Wine Country And Horses

This week, the Press Democrat newspaper confirmed the analysis of Sonoma County home sales reported here a couple of weeks ago, proof yet again that a local blogger can more nimbly provide the latest hard core real estate data. My reports are based upon the exact same data the Press Democrat is getting.

The headline featured July’s drop in CLOSED home sales. If you read through the article, however, you will also learn that pending sales (newly ratified purchase contracts) are up to a two year high in July, indicating that sales activity is still strong, and has rebounded after the expiration of the $8,000 Federal Homebuyer’s Tax Credit April 30, 2010. While not all the pending sales will come to a succesful conclusion, it is still a good leading indicator of market activity.

Just a reminder that if you are looking for the latest Sonoma County home sales data, you can sign up for an email subscription to my blog, or check here the first week of every month to see the latest real estate sales trends analyzed here. For an archive of previous months’ data, check out my Scribd Account. If you are wondering, Scribd is an online repository for sharing of documents with social media components. It is to documents what Flickr is to photos.

This year marks the 100th! Anniversary of Sebastopol’s first ever Gravenstein Apple Fair in 1910. Billed as “The Sweetest Little Fair” in Sonoma County, it is a celebration of Sonoma County’s long tradition of agricultural delights. Now many of the apple orchards have given way to vineyards, and Sonoma County apples have long been less competitive on the world markets than those from Washington State and China, but the early ripening Gravenstein apple is still a hallmark of the best in local farming and fruit! Thanks to Sonoma County Farm Trails for keeping this tradition alive! If you can’t make it to Sebastopol this weekend, Sonoma County Farm Trails offers a great on-line and printed guide to year round food tasting activities and events at Sonoma County’s many small farms and markets.

There are no hugely exciting sales trends to proclaim this month. Trendlines we have noted in the past continue in unspectacular fashion which is good news as the market continues to stabilize. The best news is that newly pending sales (ratified home purchase contracts that have yet to close) rose up in July to nearly the same level as April.

The pending sales figures for April 2010 were very high, following several months of increase leading up to the expiration of the $8,000 federal tax credit, only available to homes “under contract” by April 30, 2010.

Throughout much of the country and in Sonoma County, newly pending sales dipped as expected, in May and June, since many people who might have bought in those months rushed to beat the deadline.

Here in Sonoma County, the July’s pending sales numbers are nearly as high as April’s however, probably due to seasonal effects a well as even lower interest rates than last spring.

Sales have not looked so good elsewhere in the US, but seem stronger here in Northern California and the greater Bay Area, a phenomenon we have been accustomed to over the last 30 years. I am concerned about the state of California’s budget woes and their long term impact on our markets, but that is a whole other topic.

Newly pending sales in Sonoma County reflect a couple of trends.

The rate of closed sales is down slightly from 2009 when sales of distressed properties peaked in the late winter.

Days on market continue to decline, reflecting a decline in inventory at the lower price points.

At the current rate of sales, the number of months supply of inventory is hovering around 3 months–a seller’s market– but only for properties priced under $450,000 or $500,000. There are plenty of sellers sitting on high priced (over priced) inventory throughout the county.

The median price is hovering in the low to mid $300,000′s.

The proportion of “bank-involved” properties is declining as an overall percentage of the sales mix. Regular folks have decided that now is as good a time as any in the foresee-able future for them to sell, so we see a greater mix of homes available to purchase.

Rates are ridiculously low, as little as 4.5% for a thirty year fixed mortgage for some credit-worthy folks! (Check out rates UNDER 4% for some 15 year loans!!!)

This means some people who want to move up to a bigger property, or a country property, are feeling more confident this year than last and willing to take that step. What they might lose on the sale of their existing home, they will gain with a good purchase price (at insanely low rates) on whatever they buy.

Here is a look at all the market reports for the last 18 months. Please email or call me if you have any questions or I can help you to figure out how they apply to your particular situation!

August 2010 Sonoma County Real Estate Home Sales Trends (August 2009 to August 2010)

I am embarrassed about my infrequent posts as of late. I have been on the run, working with buyers and sellers of Sonoma County real estate. Out of town buyers are out in force, looking for that special retreat property, horse property or wine country second home, from Sebastopol to Healdsburg, Santa Rosa to Guerneville. In the last year I have worked with buyers from San Francisco, Berkeley, Marin County, Provence, St. Louis, New York, Las Vegas, Seoul, Los Angeles, Burlingame, Palo Alto and San Jose, all in one stage or other of the Sonoma County home buying or home owning process.

Meanwhile, gardens are in peak bloom, the grapevines have leafed out. My neighbor’s pinot has set fruit I noticed today. The ROSES are in full force. Everywhere you go, from country lanes to in town, there is a riot of roses.

I’ll leave you with a few pictures until my next post.

