Despite frequent opinions to the contrary, home prices are ultimately determined by whether a seller is willing to part with a property for what a buyer is willing to pay. What a seller may need and what a buyer may demand often has little to do with the outcome. It is the analysis of these transactions over time that I find offers wonderful insight into local conditions and a sanity check to my experience on the ground. As it turns out, the numbers rarely lie.
Consistent with the trends I’ve been reporting to you, the rate of rising prices continued to slow during the first half of 2019, with the pace of transactions at similar levels to last year. On a deeper dive, what I found most interesting is that the data confirmed what I’ve been experiencing all year… larger homes are receiving lighter buyer demand across the board. This trend was most pronounced in Piedmont where the size of the average home is nearly twice that of its neighboring communities of Oakland and Berkeley.
There are two things going on here. First, smaller homes tend to sell for higher average prices per square foot, as the land becomes a larger percentage of the property value. This is generally true in any location… incremental square footage is valued at a lower marginal rate.
But what is more interesting is that properties in our local market tend to get larger the further they extend from the urban core due to generational trends back when residents with growing households sought space and serenity in the hills. Today, demographic shifts and lifestyle choices are pulling people back to the core where local services are far more valuable to buyers than square footage and privacy. Less, it turns out, is really more.
So, as I enjoy another season of barbeques in our little slice of heaven and I’m inevitably asked about what kind of home one can expect to find for $1,500,000 in our market, my answer may seem glib but not wrong: a 2 bedroom cottage or a 4 bedroom with room to roam. I wish you and your household a wonderful summer and festive July 4th!
*detached homes over $450,000 in Oakland zip codes 94602, 94605, 94608, 94609, 94610, 94611, 94612, 94618, 94619. Based on information from the MLS as of June 30, 2019. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information