Is the East Bay Housing Market Really Cooling Off?
Zillow says the market is cooling, but Redfin says otherwise. Turns out there is truth in both.
Some evidence suggests a slowdown, but not the price of this $1.4 million Berkeley home, which sold for 41 peercent more than the asking price in March.
Home by Brian McCloud
According to Zillow, there’s a chill in the air. The Bay Area’s “white hot” real estate market might need to put on a jacket—or at the very least, a sweater.
“The market is starting to level off, which is good news for prospective buyers,” says Svenja Gudell, Zillow’s chief economist. “This trend will hopefully ease the competitive pressure.”
Not so fast, says Redfin. Bay Area markets are still smokin’ hot, according to the other real estate number cruncher. So, who gets it right?
“I would tend to believe Redfin’s prediction over Zillow,” says Aman Daro, Red Oak Realty’s director of marketing. “Zillow tends to looks at entire metro areas, while Redfin looks at specific communities. Zillow averages in lower-priced homes in outlying communities, like Antioch, with higher priced communities like Berkeley and Oakland, skewing the overall picture.”
However, Zillow might have it “kind of” right. Current data indicate single-family home sales throughout the East Bay have been on the decline for the past three years. Similar downward trends occurred after the stock market meltdown of 2000, and again in 2008 after its correction.
“There are two parts to this story,” adds Daro. “Today’s market versus the market in six months. Given the tech market climate—LinkedIn saw huge losses in Q1 2016—buyers from the tech sector may no longer have the capital to make big real estate purchases. We’re seeing a cool down in VC and startup activity, which has a direct impact on the Bay Area economy.”
Still, there’s more demand than supply. East Bay homes are averaging less than 30 days on the market and continue to see double-digit increases in median price year after year since 2012, with 2013 seeing the largest gains in single-family home prices, up from 12 percent to 37 percent, a 25 percent gain over the previous year.
Seemingly “affordable” East Bay real estate is also luring San Franciscans (and others from the Peninsula) to this side of the bay. According to Daro, the median price of a single-family home in San Francisco hovers near $1.5 million compared to the East Bay average of $790,000.
With the tech market slipping sideways, there’s a perceptible, albeit minor, decline in home prices, even in “emerging” areas, the veritable canary in the coal mine. But, prospective homebuyers shouldn’t get their hopes up too soon. Properties in the East Bay still command top dollar.