We continue to see the effects of decreased inventory coupled with increased sales in East Bay, which includes median prices soaring back to all-time highs. Once again, the market is favoring sellers. As the market ebbs and flows, we continue to provide you with the most up-to-date information, so you feel supported and informed in your buying and selling decisions.
The pandemic tested the efficacy of large-scale remote work, causing companies to reconsider the need for massive office spaces. Notably, Pinterest announced in late August 2020 that it paid $89.5 million to terminate its lease on a yet-to-be-built 490,000 square foot office space. The choice reflects Pinterest’s reevaluation of its workforce needs, and its realization that more employees can work from home on a regular basis. Pinterest is showing another “new normal” for companies: hiring employees from different parts of the country without requiring those employees to relocate near the office. As a result, companies and employees are even less restricted by geographic location than they have been in the past.
Unlike many other cities around the country where the cost of a mortgage is similar to the cost of rent, the Bay Area maintains a large gap between those that can afford rent versus those that can afford a mortgage. The rental market, which is receiving a lot of press for its steep decline, does not foreshadow a decline in single-family home prices.
Single-family home prices climbed back to the highest median price on record as inventory waned and sales increased. Year-over-year, single-family home prices are up 8% in Alameda and 19% in Contra Costa. The East Bay as a whole has fared well throughout the pandemic with year-over-year prices dipping briefly in May and rebounding in the summer months.
Median condo prices posted gains across both counties. Contra Costa county saw significant price increases for both single-family homes and condos.
To fully appreciate the year-over-year decline in inventory, we must look at the ways in which sales behaved in 2020. During the initial months of the pandemic (March, April, and May), buyers and sellers hesitated to enter the market or entirely withdrew from it. Sellers began to reenter the market in May, thereby increasing inventory, but not to last year’s levels. Without the usual inventory, buyers have had fewer options from which to choose, and yet, sales have rebounded, surpassing last year’s numbers. We’ve seen a large year-over-year sales increase, which is an amazing recovery from the lows in May. The increase in sales shows that there is still high demand in the area, despite the lower-than-usual inventory.
The inventory of homes for sale remains near its high for the year but are far lower than last summer, which we can see reflected in the increased median home prices. Lack of supply compared to demand typically buoys the East Bay’s prices, which still remains true. Demand has remained high in the summer months, and the area may see an increase in new listings with sellers looking to capitalize on the favorable seller’s market.
Days on Market
The Days on Market (DOM) decreased, corresponding to the increased sales, and is more in line with what we typically see in the summer season. We suspect that the DOM will remain low during this time of undersupply. Condos, generally, take longer to sell, which makes working with an agent that can differentiate the property and create a winning selling strategy even more important.
In summary, the lower levels of inventory have made the market more favorable to sellers. We believe sales will continue to trend upward, which could bring more homes to the market to satisfy the demand for housing in the East Bay. The housing market has shown its resilience through the pandemic, remaining one of the safest asset classes.
As always, Arrive Real Estate Group remains committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we have shared above. We welcome you to contact us with any questions about the current market or to request an evaluation of your property.