KENSINGTON (KPIX 5) – In the Bay Area real estate market, bidding wars are back with a vengeance. Despite a global pandemic, 2020 is expected to beat 2019 when it comes to the number of homes sold.
“I’m very surprised at the numbers we’re seeing,” said Michael Delehanty, a real estate agent for Compass.
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Delehanty has been a broker for 16 years. He says he talks to customers about overbids on a daily basis.
You go something like that. “I have good news and bad news. The good news is I know what it takes to maintain this property. The bad news? The number is so fancy that it is difficult to say it out loud, ”he explained.
Delehanty recently sold a three-bedroom home in Kensington, a neighborhood in the Berkeley Hills, for $ 400,000 above the asking price. That overbid is more money than the house that was sold for in 2001.
“We’re talking about Kensington and these areas. But to be honest, it continues in Concord, Oakley and Brentwood, and all of the East Bay, ”said Delehanty.
A variety of factors contributed to the creation of this glowing real estate market. For one, it was the record low for a 30-year fixed-rate mortgage in January, which hit its low of 2.65%. In addition, more than 3 million millennials have just reached the age of buying.
The pandemic and working from home changed what people wanted, most want space now, but many sellers are concerned about moving during a pandemic.
The analysts at Zillow like to say: “Low stocks + high demand = intense competition”.
Homes in 2020 spent an average of 16 days on the market, up from just 12 in October, compared with an average of 42 days in 2019.
“It’s this scramble for space where there’s not enough inventory, especially in suburbs and single-family homes,” said Jeff Tucker, Zillow’s senior economist.
Tucker points out that the record-low interest rates we’re seeing mean even more in extremely expensive real estate markets, “because they know they can secure that for 30 years, which makes such a big difference in such a sizeable mortgage.”
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Many people with white-collar jobs who did not lose jobs during the pandemic have saved money by staying at home. It has been difficult for first-time buyers who helped with a down payment and low interest rates to resist buying. Now it is expected that the economy will improve in the years to come and these interest rates will rise slightly.
“I think this is actually creating another mess as this may be your last chance to set an interest rate below 3% and people think I want to do that now,” Tucker said.
“It really is the perfect storm for the real estate market that we are seeing,” says Alexander Fromm Lurie, Real Estate Advisor at Compass.
Lurie said he saw interest in San Francisco dwindled during COVID, but it was coming back, especially for unique homes like 2454 Bush Street. It’s two cottages combined by a glass ceiling, offering a lot of rare outdoor space for the city.
“We are expecting an offer today that will be on the market in just a few days,” said Fromm Lurie.
The broker continued, “People want a sanctuary in the city, gardens on either side, not a cookie cutter. People want to feel like they are in a special room. “
Luxury real estate in San Francisco is also breaking records. 150 Glenbrook Avenue broke a neighborhood record of $ 17.5 million in 2020.
“The people in good positions and profitable businesses are buying luxury homes and maybe second homes,” says Laura Adams, a former real estate agent who now works for Aceable, a real estate licensing training school.
Adams says she worries about how the other half is doing, those who keep their homes but have lost their jobs and are only seeing relief because of indulgence.
“When we hit the mortgage forbearance end, which is expected in late June, we may see a lot more foreclosures that could change the momentum a bit,” said Adams.
As for how long the bidding wars will last, Delehanty says it doesn’t look like it’s going to wear off anytime in the next three to six months.
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“The quirky aspect is not feeling like this is a bubble, not feeling like this is an unsustainable launch in the market,” Delehanty said.