The Market Is Sending Two Signals at Once

May gave us a market that rewarded clarity and punished ambiguity in roughly equal measure. Across the Bay Area, inventory remained tight, demand held firm, and homes in well-positioned neighborhoods continued to move quickly and above asking. At the same time, the Outer East Bay corridor told a quieter story, one of balance rather than competition.

Inner East Bay

The Inner East Bay closed 316 sales in May with a median price of $1,392,500, up 10.3% year-over-year, and an average of 119% of list, up 7.2%. That is not a softening market. The more notable numbers come from Oakland. One hundred seventy-five sales. Median price of $1,022,500, up 11.1% year-over-year. Average of 115% of list, up 8.5%. For a city that has absorbed more skepticism than most over the past few years, those numbers carry meaning.

Oakland is not suddenly a different market. But buyers are recalibrating. The value story is landing. And the overbid behavior, now back in double-digit territory above list, reflects the same conviction we had seen many years ago. I have watched this shift play out on specific streets in specific neighborhoods. It is not uniform, and it is not guaranteed to continue. But it is real.

Berkeley delivered 65 sales in May, up 4.8%, with a median of $1,615,000 and an average of 129% of list, up 4.9%. The volume and the overbid ratio both strengthened year-over-year. Berkeley's market does not fluctuate dramatically. It compounds steadily, and May was consistent with that pattern.

Kensington continues to perform above its size. Eight sales, median $1,789,444, up 31.3%, average of 128% of list. Volume was up 33.3%. In a market that trades this few homes per month, a single compelling property can move the numbers significantly. But the directional trend in Kensington has been consistent across several months now. Buyers there are not hesitating.

Albany held steady with eight sales, median $1,617,500, up 13.5%. The overbid ratio dipped to 122%, down 9 points year-over-year, which is worth noting. Albany buyers are still competing, but perhaps with slightly more discipline than a year ago.

Piedmont posted 17 sales in May, up 41.7% from last year, with a median of $4,205,000, up 69.9%, and an average of 123% of list.

I want to be careful with that median figure. Piedmont's monthly numbers are sensitive to which homes happen to sell. A handful of high-end transactions can move the median significantly in either direction. What I find more meaningful is the volume increase and the sustained overbid behavior. Buyers motivated enough to compete in Piedmont are not doing so lightly. The conviction is real, even when the specific numbers require context.

El Cerrito showed something interesting in May. Fourteen sales, down 22.2%, with a median of $1,275,000, down 1%. Volume has been soft for several months now.

But the overbid ratio was 131%, up 1.6 points year-over-year. The buyers who are showing up in El Cerrito are competing hard. The challenge is that fewer of them are showing up. It reads like a market where the underlying demand is present but the inventory that matches buyer expectations is limited. When the right home surfaces, it moves. When it does not, the month gets quiet.

Outer East Bay: Volume Returns, Pricing Adjusts

The outer corridor told a different story in May. One hundred ninety-four closed sales, up 6% year-over-year, which is a meaningful improvement in activity. But the median came in at $1,767,500, down 6.7%, and the average sat at exactly 100% of list. Homes here are selling for asking.

Walnut Creek led the way with 56 sales, up 21.7%, confirming a trend that has been building over recent months. Moraga saw a sharp jump in volume, up 77.8%, though the small base makes that figure less definitive than it appears. Pleasant Hill also posted strong volume growth, up 58.8%, with 27 sales.

The pricing softness in this corridor is concentrated in a few places. Lafayette's median came in at $2,000,000, down 12.1%, though that figure reflects the composition of what sold rather than a structural shift in the market. Orinda moved the other direction, with a median of $2,250,000, up 19.4%, and an overbid ratio of 103%, up 5.1%.

The Outer East Bay right now rewards precise pricing and patience. Sellers who understand that dynamic are transacting. Those who are waiting for the inner market's urgency to migrate outward are waiting longer than they expected.

The Broader Bay Area Picture

The regional backdrop continues to support demand. Bay Area job growth added more than 35,000 positions year-over-year. The unemployment rate held in the low-4% range. Wages continued to outpace the national average, and AI-sector wealth has given a meaningful segment of buyers purchasing power that is largely insulated from mortgage rate pressure.

Bay Area-wide, the median sale price reached $1,445,000 in May, essentially flat year-over-year. That stability at the regional level is the product of a bifurcated market: strong price growth in the inner Bay Area offsetting softer results in outer corridors and more rate-sensitive segments.

High-end activity remained elevated. Homes above $3.5 million saw sales increase by more than 40% regionally. In San Francisco, more homes sold at that level than in any month since 2017, with 85% of all homes selling over asking at an average of 30% above list. That is a different market than ours, but it is adjacent to ours, and the economic forces driving it are the same ones supporting demand in Berkeley, Piedmont, and the Oakland Hills.

Looking Ahead

The gap between the Inner and Outer East Bay is not new. But it is widening in a specific way. It is not that the outer corridor is declining. Volume was up in May. It is that the style of transaction is different. One market is running at auction pace. The other is running at conversation pace. For sellers in either market, the implication is the same: understand which game you are in before you set your price.

A home that would attract multiple offers at 115% of list in Albany will not produce the same outcome if it is priced as though it is in that same market but located in Walnut Creek. The buyers are different. The calculus is different. The preparation required is the same.

That is where Rick and I spend most of our energy before a home ever goes to market. Not in the negotiation, but in the read.

The spring market is not over. If the economic backdrop holds, June should bring continued activity at the high end and continued selectivity across the middle. The buyers are there. The question, as always, is whether the homes are ready to meet them.

-Alex