We move for different reasons. Yet we have one thing in common if we are considering the purchase or sale of a home in our local market: the realization that our area is expensive. What does “expensive” actually mean? After all, prices are relative. A median priced home in our local market* for the third quarter was $739,000 compared to $468,900 for all of Alameda County (in August, per the California Association of Realtors). In fact, our area’s median price was higher than the average in every county in the state with the exception of Marin and San Mateo counties. While I am not suggesting that prices are cheaper in Atherton, Malibu or Ross, I can conclude that the combined area of Piedmont and the hills of Oakland and Berkeley is a very pricey enclave.
So, when a buyer or seller is considering a move either out of or into one of our neighborhoods, the financial considerations are usually better for someone leaving the area than coming in. Within our community, however, the economic considerations are a bit trickier. I find it most useful to think about the relative values of a similar sized house in one neighborhood compared to another, all other things being held equal. To help illustrate what I am talking about, let’s take a look at a snapshot of sales information for the quarter ended September 30, 2011 for some of the more active neighborhoods in our local market. Please keep in mind that this data can change dramatically from period to period and that this is merely information for the activity in these neighborhoods over the last three months:
We have situations where similar homes, possibly only blocks away from each other, can vary in price by over 50%. And what is not evident from the chart is that neighborhood values often do not move in lock step with one another. In other words, from one quarter to the next, the relative price of one neighborhood compared to another may change, and in some cases quite dramatically.
The takeaway: numerous options are available for someone who has changing needs in up and down markets. For example, empty nesters who may want to downsize and move closer to coffee and shopping may find that it is actually more costly than remaining in a larger home. Conversely, someone who requires more space may be able to find a home that allows them to expand while actually saving money. In short, careful consideration of your primary housing needs and relative prices can be an enlightening way to begin your planning process.
*detached homes over $450,000 in Albany, El Cerrito, Kensington, Piedmont and the hill areas of Berkeley and Oakland