I keep reading that Bay Area home sales are at the lowest level in 12 years. This headline has left buyers scratching their heads wondering, "where are all the resulting deals?" Unfortunately for buyers, it's the number of sales that have declined not the prices. Fewer homes on the market have resulted in the recording of fewer sales. This translate to low inventory for buyers. This in turn creates competition and results in multiple offers. The Median Price for a single family home in the Bay Area has increased to $660,000, the highest recorded level yet.
There is good news for buyers despite the confusion. The current median price reflects a modest 3.4 percent gain over last year, as reported by DQnews.com. This is a small gain compared to the 20 percent increase from 2004 to 2005. (In 2005, the median price for a single family home in the Bay Area was at $556,000.) This isn't a windfall for Buyers, but it does indicate a healthy leveling of the Bay Area market.
In our office, we are seeing buyers react cautiously to a sometimes spotty market. The market is "spotty," because some, but not all houses, are drawing the competition from buyers that results in sales prices which exceed market expectations. For our sellers, we do our best to increase the odds in their favor (which makes our track record better than most) but the current market is more susceptible to buyer whim. As sellers work to rally scattered enthusiasm, buyers gain an improved bargaining position.
This brings more good news to Buyers. In addition to the tempering of competition on some houses, buyer contingencies have regained some strength. In particular, buyer inspections have returned along with the negotiations associated with their findings.
We have also seen a continued increase in the number of homes "back on the market" as buyers struggle to develop a well rooted sense of value in what has been a changing market. Sellers too struggle to rationalize the reports from the neighborhood grapevine (with tantalizing instances of sellers who seemingly still hit the jackpot) with the realities of a leveling playing field.
We will be watching to see how this market plays out in July as we head toward August. August traditionally slows down as Bay Area residents take their summer vacations and prepare for the coming school year. As a result, what happens in July often informs the September market.
For Buyers and Sellers: Berkeley Hills Realty works hard to improve the odds in your favor. We remain ever vigilant and strive to think outside the box as it relates to all new information. For our Sellers, we have put new strategies in place designed to expand market exposure and to increase a property's perceived value. We also consult with our Buyer clients on factors that create and protect value as it relates to the purchase of their new home. As we embrace this new marketplace, we invite you, your friends, and family to call with any and all real estate related inquires. As always, we are happy to share our thoughts.