Sometimes there is a precarious equilibrium that exists between a buyer’s vs. seller’s market. I hesitate to suggest that there may be a subtle shift occurring in our Lamorinda real estate market, but there certainly are some signs of subtle change… perhaps only for a brief period of time. A recent column in the Wall Street Journal discusses the shifting dynamic between buyers and sellers. It’s something that we’ve observed this year, too.
Fundamentally, there is a significant amount of unsatisfied demand for quality housing within our Lamorinda market place. The demand is higher at the lower price points, and it tapers off significantly as one climbs above the $1.5M mark. The key here is “quality”, a highly subjective adjective. Buyers are being cautious, so “quality” usually means that a home is located in one of the most desirable areas of the Lafayette real estate market… Orinda or Moraga; that it’s in turn-key condition; presented in pristine, turnkey condition; and that it is priced so that buyers will perceive it is a strong value. When those elements line up, then the properties are selling, and often selling fast.
I recently wrote an offer on a Lafayette home that had been on the market for two days prior to my clients being able to take time from their very busy schedules to see it. We wrote an extraordinarily strong, full price offer on a $1M+ home; about $500K in down payment; offered to accept the home “as is” following a week’s inspection contingency period; 30 day escrow; and even offered the seller’s an extended rent-back period so that they could find a replacement property. We didn’t get the property. Another buyer either outbid us, or offered some other term that the seller’s preferred. Coming out of 2-3 years of the most challenging housing market in US history, it was objectively and rationally very challenging for my clients to write such a strong offer. Knowing that they had really stepped outside their comfort zone crafting their offer, they graciously accepted the fact that they didn’t get the home, knowing they had done the very best they could. With patience, we’ll certainly find another home.
From the other side of the market, we just listed our 3rd home this year that is priced around $1M. The first home on Madrone in Lafayette had 21 showings during the first week on market, and went into escrow after 9 days. We clearly saw strong demand from prospective buyers. A few weeks later, we listed a home on Orchard Road, Lafayette . It had about 25+ showings and sold after approximately 3 weeks… closing escrow last week. If it had a garage, it would have sold within a few days. Two days ago, on the Saturday of Easter weekend, we put this Quail Ridge Road, Lafayette on the market, and had about 7 showings that day! Two agents contacted me yesterday and said they thought they would be writing offers today! We’ll see. Hopefully, our clients will receive at least one compelling offer!
Clearly, we are seeing significant energy within the most affordable segments of the market. Buyers are being very careful about their selections, unlike the heights of the market in 2004-2006. The winds of change are certainly moving in the right direction.