As home prices declined, more homes were sold in Berkeley during the last 12 months than in the previous year, signaling a possible recovery for the city’s fragile housing market.
Between September 2010 and August 2011, 27 more houses were sold in the city than during the same time period the previous year, a trend reflected in recent sales in both Alameda County and the larger Bay Area, according to DataQuick, an organization that provides real estate data for properties around the nation.
“The sliver of positive news here is that, no matter how you look at it, last month’s sales beat the year-ago numbers, which were pretty lousy,” said John Walsh, president of DataQuick, in a statement.
In Berkeley, incredibly low interest rates have primarily driven buyers to purchase in the last year, according to Deidre Joyner, a real estate agent at Red Oak Realty. Low rates make capital more accessible and, by that token, encourage entry into the housing market, she said. Glen Bell, a broker at Better Homes and Gardens Real Estate, said he expects these rates to be maintained for at least “a year or two.”
The Mortgage Credit Certificate program, which uses $10 million in allocated funds to facilitate access to credit for potential homebuyers who might otherwise struggle to put together the capital, has also helped stimulate local demand for homes, according to Michelle L. Starratt, the assistant housing director for the Alameda County.
To meet this demand, the city has been building. In August 2011, the quantity of construction permits issued by the city was 12 higher than the number issued in the same month last year, increasing from 192 to 204, according to a report from the city’s Planning and Development Office.
Dave Garner, a Berkeley landlord, said in an email that development as of late has significantly improved the quality of the market.
“It has not been the weak economy that makes renting more difficult,” Garner said. “It is the new apartments that have been built recently and are available … it is difficult to compete with new units with granite baths and kitchens and the latest built-ins.”
The high quality of Berkeley residences has caused bargain-priced homes to frequently sell above list price, according to David Fickenscher, a real estate agent with Marvin Gardens Real Estate. Over the past four months, sale price exceeded the asking price by half a percentage point, according to data from Multiple Listing Service.
Bell said he foresees “a cumulative appreciation of 15 percent” in home values by 2015.
“The Berkeley area is a very desirable area, and as a whole it tends to do better than the country as a whole,” Bell said.
Yet, nothing is certain, Joyner said.
“There is no cookie-cutter formula to this housing market,” she said.
The combination of decreasing home prices and diminished consumer confidence, a result of gloomy economic news from Washington, D.C., and Europe, places the city’s housing markets in a critical position, Bell said.
The lack of certainty has led the local market to suffer from “a lack of buyers, a lot of people getting on the fence and holding off,” he said.
“We’re probably hitting lows. We’ll probably be bouncing along the bottom for a year or two,” Bell said.