Oakland California real estate shot through the roof during the period from 2001 to 2005, with appreciation reaching 120% in some areas. Homes were routinely selling for 60-100k over asking price and more! It was not uncommon for a desirable property to fetch 30-40 offers. I remember one home in the Oakland Hills went for over 300k over asking price!
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However that type of market by nature is not sustainable, and the current market is proof of that. Starting in early 05′, us Realtors started seeing a noticeable slowdown in activity, which has continued to this day. The ironic thing is, prices are still high. They have taken a slight dip(approximately six percent) in the last year, but our median price is still around 500k. There is much more opportunity for buyers right now, because there are plenty of homes on the market which means buyers have more choices and more negotiating power.
Sellers have had to come to the realization that they can’t just get any price they want for their home, and the days of putting up a sign and the next day it’s sold for 60k over asking price are OVER. Sellers have to do more to prep the home for sale now, and staging is much more common. The most important thing of course if price though. I don’t care how nicely a home is staged, if it is not considered a value compared to the others in the area it WON’T SELL. This is, unless your home happens to have historical significance or is in an especially desirable area.
One example of an exception to the rule was a house that just closed last week in Piedmont. It had great square footage, (I personally viewed it on our office tour) but it was in need of a lot of TLC. The bonus was that it was in a particularly exclusive neighborhood in Piedmont and had been designed by a locally renowned architect. The agent also had contractors and interior designers at the open houses to help give buyers ideas. The home went on the market for $1.4 million, and ended up selling a few weeks later for over $1.7 million! Yes, 300k over asking price!
However the reality for most sellers of Oakland real estate today is that they need to price their home attractively and prepare the home for sale if they expect to get it sold.
Hamid Grinage
http://www.articlesbase.com/real-estate-articles/bay-area-real-estate-no-bubble-burst-120101.html
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9 Responses to “Bay Area Real Estate- No Bubble Burst”
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February 13th, 2010 at 4:17 am
What does the lessen of Japan’s bursting real estate bubble and subsequent stimulus have to teach us today?
The International Herald Tribune:
“Japan’s rural areas have been paved over and filled in with roads, dams, and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s.”
Public spending was so aggressive, it boosted Japan’s government debt to 180% of GDP – more than two times the current US level. But did all that cement buy Japan out of its slump?
You be the judge. Housing prices in Japan are now back down to where they were in 1975 – nearly 90% below the late-‘80s peak. And stocks? The Nikkei index is back down to where it was a quarter century ago. Stocks sell for half their book value – and they’re still considered too expensive for beaten-down, hyper-fearful Japanese investors. The downturn began in 1990. Over the following 19 years, it did more property damage than the Great Tokyo Fire of ’23 and the Enola Gay combined, wiping out wealth equal to three times the country’s GDP. This was despite interest rates at zero… and a heroic effort at Keynesian stimulation.
If America were to follow Japan’s example, it would have to leave its interest rates near zero for the next decade… and add about $10 TRILLION to its public debt. And if it got the same results, you’ll be able to sell your house in 2026 for the same price you paid in 1992.
But the simpletons have no other idea.
“In a nutshell,” continues the IHT report, “Japan’s experience suggests that infrastructure spending, while a blunt instrument, can help revive a developed economy, say many economists.”
Are these, perhaps, the same economists who thought America’s super-consumption, eternal-debt economy would never fail? The same economists who thought the bankers were providing a public service, by offering so many people so much credit… and then planting their debt bombs all over the planet? The same economists who forecast rising stock prices in 2008?
Probably.
madart, even in tough times you really try to make needed repairs. That is as true for a country as for an individual with a house to maintain. That is repair, not stimulus. The rest should go. ALL the rest.
February 13th, 2010 at 9:19 am
The very same thing happened in america
i saw it happen
WAKE UP
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February 13th, 2010 at 9:21 am
Part of the problem with the Japanese stimulus plan was its very slow roll out. People have learned from that mistake and are calling for a much faster implementation.
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February 13th, 2010 at 9:23 am
America’s infrastructure is in need of repair – so fix it, to fix it not for the sake of spending money
But let me say this again – Keynesianism was tried and it failed. It is still wrong.
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February 13th, 2010 at 9:25 am
Everyone runs out of fuel sooner or later.
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February 13th, 2010 at 9:27 am
The analysis I heard was that the problem was that they abruptly stopped the infrastructure spending. It would have been much better if they gradually tapered off.
And are you really arguing that we don’t need improvements in infrastructure? I mean we haven’t had major bridges fall down and whole cities flood- oh wait we did.
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February 13th, 2010 at 9:29 am
It’s funny but, I tend to think the Japanese have a good handle on their country. The fact that stimulating the economy through keeping interest rates at zero worked slowly and government provided financial stimulus kept the country from failing completely is actually impressive considering their debt to GDP ratio. The fact that the simpletons (and I’m not arguing with you there) are looking to precedent in this case means they may actually be using the weights on top of their shoulders for once.
New ideas would be great however, when you’re fighting a problem of such magnitude, there is no such thing as a bandaid. The solution will take a long time and be painful. That’s why I think so many Americans were so pissed at the Bush administration. Maybe they saw this coming.
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February 13th, 2010 at 9:31 am
I am so sick of hearing print more money. While the general population have zero idea as to where all of this money comes from. Yet many seem willing to ignore history, and justify all of this spending as if they’re above it all and inflation and the worthless dollar won’t happen to them.
Massive inflation WILL occur.
The value of the dollar WILL plummet.
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February 13th, 2010 at 9:33 am
Those who don’t know there history should repeat it. I have been saying this for years, yet people seem ignorant of it. I mostly point out the housing down turn and that zero percent interest didn’t get the Japanese out of the hole. At work I keep seeing people repeating the same mistake and it always fail. The stupid things is that the politicians say the exact same thing as my idiot bosses. We got to try something. I;m reading the answers and those who support the stimulus package scares me. They want to rush it before we examine the package. When I do business, thieves rush a sale so you wouldn’t research it. A stimulus pacakge won’t work. They are not lookin at the whole picture. People need to become a lot more conservative in what they invest.
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