It finally happened, and this is unprecedented news here. A home in Gold Coast, Alameda, recently sold for an insane price of $4.75 million. Undeniably, the house was gorgeous, but still, that deal is insane. Why is that so insane?
That’s because the previous sales record for a home was $3.6 million. However, that $3.6 million-worth home was much larger, had a larger lot, better upgrades, and more of a historic, prestigious architect. Also, as you may know, that’s the kind of home you would expect to see sell for this much. So this recent record eclipsed that by over a million dollars.
It was absolutely fascinating to me. That’s because I had someone who wrote an offer on that house. However, it wasn’t even close to the fours ($4 million). We weren’t even in the bidding. That just exceeded everybody’s expectations by a ton of money, and we were caught off guard by it.
But what can we learn from this? What does this mean for the future of our market? Let’s talk about it today.
The best houses always sell for the most money.
As I’ve always said, the best houses always sell for the most money. They’re always getting the best buyer pool and the most buyers at the end of the day. And this blockbuster of a deal is an excellent example of that. If I’m not mistaken, they had a total of nine offers, including the one that I wrote. But ultimately, a couple of offers at the top just bid it up and bid it up.
In other words, a gruesome bidding war happened at the top offers because they just had to have it. It was understandable, though, because it really was a special property. It was built in 2002 on a double lot and is really well laid out. Basically, there is nothing wrong with it. It had some really wonderful upgrades. However, there’s nothing that one would call perfect for the modern aesthetic of what’s in and popular right now. Nonetheless, it was an absolutely stunning, gorgeous home. Someone could just paint a few things, change some countertops, do some really basic upgrades, and make it exactly what they wanted. The bones of it were good, and the layout was good, is what I’m trying to say.
As a result, it attracted a ton of attention. It obviously pulled people’s emotions in, and ultimately, that is what happened there. People are again starting to value their homes differently. The space where they work, live, spend time, raise a family, and make memories is again gaining a ton of value. That, coupled with a massive bump in wealth through cryptocurrency, stocks, and all sorts of things, is coming to fruition on this particular property.
Did the owners overpay?
Maybe some of you are wondering if the owners overpaid. First, let’s clear some things up. Although they overpaid the previous sale record by over a million dollars, that doesn’t necessarily mean they seriously overpaid. Well, that’s because you can look at things in a couple of ways—different angles or perspectives. Likewise, you can see this whole “overpaying” from different perspectives, not just in terms of the amount of money involved.
By the way, this one closed really fast, and if I’m not mistaken, it was a 10-day close. So I can only imagine that the offer for purchasing the home is in cash.
The home closed at $1,000 a square foot.
So when you look at it, it closed at basically $1,000 a square foot. That price is completely unheard of, even in Piedmont, Berkeley, Orinda, and those kinds of places. $1,000 a square foot is just wild, especially for this size. You would expect something to sell at $1,000/ft2 with sizes like 11,000–12,000 square feet, or something like that. So, it’s really unheard of for something that’s only 4,800 square feet. And this is especially true in the East End.
That being said, when you look at this whole deal from that perspective, one could argue that they really overpaid. However, it doesn’t seem like that anymore when you look at what the house actually got them. First, there’s the neighborhood’s caliber and the property itself. Also, the way it was laid out and how the owners could just live in it over time is incredible. I mean, it had these awesome features that were just too good not to fight for. For example, it had an ensuite below the main level, just off the kitchen. So, someone could just move down there and age there if they so desired. Or, perhaps the owners could move family members in or have an au pair or whatever.
It afforded the owners a lifestyle, is what I’m trying to say.
It afforded longevity to the property. Not to mention, there were no repairs that needed to be done. The place was built very recently, in 2002, compared to some of the 1908 or 1889 homes. By the way, these old, historic homes typically sell for that amount. Traditionally, it’s either them or the big, beautiful homes on the Gold Coast or many parts of Alameda. And clearly, this particular home in Alameda that sold for $4,5000,000 really garnered a ton of attention.
What does this say about the buyer pool?
So, what does this say about the buyer pool? Well, it tells us that the buyers value the layout, the newness, and the move-in-ready nature of the house. Or, they value what it does for them ultimately.
Again, you could call it an overpay on a dollar per square foot basis, if you will. However, if you look at it from the perspective of what it gave them, you might say that paying that much is justified. I mean, clearly, they saw something in the property that they valued so much, something that meant so much to them that they just had to fight for the ownership of the house, even if it meant paying that huge amount. That’s because, at the end of the day, people buy homes that will satisfy their wants or needs. “What does the property do for us?” is a personal value that I see a lot of people making these days.
And, honestly, that’s a distinction relative to the luxury price points, especially. “What does this property do for me beyond the excellent X’s and O’s in dollars and cents?” It’s not just about things like having three bedrooms and two bathrooms anymore. Instead, it’s now about the “memories” it would give you. It’s about “loving where I live, the street I’m on, the facade of the house, the drive up, the walkout.” People are now giving more value to the emotional aspect, or what have you, of things when buying houses.
What ultimately raises the prices of homes around you?
Generally speaking, when you start to get into those upper price points, that’s the value people are looking for. In other words, it’s not just about the monetary value that people are considering anymore. So, as far as the market is concerned, when you start to see those really special properties, this is the kind of thing that you’re engaging with. This is why people are “overpaying.” That is because its value is way more to them than just their money. And so, they’re willing to throw extra cash at it.
Ultimately, that’s what raises the price around you. After all, we sell and justify our prices based on recent sales and comps. So now, this is going to be a comp for all these huge homes. Whether or not they’ll achieve a similar outcome will be very interesting to see. Still, it’s very subjective relative to the buyer pool that’s looking at that moment.
Nevertheless, it does set a precedent. In addition, it also gives a great example of this anecdote I’ve been saying for many weeks–it’s really the best homes fetching the best prices.
We may have a new data point, but in conclusion, I’m not ready to call it a trend yet. I’m not ready to say that everything on the Gold Coast sells for $1,000 per square foot. It is rare, and it is uncharted territory. We’ve never seen this before, and now here we are. So as we go into the next iteration of the market, we will probably see some other records come up as a result of this, probably in the early spring, February, March, or April. That’s assuming the economic and financial situation locally and globally stays the same or keeps improving. If that’s the case, I think you could probably safely say you will see a few more of these anomalies.
So, as you can see, this is rarefied air (?). Is this an anomaly? Is this a new trend? It’s difficult to say. What’s sure, though, is that people are still paying the most for the best houses. That’s the trend. But what will that mean for the future of Alameda sales and other neighboring neighborhoods in Oakland and Berkeley? Will this set a new precedent? Will this bring Piedmont buyers into Alameda and change the Piedmont market all of a sudden? It’s still hard to say for now. That’s a trend we will have to keep an eye on. And, I will report back when I have something to say about it.
I hope my market update on "Alameda Home Sold For $4,750,000" has helped you.
Need more tips to help you succeed in the East Bay Real Estate Market?
Sign up for Two Minute Tuesday–market updates and stories about East Bay real estate (with the occasional puppy picture) from Hans and Kristin in two minutes, once a month.