Markets News
Forex and Market News

The cost of Berkeley homes has surged during the pandemic. Why?

The Berkeley real estate market, which has been a world unto itself for decades, has recently entered an entirely new orbit. 

“I don’t think I have ever seen the market as overheated as it is now, and I’ve been doing this since 1980,” said Alison Teeman, co-owner of Yovino-Young, a Berkeley real estate appraisal company. It’s gone from an incremental annual price increase to “unprecedented” hikes, she said. 

“I don’t think I have ever seen the market as overheated as it is now, and I’ve been doing this since 1980.” — Alison Teeman

The phenomenon is a combination of “almost give-away interest rates,” an incredibly low housing supply, unprecedented post-pandemic demand and a plethora of buyers with deep pockets, Teeman said.

“Every year we think the market is at a peak, and for the past few years we’ve been thinking, ‘Oh my God, it can’t get any higher than this’,” agreed Anna Bellomo, founder/owner of real-estate agents District Homes. The current market? “This makes no sense.”

Take the three-bedroom, two-bathroom house on Harvard Circle in the Berkeley Hills that went on the market in early March at $1.150 million. The house made national news by selling for exactly twice that much. Listing agent Jill Carrigan from The Grubb Company said it garnered 29 offers and had a final sales price of $2.3 million. 

“This is an unusual house because it had a fantastic view and a flat lawn, and it was on a double lot,” she said. “It is also on a cul de sac, it’s close to Tilden Park and Grizzly Peak Boulevard, and it’s a mid-century house. Who doesn’t want this?”

But this isn’t the only Berkeley home that has recently sold for far, far more than its list price. Another mid-century home in the hills, a three-bedroom with bay views on Hill Road, listed for $1.3 million in March and closed for $2 million in April. A two-bedroom bungalow on Peralta Street in the Thousand Oaks neighborhood sold for $1.835 million on a list price of $1.250 million. A painted-Lady Victorian with a rentable apartment on Newbury Street near Ashby BART, reportedly sold for $2.25 million on a list price of $1.3 million. 

The phenomenon is not limited to Berkeley. Last month, a striking mid-century modern home in El Cerrito sold for nearly $1 million more than its $1.495 million list price, and a buyer paid $750,000 over asking for a three-bedroom Craftsman on Santa Fe Avenue in Albany. And it’s not limited to the East Bay either: it’s a trend that has been documented by the media around the country, including in places like Tahoe, New York, Washington DC and Vermont.

“Imperfect houses were a plus”: The grim reality of buying in Berkeley now

It’s not just the “beautiful” houses that cause a bidding war. Ashlee Tran and David Hofmayer have been wanting to buy a house in Berkeley for the past three years, and got serious last June when they signed up with listing agent Sarah Ridge of District Homes. 

From the start, the bidding wars were so intense that Ashlee, who has an MBA, created a spreadsheet “tracking metrics over time, trying to predict how popular a house would be,” and what the final sales price would be, Hofmayer said. 

“I tracked how many people looked at each house online [Redfin and Zillow provide those metrics]; how many people ‘hearted’ each house; and I tracked their velocity — that is, how popular the house was during the first couple of days, and how quickly the metrics grew,” Tran said. “That gave me an idea of how frenetic the bidding war was going to be.” Using these metrics, Tran said she was able to predict within 5 to 10% what the final price of each house would be.

But even with this intense work, Tran and Hofmayer lost out on their first three or four bids because the sellers chose buyers who could pay all cash. In a couple of cases,  Hofmayer and Tran’s bid was $20,000 higher than the others, but they still lost out to the all-cash buyers.

“The sellers didn’t want to worry about the appraisal coming in lower than the sales price, and the appraisals haven’t caught up to the prices yet,” Tran said.

During their ten months of serious house hunting, Hofmayer and Tran learned the importance of decisiveness, speed…

Read More: The cost of Berkeley homes has surged during the pandemic. Why?

Notify of
Inline Feedbacks
View all comments

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.