Market Report: Inventory Squeeze Led to Over-List-Price Home Sales in June

San Francisco may be known for its June gloom (hat tip to Karl the Fog), but the sun has been shining across the Bay for us and our home sellers in Alameda and Contra Costa County.

According to the most recent sales data, detached single-family homes sold for over the list price in June in nearly every city we track. That includes Berkeley (23% over list price), El Cerrito (18% over), Alameda (16% over), Oakland (13% over), Richmond (10% over), and Walnut Creek (5% over).

That might surprise you, considering all the headlines about sales prices dropping year-over-year – which is also true.

Wait, what?

It’s no wonder so many East Bay homeowners are scratching their heads, confused about whether now is a good time to sell or wait.

Let us explain why the two things – decreasing median sales prices and over-list-price bidding wars – aren't contradictory events in East Bay surreal estate...

How we got here and what it means for East Bay home sellers

Remember when East Bay home values skyrocketed during the pandemic? When interest rates hit historic lows, and people with unprecedented buying power went gaga for homes in the suburbs?

The party raged and home prices surged until mid-2022 when inflation increased, interest rates rose, tech layoffs started, and recession rumors began. The rager fizzled.

Lack of buying power and economic uncertainty led many buyers to put their house-hunting on hold. (But not all buyers, as we’ll explain).

At the same time, homeowners became hesitant to sell. They feared buyers were wary and weary. And, with interest rates more than doubling since 2022, some homeowners were unwilling to give up their 3% mortgages to move to a new house with a 6% or 7% interest rate.

Here comes the part where we tell you that homeowners who wait to sell might be making a mistake:

Hundreds of hungry buyers are still out there and searching for a home.

Low supply (inventory) + high demand (buyers) = a competitive climate where people will bid over the list price for a chance to win their dream home.

Yes, median prices dropped in June, but home sellers still profited

Let’s be clear: Many East Bay homes are not selling for as much as they did last year, but most sellers still stand to profit if they bought their property before the pandemic price boom.

Take the Oakland real estate market for example: Last June, when the market was still overheated, the median sales price hit a $1.3 million high. This June, the median was about $1.1 million. Pre-pandemic in 2019, it was $900,000.

You do the math.

Buyers have not stopped, so why should sellers?

If you’ve been wondering “Should I sell my house now or wait?” we’d ask in return, “Why wait?”

Bay Area inventory remains historically low, with little evidence that it will catch up with demand. And the way things are headed, interest rates might rise again this year.

As Abio Properties co-founder Linnette Edwards recently told reporter Ted Andersen of the San Francisco Business Journal: "Buyers have not stopped — they are still actively searching.”

For example, Linnette recently received 20 offers on a single Walnut Creek listing.

"I think that August is going to be the new April — I'm anticipating more inventory coming out," Linnette added. "There are rumblings that those laid off in the tech industry are starting to feel uncomfortable and feeling the pressure of needing to sell. We anticipate more inventory in the next couple of quarters from those laid off in the tech industry that realize they are not going to get the same paying job they had before and are forced to sell."

Lucky homeowners in the 94595: Values close to hitting a high

The San Francisco Chronicle recently reported that home values in the 94595 ZIP code in southern Walnut Creek grew 0.8% from May 2022 to May 2023 — the only one to show year-over-year growth out of all Bay Area ZIP codes with significant home sales in the last year and a population of at least 10,000 people, according to data from real estate listings site Zillow.

Neighborhoods in 94595 include Rossmoor, Saranap, Parkmead, and Tice Valley.

Typical home values in this ZIP reached an all-time high of $770,000 in July 2022; at the end of May, they were $768,000, according to the report.

If you want to know more about home sales in the 94595, contact us at 888-400-ABIO (2246) or [email protected]. Abio's team includes agents who live and breathe the 94595.

See homes for sale in the 94595 (type "94595" into the search bar)

Millennials are struggling to afford homes in the Bay Area

According to an Apartment List survey, the number of millennials who feel like “forever renters” has nearly doubled in a decade. And the percentage of millennials who own homes in the Bay Area is one of the lowest in the nation.

The majority of those surveyed blame their lack of homeownership on affordability factors.

Here in the East Bay, many of our millennial clients are finding their best buying opportunities in the condo/townhouse market. Check out these median sales prices for detached homes in June:

Concord $437,000
San Leandro: $535,000
Oakland: $599,000
Walnut Creek: $648,500
Hayward: $687,000
Alameda: $736,000
Berkeley: $825,000
Moraga: $855,000

See some condos and townhouses for sale in the East Bay

Interesting side note: The Apartment List report pointed out that millennials are becoming homeowners later in life than their parents and grandparents did. By age 30, just 42% of millennials owned their homes in 2022, compared to 48% of Gen Xers, 51% of Baby Boomers, and nearly 60% of the Silent Generation.

If you’re a first-time homebuyer and feeling financially squeezed out of the market, contact us. We can point you to affordable markets, loan programs and down payment grants. 888-400-ABIO (2246) or [email protected].