what homes are pending for within days.
Here are some tips for buyers and sellers to navigate the current market:
Don’t look at list price, instead look at comparable sales in the neighborhood
Make sure you work with a seasoned local agent and truly get to know them
Trust will take you a long way in this market
Look at comparable sales prices in the neighborhood
Formulate a list price that makes you the most comfortable, as well as what will cast the widest net and achieve the highest offer
We hope this helped clear up some of the confusion about the crazy prices we are seeing in the 2021 market. Buyers, don’t give up hope! Remember that the list price is often misleading and a good agent will make sure you do not waste your time. We wish you all good luck and would be more than happy to answer any real estate questions you may have.