High demand for Berkeley real estate results in housing shortage
Berkeley homes are selling for about 20 percent more than their list prices, with prospective homebuyers facing a shortage of options, as first reported by Berkeleyside.
Patricia Bennett, president of the Oakland/Berkeley Association of Realtors, said that as an active agent, she has witnessed the high demand for real estate in Berkeley firsthand. According to Bennett, because of the shortage of available properties, one property could receive up to five or six different offers from potential buyers. This results in a property being sold for much higher than the listing price, Bennett said.
“A buyer will hear there is another competing offer, so they’ll offer the seller a little more,” Bennett said. “They’ll learn that there are two other offers, three other offers or possibly eight other offers, and they’ll increase their offer.”
Bennett said the selling of homes for higher than their list prices is not a recent trend. Bennett called the process “cyclical,” stating that it depends directly on demand. According to Bennett, the demand for real estate in Berkeley is high because of the diverse community, access to amenities, education facilities and cultural attractions.
Expectations in the marketplace also affect the overbidding for homes, according to Elisabeth Watson, a realtor for Abio Properties. Often, house prices are purposefully listed at attractive rates to boost buyer motivation, Watson said. Watson added that most sophisticated buyers are aware that the listing price is not the actual price of a property.
Marion Henon, broker and co-owner of Marvin Gardens Real Estate, cited the booming technology sector in San Francisco and Silicon Valley as an active contributor to the demand for property in Berkeley.
“Berkeley is close to San Francisco and has a good public transport system,” Henon said. “Areas that aren’t as well-served in public transport don’t have as much demand in real estate.”
According to Jennifer Wolch, dean of the UC Berkeley College of Environmental Design and campus professor of city and regional planning, the pool of available units is another variable that must be considered in addressing the issue of real estate demand.
“There are only a certain number of properties in play,” Wolch said. “Suppose City A has a thousand houses, but only five are for sale. … Only a small fraction of houses are on sale, compared to total houses in play, which can result in a volatile sample.”
Wolch said increasing housing supply and increasing housing affordability are challenges for policymakers.
Daniel Chatman, campus associate professor of city and regional planning, said one of the implications of the high demand for housing in Berkeley is increased segregation by income. According to Chatman, if this trend continues, Berkeley will become home to predominantly higher-income people.
“People are desperate and competitive and they really want to buy in Berkeley and therefore might not have money for other things,” Chatman said. “Prices are just a signal of people who want to live here.”