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/no-bay-area-bubble-burst-114054.html
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March 9th, 2010 at 9:28 pm
Is there a housing bubble in the Bay Area that will burst?
There has been great speculation that there’s a housing bubble in the Bay Area, however what are the real chances of it occurring? What ‘sparks’ might be most likely to precipitate it? Are there any close parallels?
Alternatively is this a myth and house prices are fully justified and will continue to rise?
March 10th, 2010 at 2:30 am
Read the article I wrote: "Is the Housing Bubble Real?" http://burlingamerealtor.com/serendipity/index.php?/archives/2006/02/16.html
I suggest reading "Are You Missing The Real Estate Boom?" by David Lereah
Real Estate prices can’t go to zero, unless there was a reason for people to flee that area or the interest rates shot up suddenly and much higher than what we could imagine, whatever the size of that area. It’s not likely that interest rates will shoot up quickly. So ask yourself if the people of the area you are thinking about have a reason to leave the area suddenly.
If they don’t, then there will likely be no real estate bubble in that area.
Real Estate is not a short term investment and it’s not as liquid as stocks. Stocks can go to zero but it’s EXTREMELY difficult for real estate to go to zero.
The real estate bubble scare has been brought upon by stock brokerages and/or the media since they are tied together or invest in each other. Don’t buy into it.
Real Estate is a finite commodity. However, stock shares can be split forever it seems. Also real estate is unique, even if it’s in the same complex, if a condo. Is each share of the same stock unique? No, one share of MSFT, for example, is exactly like another share of MSFT!
So in my opinion, yes real estate can drop by 10%, 15% or 20% but I wouldn’t call it a bubble. The price will likely come back up in time, unless the area has been cursed forever. For less risk, buy in an area that’s got potential, is near good schools, near shops, near transportation, has a good real estate history and near jobs.
My strongest suggestion if you are serious in buying is to speak to a good Realtor, (go to http://www.ReferredPro.com) to be referred to one, who can give you some guidance, especially since they work with lots of people in your shoes who are thinking the same thing and lots of others who are making money in real estate. Warning: friends don’t necessarily give the best advice, even when they think they are.
References :
http://burlingamerealtor.com/serendipity/index.php?/archives/2006/02/16.html