Multiple Micro Markets

A month ago in this space we reported on a jaw-dropping example of over-bidding in what the mass media still describes as a “buyers’ market.” A two-bedroom, one-bath home in Rockridge, listed for $799K had received 17 offers. It sold this week for $930K, 16% over list. Yesterday I was one of six agents presenting offers on a property in North Oakland, and I routinely hear of colleagues who are presenting one of three to six offers on homes. That’s unremarkable for those of us selling in Albany, Kensington, North Berkeley, Elmwood or Rockridge. What was a bit unusual in this case was that the house was just one block off a part of

with fairly high crime statistics. And only a few blocks away several homes are in foreclosure, and others have had several price reductions.

The home I presented an offer for was very charming with lovely period details and a tastefully updated kitchen, a feature that often translates into considerable interest. The overall charm, plus a full basement, tantalized my clients, despite the fact that the price seemed quite high for the location. A dozen other buyers were attracted as well. And so, to be as competitive as possible, my clients decided to do a pre-inspection. At the high-point of the market this was one of several practices used to gain some advantage in the bidding. Some other aggressive practices were pre-emptive offers, and relative offers, both of which have re-emerged this spring. Conducting inspections in advance of presenting an offer allows buyers to go in without an inspection contingency, as they’ve already truly inspected the property. It means they have also spent around $600, and they and their agent have spent another four hours or so bonding with a property that they may not be able to buy.

Within the written disclosures, items may be mentioned as “possible areas of concern.” That’s a very different perspective than when a highly knowledgeable inspector points to a roof with missing shingles and says “this roof is shot: it needs replacing.” That was the recommendation for our charming bungalow. We also were shown a leaking, rusting water heater and an ancient boiler for a radiant heat system. It needed earthquake retrofitting, demolition of a chimney and various other smaller fixes‑-some inexpensive to deal with, some that could lead to a domino effect of other requirements. So my clients backed off from what they had anticipated offering. That put them in third place out of six, evidently well behind the first two offers.

The question on everyone’s mind is Why? Why, in a general atmosphere of doom and gloom regarding the lending industry, and when increasing numbers of short sales and foreclosures are appearing on the market, are there still pockets of such strength here in the EastBay? I believe it’s a combination of factors:

1). Sub-prime loans never were much of a factor in the hotter locations

2). We have no room here to build new developments, the property types that have suffered the most in many parts of California

3). This is an area of intrinsic desirability. It is physically beautiful. It has interesting topography. Within minutes we can be in the woods of Tilden or at the Bay. And we are surrounded by mostly attractive, and in some cases positively gorgeous homes. As Realtors we have the opportunity to represent beautiful architecture, including the works of some true masters. That gives our jobs, as well as our clients, a kind of satisfaction that does not exist in the areas where foreclosures now dominate.

4). We have easy access to interesting, colorful, delicious things that are hard to find in so many areas. The large population of immigrants attracted to the San Francisco area has produced remarkable cultural diversity in our part of the EastBay. In practical terms that has resulted in the broad availability of many types of ethnic music, phenomenal ethnic cuisine at reasonable prices and celebrations from many cultures that have become now part of our experience.

5). Berkeley especially, but other academic settings within the EastBay as well, have attracted huge numbers of people who are attracted to “the life of the mind.” And finally. . .

6). It’s the wisteria. I am only partly kidding. More to come. . .

All photos copyright © Arlene Baxter 2008.