For the past three years of economic crisis and the explosion of foreclosures and short sales resulting from it, the East Bay’s real estate market has gone through several major shifts. Beginning in 2007 and through 2008, the market became flooded with bank owned properties and people were hesitant to buy homes. Those brave enough to buy found little competition and more abundant government down payment assistance.
Confidence eventually rose and more first time buyers and investors entered the market while lenders and PMI companies sought to minimize their risk by tightening lending standards. The market shifted in sellers’ favor, especially after the Federal and State tax credits were announced in late 2009. It wasn’t unusual for a listing to receive 20 to 30 offers within its first week on the market. Sellers demanded quick closes and short contingency periods and their willingness to offer concessions like closing costs credits or home warranties evaporated.
Since the late summer, the market in the East Bay has begun to shift back in buyers’ favor.
This Redfin article gives a great summary of the Bay Area’s real estate market. October’s sales were down from where they were a year ago. Although the Peninsula and San Francisco are still seeing bidding wars, other areas are slowing down. Sellers may not be fully on board with the slow down: “(a)s the Bay Area prices enter a winter lull, Bay Area buyers and sellers are still at a stand-off on price, with many Redfin buyers seeking 5% – 10% discounts off the asking price, while most sellers are usually only willing to give 2% – 4%.”
The shift back to buyers’ favor has been dramatic in the East Bay, especially on properties that are less attractive to investors such as single family homes over $150,000 and condos. In Oakland, there were about 100 fewer closings (228) this October than last (324). Homes are also staying on the market longer. This October, closed homes had been on the market an average of 37 days while last October they had been on the market for 34 days. Prices, however, were relatively stable. The median sold price for October 2010 was $258,170. Last October it was $257,500. The average sold price was up $6,000 from $258,200 to $264,000.
This market is the most favorable market for buyers in years. Interest rates are still very low – rates on loans with a 30 year fixed rate have consistently been below 4.5%. Competition on homes is way down and sellers may be more willing than they were in more competitive times to offer concessions and accept offers from buyers who are using government programs. Furthermore, as the holidays approach and the days grow shorter, more buyers will leave the market which offers more opportunities for the buyers that remain.
Of course, it’s still more difficult to get a loan and homes in popular neighborhoods that are priced attractively and are move-in ready are still seeing a great deal of competition. Also, many government programs have less funding or they have run out of funds.