Oakland now has the dubious distinction of being the nation’s “most competitive” housing market, beating out San Francisco and San Jose, with over 80 percent of properties selling above asking price.
And while Oakland brokers and home sellers have been underpricing properties to draw multiple offers, it’s not a unique strategy in the Bay Area.
In August, the city’s median home sale stood at $875,000, according to Redfin, which was 4.3 percent higher than a year earlier.
Rita Lindahl-Lynch, who began house hunting with her husband, Will, just before the pandemic, witnessed the rising prices in real time. It led to a ballooning budget and shrinking expectations.
They were hoping for a bigger place for their family of four but wanted to stay in their beloved Glenview, where prices had already been rising.
They only made it to a handful of open houses before the Covid lockdown. The restrictions made seeing homes more difficult, but Lindahl-Lynch estimated she “toured the outside” of every home in the neighborhood with at least three bedrooms that hit the market. And as showings returned, the couple toured a dozen promising properties, making offers on three. The competition was fierce; Lindahl-Lynch said they would have put down more offers, but other buyers beat them to it.
“We definitely felt like giving up,” she said, noting that they also looked into adding onto their own home or finding a smaller home on a bigger lot that had potential for an addition. “Buying a home in Oakland today is incredibly expensive and difficult,” she said. “Honestly, if we thought we could be happy elsewhere, it would have been much easier to move further away.”
The Oakland housing market’s frenzied pace over the last 18 months has been spurred on by low inventory and a buyer pool desperate for more space in a city where Victorian cottages and 1920s-era bungalows are still common. The city had long since slammed the door on bargain hunters, but Covid sent prices skyrocketing. While home sales have dipped recently and sellers have to work a little harder to show their properties, agents report that multiple offers over the asking price are still commonplace.
For Oakland single-family homes — more in demand than condos — the spring and summer months were blazing. Between March and August, the median single-family home in the city sold for $1.1 million, according to MLS data compiled by Deidre Joyner, a broker at Red Oak Realty. That’s a 20 percent jump from the year before, said Joyner, whose firm is based in the East Bay. During the same period, about 20 percent of homes sold over their list price, compared to 10 percent the year before.
In Upper Dimond, where the median sale stood at $1.2 million, about a third of the homes sold above their original listing. In West Oakland’s more affordable Prescott and Village Bottoms neighborhoods, the median sales price also skyrocketed, to $900,000 from $700,000 the year before, and sales quadrupled year-over-year, Joyner said.
As pandemic buyers searched for more space, high-priced communities that sport panoramic views in the Oakland Hills also kept climbing. Median home sale prices in Upper Rockridge were up almost 30 percent, to $2.2 million; in Crocker Highlands, Fairview Park and Skyline-Hillcrest Estates, the median price rose to about $2 million.
“What stands out to me is how much money is in this market,” Joyner said.
Meanwhile, many of her clients, like Lindahl-Lynch, have outgrown their Oakland starter homes but have found it difficult to move because “the gap between the first home and the move-up home has widened,” she said. Many of those clients, Joyner added, are delaying their buying plans or abandoning them entirely and renovating their current homes.
Those price increases also made it tough for Erick Howard and his wife, Melissa. During last year’s lockdown, the couple grew tired of fitting their family of four — including two toddlers — into a 1,500-square-foot, two-bedroom San Francisco condo. Like many in the city, they longed for some private outdoor space where their boys could run. Howard and his wife also hoped for more private indoor space where they could take their Zoom work calls without interruption. They set their sights on Oakland.
Even coming from San Francisco, the couple experienced sticker shock when they saw what their money could buy. They expected the homes they targeted to end up selling a little over their asking prices, and end up somewhere south of $1.5 million. But they soon learned that sales 40 percent over asking were common in many Oakland neighborhoods.
“We got a rude awakening when we actually jumped into the market and realized our original budget wasn’t going to go far at all,” he said.
Even seasoned agents had trouble making sense of the “nuclear” housing market this past spring, said Michael Braillard of Caldecott Properties. It was common for a listing to get more than 15 offers and go into contract within a week of hitting the market. Frantic buyers dropped all contingencies in the hope of coming out on top.
And more people started looking into buying small multifamily buildings with friends or family, hoping that they might have more room to negotiate, he said.
Braillard has been through sellers’ markets before, but this felt different, he said. At the same time, he could also understand why buyers were so desperate. Many were feeling cooped up in their homes, and they couldn’t travel or even go to an office for a change of pace.
“Everyone’s attention was on purchasing a house,” he said.
From frenzy to fatigue
But starting this summer, Braillard noticed a shift. “Buyer fatigue” was setting in. Vaccination rates were rising, and more people were traveling and seeing friends and family again — generally moving on with life. Homes started closing in two weeks instead of one; those multiple offers fell into the single digits.
There was still a healthy pool of buyers, Braillard said. It was just slightly smaller in comparison to the intense spring real estate market.
He still expects a strong fall season, and has also noticed a slight increase in San Francisco buyers recently. The early-pandemic buyers prioritized space so much that they often bypassed Oakland, instead seeking out bigger homes even more removed from city life, Braillard said. Now interest in those areas has waned and some of those buyers are turning to Oakland, he added.
“Instead of buying a condo near BART [Bay Area Rapid Transit] in Oakland, SF buyers were purchasing a house in Castro Valley, Concord or San Leandro,” Braillard said. “We’ve personally seen more condo purchases in 2021 than 2020, which seems to be a slow return to normal buying behavior for that market segment.”
Condos are back on the table and so are contingencies, Joyner said. Because the market has cooled, even single-family sellers may have to do a bit of prep work before showing property, she advised.
“In the first half of 2021, I noticed that buyers accepted more challenges and repairs,” Joyner said, but that has changed. That shift may remain into next spring, so “sellers should take extra care and pay attention to the details when it comes to pre-marketing preparations,” she added.
But for Howard and Lindahl-Lynch, their house-hunting odysseys are over.
Howard said he and his wife were ready to begin searching for a rental when they found a 2,600-square-foot Oakland property that “ticked all the boxes for us,” though they had to compromise on a smaller yard and a one-car garage.
Lindahl-Lynch and her family were able to upgrade to a home in their longtime Glenview neighborhood with twice the square footage, but only after her mother sold her place in San Francisco and assisted with the down payment. That boosted the couple’s budget from $1.4 million to $1.7 million. Now her mother lives in their former home, and her kids are a 10-minute walk away from their grandma. She feels “very lucky,” even though their new home is closer to a major intersection than she had hoped.
She advised those still out at Oakland open houses to decide what really matters to them and where they could find room to compromise, and then jump on any house that fits the bill.
“The main thing I learned was that you should put an offer, quickly, on any house you love,” she said. “You never know — you just might get it.”