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East Bay: Q1 Results
How tight was the supply of East Bay homes for sale in the first quarter? One statistic says it all: Fully 90 percent of the transactions in Pacific Union’s Montclair and Berkeley offices involved multiple offers, with the number of bids rising into double digits for many homes.

The tight supply proved challenging for first-time buyers, who increasingly found themselves outbid or priced out of their preferred neighborhoods. The number of short sales and foreclosed homes was down considerably in the quarter, further limiting the supply of lower-priced properties for first-time buyers.

Homes sold quickly in the quarter, with an increasing number of all-cash transactions.

Sellers enjoyed higher prices than they’ve seen in years, with homes frequently selling for more than 10 percent above the asking price.

Looking Forward: We’re optimistic that rising prices and attractive offers will coax more homeowners to put their properties on the market in the second quarter and beyond, with more than enough demand to meet the supply. Rising home equity, thanks to recent price increases, may pleasantly surprise sellers, prompting them to become trade-up buyers themselves.

Defining the East Bay: Our real estate markets in the East Bay region include Oakland ZIP codes 94602, 94609, 94610, 94611, 94618, 94619, and 94705; Albany; Berkeley; El Cerrito; Kensington; and Piedmont. Sales data in the charts below includes single-family homes in these communities.
Median Sales Price
The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.
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Months’ Supply of Inventory
The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.
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Average Days on the Market
Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.
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Percentage of Properties Under Contract
Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.
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Sales Price as a Percentage of Original Price
Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.
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A Closer Look at the East Bay
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Sellers, Start Your Engines!
After record-breaking results in 2012 for units and volume of residential real estate, activity in the first quarter suggests 2013 will once again reach new highs. Local trends drive the dynamics of our markets, but overall we expect 15 to 17 percent increases in units sold in the Bay Area and price appreciation of 4 to 9 percent.

The single most important dynamic driving this growth is our healthy regional job market. Economist Stephen Levy noted that the Bay Area led California job growth in January, with San Francisco at the forefront and the Oakland, Napa, Santa Rosa, and Vallejo metro areas all posting gains far above the state and national average.

These are high-quality, high-paying jobs in the technology and professional services sectors. We believe confidence in jobs and business in general is driving consumer confidence and the intense pent-up demand for residential real estate. 2013 may be the last year of this cycle that money (mortgage interest rates) remains on sale as real estate prices lift from the bottom and consistent appreciation returns for a sustainable period of time.

Intense demand is occurring even as the supply of available homes remains constrained, and coupled with modest price appreciation is driving the return of equity into homes. This may allow more sellers to realize gains, sell existing homes, and trade up to new dream homes or neighborhoods.

These dynamics are occurring in nearly every one of the markets Pacific Union serves, and we expect it to entice move-up buyers to act – making them a likely source for new, mid-tier inventory.

For specific market performance or advice on your specific property, please reach out to your local Pacific Union real estate professional. And enjoy the warmer spring months!

The Sellers’ Market Heats Up
It has been a bitterly cold few years for would-be sellers in the Bay Area, but spring is bringing welcome warmth for both home values and buyer activity.

Home prices have been rising for a year across all of Pacific Union's eight regions in the Bay Area and Tahoe/Truckee. In San Francisco the median sales price of homes rose nearly 30 percent in the first quarter from a year earlier, and double-digit increases were recorded in all other regions as well.

In a recent Wall Street Journal survey economists agreed that home prices will continue rising at least through 2017, and the Bay Area's strong economy suggests price increases here will outpace those in most of the rest of the nation.

Those rising values translate to greater equity, and many homeowners who believe they are “underwater” – owing more on their mortgages than their homes are worth – may be surprised to learn that they've regained equity based on recent sale prices for comparable homes in their neighborhood.

Why the lift? In part it's because a persistent shortage of homes for sale has created a veritable army of aggressive and highly motivated buyers who are willing to outspend the competition. For example, in our East Bay offices, 90 percent of transactions in the first quarter involved multiple offers; on average, homes sold for 13 percent over asking price.

Homes in the Bay Area sold within weeks of coming on the market, frequently in all-cash deals, and multiple bids pushed sales prices above asking prices in all regions, much to the delight of sellers.

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Overall, the increased velocity of real estate activity in the first quarter of 2013 was nothing short of remarkable.

This means that sellers looking to trade up to a higher-priced home may now make significant gains in the current market. For example, consider a homeowner whose property was valued at $300,000 in 2006 but dropped 20 percent in value to $240,000, for a loss of $60,000. That same 20 percent drop in value for a higher-priced home – say, a $450,000 home now valued at $360,000 – gives a trade-up buyer savings of $90,000, or a net gain of $30,000 on the new home.

Today's low mortgage rates also offer serious savings to trade-up buyers. In 2002, when the interest rate on a 30-year fixed-rate mortgage stood at 6.5 percent, the monthly payment on a $500,000 loan was $3,160. At current rates, which hover around 3.6 percent, approximately the same loan payment would buy a home with a $700,000 mortgage – a net gain of $200,000.

The benefit won't last forever, so prospective sellers should move quickly: A report from the Mortgage Bankers Association predicts that rates will average 4.4 percent by the end of 2013. That 0.8 point rise will add $230 to the monthly payment on a $500,000 mortgage.

So if you're thinking about selling in this blazing market, don't get burned by waiting too long. And count on the expertise of a real estate professional who knows the local market to help assess your home's current value and prospects.

Looks like it's shaping up to be a hot season for sellers!

Bay Area 10-Year Overview
Here’s a look at home sales in the Bay Area’s real estate markets in the first quarter of 2013, with a glance back at the 10 preceding first quarters.
Click here to see specific 10-year data on key cities in the Bay Area.
Recent Activity
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Neighborhood Data Properties for Sale
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Nguyen Nguyen Porter
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nnguyen@pacunion.com
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