OAK NOTES from Grace Bishop

Grace Bishop  2021 Top Producer  2021 Neighborhood Ace - Northbrae




 
THE MARKET IS CHANGING (BUT IN WAYS YOU MIGHT NOT EXPECT)

As you may have read - or encountered first-hand - the East Bay real estate market is currently experiencing significant changes. Buyer demand, which had been softening for months, experienced a hard stop in early June and continues to slow even further in July. The change was mainly driven by spikes in inflation, uncertainty driven by rounds of tech layoffs, and increasing interest rates (and thus decreasing buying power). 

Although buyer activity has been falling, new listings continue to hit the market, creating an imbalance between supply and demand. As a result, key metrics in the East Bay are faltering, driving down median price as well as the amount buyers are willing to pay over the list price, while driving up days on market. For example, looking at active listings by the length of time they have been on the market, 42% of properties have been active for 5 weeks or more; at this time a year ago, only 27% reached this threshold.

Average Days On Market of Active Single Family Properites[ view larger ]

However, not all properties are being affected in the same way. Higher-priced properties are generally performing better than lower-priced properties. Those that are "most attractive" - desirable neighborhood, appealing design and "move-in ready" - are often still generating a high level of interest from buyers. Indeed, when looking at properties that sold in Q2 2022, the higher the sale price, the further over asking the property tended to sell.

Original list price vs. sell price
[ view larger ]

How is the future East Bay market unfolding? By analyzing Red Oak's internal transaction data by offer date, we can see that the high level of inventory continues to take its toll. Homes are selling closer to asking (an average of 15% over list) and are attracting fewer offers (an average of 2.2, the lowest we have seen for this season since 2014). 

RO Buy/Sell Transactionsview larger ]

This shifting market has put significantly more power in the hands of buyers - more than they have seen in over a decade - creating new opportunities to purchase at lower prices with terms that are more attractive to them. However, buyers are still writing aggressive offers: in June only 15% had an appraisal contingency, 18% had an inspection contingency, and 17% had a loan contingency.

As sellers and their agents navigate this market, they need to stay in tune with current conditions - which can change week by week - adjusting pricing and expectations accordingly. 

For more information, please see this 95-page analysis of the Q2 2022 market and reach out if you would like a custom report related to your specific goals.
 



RECENT TRANSACTIONS

MARKET UPDATE: JUNE 2022


 

Properties that sold in June were largely unaffected by the buyer slowdown that started in earnest in early June. The number of homes sold fell: units were down 20% compared to last year (which was one of the strongest markets on record) and were down 8% compared to last month (which is not uncommon for the season). But prices remained strong, reaching another all-time high of $1,399,500, a 14% increase since last year. Although we saw an increase in the number of homes selling at or below asking, the average home sold for 20% over list, which was the same as last year but a decrease from the all-time high of 25% we experienced in April of this year. And average days on market was 16 days, close to an all-time low. When we review July data, we expect several of these metrics to soften.
 


MORTGAGE UPDATE

Inflation numbers for June came in hotter than expected at 9.1% year-over-year. The consensus estimate of 8.8% was beaten by 0.3% just as it was when the May numbers were reported (8.6% vs. 8.3% consensus). However, unlike the reaction to the May numbers, which sent rates soaring, the response to the June numbers was relatively muted as bonds stayed flat. The reason for this is other data in June indicated that there may be a light at the end of the inflation tunnel as we saw commodity prices fall and inventory in auto, apparel, and other consumer goods increase. This data coupled with lower consumer sentiment tells us that we may be seeing inflation numbers falling by the end of the year. The FED is expected to raise its benchmark rate by 0.75-1.00% when they meet at the end of July as they continue to focus on fighting inflation. This should be welcomed by the bond markets and will likely cause rates to go down as they did in June following the last rate hike. If the hikes have the dual impact of lowering inflation and slowing down the economy, the likely outcome is a recession which should shift the focus of the FED from fighting inflation to stimulating the economy. This could occur over the next 12 months, further increasing the downward pressure on interest rates. We seem to have peaked in the rate market for the time being, barring any unforeseen events. For more information on this or if you have any questions, please contact Faramarz Moeen-Ziai of CrossCountry Mortgage, LLC at fmz@myccmortgage.com or 510.254.4697.

FMZ TEAM CROSSCOUNTRY MORTGAGE

Personal NMLS342090 | Branch NMLS2020284 | Company NMLS3029 | CA-DOC34209
 



SAVE THE BAY
 
SAVE THE BAY: BAY DAY 2022

Red Oak is excited to partner with the non-profit organization Save The Bay for their 7th annual Bay Day Challenge. Presented in partnership with San Francisco Bay Trail, this region-wide event challenges everyone to get outdoors and connect with the beautiful Bay in a safe and inclusive way. The Bay Day Challenge features a 30 Mile Trail Challenge as well as the flexible Bay Activity Challenge that the whole family can enjoy - any time, anywhere. They will offer a 30-Day Guide full of fun activities, trails, views and destinations. Registration opens on August 1st where t-shirts and swag will go to the first 200 registrants. September 2nd is when the challenge officially begins, and on October 1st, the official Bay Day, the event will conclude with a public clean-up. Please join us in support of this incredibly important cause.
 



FORBIDDEN ISLAND
 
LOCAL BUSINESS SPOTLIGHT: FORBIDDEN ISLAND TIKI LOUNGE

Need a tropical trip without boarding a plane? No need to pack your bags, just head over to Forbidden Island Tiki Lounge in Alameda. Passing through the doors you'll be instantly transported to a retro-oasis full of colorful decor and other details that will make you feel like you are on vacation. They have over 150+ rums from around the globe, tasty snacks, and music off the jukebox. If you want to take the taste of this trip with you - bring several of their exotic cocktails home to share with a few buddies. Or plan a private party with Forbidden Island and share the sweet escape with a group of your friends. So don't miss out on this tropical oasis that will take you away from the hustle and bustle of the Bay buzz. 

1304 Lincoln Avenue, Alameda | Open Monday - Friday: 4 PM - 12 AM, Saturday: 2 PM - 12 AM and Sunday: 2 PM - 10 PM
 



Grace Bishop
Realtor | #01245471
510.872.4512