The 2022 real estate market could be neatly divided into halves: The first half was a continuation of the hot pandemic market, with the median price for single-family homes in the Inner East Bay reaching an all-time high ($1.2M in June). But then the Fed put the brakes on this exuberance, leading to a quick and sharp decline in the second half of the year. This leads us to the current state of the market, which we summarize with these 6 top takeaways:
In 2022, the number of transactions fell precipitously. The number of transactions in December fell 43% compared to the previous year and Q4 transactions were at their lowest point since 2007. Full-year 2022 transaction count was flat from 2019 and up slightly from 2020, but down 22% from 2021, which was an unusually active year.
Median price also fell, down 7% in Q4 compared to the previous year. This was the largest year-over-year quarterly decrease since 2011. However, when looking at the full year, the median price was $1,059,000, a 5% increase over 2021, and the highest ever recorded. There are some interesting stories in this data, though. For example, in Q4, compared to the previous year, condos depreciated 14% while 5-bedroom single-family homes appreciated 7%. Compared to 2020 or before, prices are still up significantly in almost every Inner East Bay city.
Price reductions mainly affected lower-priced listings. In Q4 2022, 33% of homes that sold below $1M required a list price reduction, but among homes in the $1M-$2M range, only 14% took a reduction. Sales in San Leandro and West Contra Costa County were most affected by this trend with 37% and 31% of transactions reduced in price, respectively.
One of the biggest changes was the percent difference between original list price and sale price. In April, homes sold at an all-time high of 26% over list, but by the end of the year that number fell sharply to 2%, where more than half of closings sold at or below asking. This was driven by two, intertwined forces: sellers were more likely to price closer to expected value, and there were fewer buyers competing for listings (which is often the case in December). But there were exceptions: In Q4 2022, 74% of homes that sold between $1M and $2M closed over asking, selling an average of 13% over list. Furthermore, Albany sales averaged 23% over list.
The number of canceled listings increased significantly, up 55% in Q4 compared to the previous year. This was the highest percentage of cancellations since 2013. What's more, over a quarter of listings that came off the market in the second half of 2022 were canceled and did not sell, the highest since 2011. This metric was particularly high in Oakland (40%), Piedmont (39%) and Richmond (37%).
The higher the price of the property, the faster it sold but the more likely the listing would be canceled. The upper end of the market reacted to the slowdown in different ways: Homes that sold $2M or higher in Q4 2022 had an average of 19 days on market, the lowest among all price ranges. However, 49% of properties listed $2M or higher did not sell and were canceled instead. This may be because the owners of those properties had a specific price in mind and preferred to wait for a better market in which to sell.
While year-end metrics were not strong, we expect to see some bright spots in the first quarter of 2023. This is typically a time of low supply and high buyer demand, helping to deliver strong metrics to the few properties on the market. And if the rest of 2023 is similar to 2022, expect select properties to see strong competition, particularly those that are in high-demand areas, are move-in ready and are priced to attract buyers. For properties that don't fall into this category, buyers may find unique opportunities to purchase. View a complete report of 2022 data here and reach out if you'd like to discuss your plans.
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