August and All About Condos

Since COVID-19 hit the world and our Real Estate Market, I have focused mainly of the Single-Family home market as impacted by COVID-19 and our recovery from the systemic shock of our first Shelter In Place orders.  But recently, I have been hounded by questions about the Condo market: how bad was the crash in 2020; will it continue; when will the recovery occur?  This month let’s talk a little about the Condo market.

Traditionally, whenever there was appreciation in the residential market, Condominiums would be the last sector to appreciate.  As Buyers became priced out of the single-family home market, Condos became the default play due to affordability.  Likewise, whenever we saw a market correction, Condos were the first property class to lose value.  Then the Millennial Generation happened.  These were young people with good incomes and not much in savings.  They also wanted to be around the action; near restaurants, wine bars and nightlife.  They were drawn to the revitalized City Centers.  They preferred to buy a Condo rather than even consider a single-family home.  I was particularly interested in this trend and hypothesized that in the next Market Correction, Condos would trend similarly to Single Family homes. My assumption was that because of the conscious choice so many Condo owners had made, they would not become the usual default.  Well, I stuck my neck out and got whacked by COVID-19.

Condos were actually the starting point of the COVID churn in real estate that I have mentioned in previous Blogs.  The general feeling due to the SIP orders and our new life on Zoom was “all of my favorite hotspots are closed… I don’t want a roommate… I need more space… I don’t want to be in an elevator with someone… I get to work from home so no more commute… I want to get a dog… I need a yard”… and so on.  I hadn’t figured on that a couple of years ago.  So last year, we had many more Sellers of Condos than Buyers.  Even in COVID times, the laws of Supply and Demand still hold, and prices went south.  But where are we now?  We have reestablished our normal market rhythm and Single-Family homes are at an all-time high.  So, I guess it’s time to stick my neck out again and talk about the Condo market recovery.

In my opinion, I think the Condo market has already begun to recover, but the data are very sketchy as there are not many Condos in some parts of our market.  But let’s compare the January through July of 2020 versus 2021.  Right off the bat we can ignore Kensington and Piedmont cuz they got nada.  In addition, some areas of Oakland and Berkeley have very few Condos so those areas will also be ignored for this discussion.

El Cerrito:  Not a lot of inventory here.  Last year only 3 properties sold.  This year there have been 12 sales and the Median price is ahead 34%.  Now that is not a lot of data points, so don’t be too amazed by that.

Albany: There are some large complexes in Albany and there has been a good recovery in this market.  31 properties have sold this year so far, which is 10 more than last year and the median price is up 24%.

Berkeley: Berkeley is all over the board by zip codes and the number of sales in each area is low so statistics can be skewed.  If you look at the Berkeley Hills, 24 Condos have sold this year versus 4 last year.  But the Median price is down 12%.  Then look at the College Avenue/Elmwood area where 10 properties have sold this year versus 8 last year and the Median price is up 13%.  The overall totals for the City of Berkeley give me a bit more confidence in the numbers.  71 Condos have sold this year; 28 more than last year.  And the overall Median price is up 12%.

Oakland: The overall Oakland Condo market has been very active.  So far this year 547 properties have sold, compared to 284 last year, representing a 93% increase!  And while the Median price is up 9% this year in Oakland overall, Condo prices are varying wildly based upon location.

94602: The Glenview, Upper Dimond and Laurel Districts have seen a whopping 52% increase in the median price with the same number of Condos closing this year as last year.

94605: This includes part of Castlemont, Millsmont, Eastmont, Eastmont Hills, Grass Valley and Sequoyah Hills.  31 Condos have closed escrow this year, amounting to a 48% increase in unit sales.  And the median price is up 6%.

94607:  This area had by far the most sales of any zip code with 151 closings this year, up 116%.  Included in this zip code is West Oakland, City Center and Chinatown.  In this area, the Median price retreated 12% this year.

94610:  Included in this zip code are Adams Point, Grand Lake, Lakeshore, and a portion of Cleveland Heights.  90 Condos have sold this year, rising 173% over last year and is the second highest total by zip code.  But prices have declined 7% this year.

Snapshot:  Here is an interesting factoid; in all areas, a significant number of the sales were over the asking price.  In Berkeley 64.79%, in Oakland 62.25% and in El Cerrito 91.66% of all condo sales were over the asking price.

As you can see, the Condo market is clearly not in full recovery everywhere.  However, there are many pockets that have clearly become hot, with rising inventory and rising prices.  And even in those areas with a modest price decline, there has been a healthy inventory and numbers of sales are significantly higher.  So, the takeaway here is that there is a robust Condominium market in 2021 and that prices have definitely stabilized from the COVID crisis of 2020.

I will return to our usual analysis of Single Family Home market in September.  We have included the usual graphs of the Single Family homes activity through July.  I just thought you might enjoy a little perspective on the Condo market.

Until next month, stay healthy and safe and hold onto your optimism.