Looking through a red rose and Russian River Zinfandel to a horse pasture beyond

A view of a Sonoma County horse pasture and vineyard through climbing rose New Dawn

A riot of roses climb the fences along a Sonoma County Driveway

The first quarter home sales figures are now available and we will take a more in-depth at them later this week, but I thought I would point out this article in today’s Press Democrat newspaper, which reported the latest home sales figures as presented at the Santa Rosa Realtor’s breakfast this morning by Rick Laws of Coldwell Banker. Rick uses data from the Bay Area Real Estate Information Services Multiple Listings, which is the same source I use for the reports I produce every month. (NOTE: Until this data was available to me, Rick kindly shared it with me every months when he was my broker at Coldwell Banker. We like to geek out on this data in an attempt to understand market trends ahead of the curve. Thanks Rick!)

Rick took a look at the percentage of distressed property (euphemistically called “bank-influenced”) sales, which refer to short sales and REO’s or foreclosed properties. The data show at price ranges up to $1 Million, that the percentage that distressed properties make in the market is still very high, but declining as compared to the market bottom of Q1 2009. That is probably because buyers are coming out of the woodwork at the mid and upper ranges, and also because “normal” sellers (that is how agents refer to them in MLS comments!) have probably realized that now is as good a time as any to sell, that prices may have stabilized and we are not likely to see significant appreciation for some time. Also, they may realize it is good to sell when rates are down and buyer tax credits are in place. Inventory continues to be VERY tight and sales are up significantly.

It is also interesting to note that distressed sales now make up 17% of sales above $ 1 million dollars, where as there were no distressed sales at that price range a year ago. There were also very few sales over a million a year ago! Stay tuned for more later this week and feel free to call me or email with your questions or comments.

Bank “Influenced” Sales as a Percentage of Total Sales

Condominiums Q1 2009 88% Q1 2010 65%

SFR under $500,000 Q1 2009 82% Q1 2010 59%

SFR $500K to $1Million Q1 2009 42% Q1 2010 29%

SFR $1M to $10M Q12009 0% Q1 2010 17%

Otilia and I have seen several articles that are claiming double tax credits for buyers who go into contract by April 30, 2010. Kathleen Pender in the San Francisco Chronicle last week detailed how some home buyer’s were tweaking their purchase timeline to take advantage of both the federal tax credit and the recently revised state home buyers’ tax credits mentioned here a couple of days ago.

The federal government currently is offering a credit of up to $8,000.00 if a buyer has an accepted purchase contract by April 30th and closes escrow by the end of June. The state of California is offering a $10,000 credit given over 3 years (BIG NOTE: This credit only can be taken against your state tax liability–if you don’t have $3,300 dollars worth each year, you don’t get the full credit.)

The big question is can buyers get the state and the federal credit? The state credit becomes available May 1st while you must be in escrow no later than April 30 to take advantage of the expiring federal credit. Some people seem to think that by closing escrow on a purchase after May 1st, but initiated before close of business April 30th, you can double dip on these tax credits.

However, when each of us read the bill it seems that the authors did not intend buyers to get both credits. ftb.ca.gov/forms/2009/09_3528.pdf  This has caused a fair amount  of confusion for potential buyers. From yesterday, when we started working on this post, to today, the California State Franchise Tax Board has provided further clarification on their home page.

Tax Credits for New Home Purchase / First-Time Buyer
The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010.

It would appear from reading this statement that it may be possible for a limited number of buyers to qualify for both credits. Not only would the terms and timelines of your purchase need to be perfect, but you would need to meet differing criteria for eligibility for each program as they are constructed very differently.

Otilia called the Franchise Tax Board and they recommended that each buyer call to confirm if they are eligible for the state credit.  As always we recommend that you consult your CPA for more clarification. They may need to call the state too! Please feel free to email or call us with any further questions!

Last month I posted the startlingly high “PENDING SALES” figure for the short, rainy month of February, in which the highest number of pending sales was recorded for the last two years.

Today the national press reported that nationwide, pending sales rose sharply throughout the US. The interpretation is that the soon to expire Federal Tax Credit of $8,000 for first-time and $6,500 for existing home owner tax credits were promoting the increased buyer activity. Interestingly, the article reported that strong sales in the Midwest lead the charge, and that sales have declined in the Western States. As yet further proof that all real estate news is local, the numbers of pending Sonoma County home sales bucked the Western states trend. (Wait till you see the March numbers, coming soon!)

Today’s rain should clear up and bring sunny skies and warmer temperatures for the second weekend of this year’s Barrel Tasting Event sponsored by WineRoad, a group of northern Sonoma County wineries from the Russian River, Dry Creek and Alexander Valley appellations. If you are like me, perhaps your first exposure to the Sonoma wine country and our gorgeous back roads came from visiting friends during tasting events such as this. After many repeat visits, you begin to think, after a long weekend of wine tasting, gee, if I lived here, I’d be home by now. Last year, hundreds of home buyers in Sonoma County shared that sentiment, moving here from the Bay Area to Los Angeles, New York, Japan and Europe. I love to work with out of town buyers seeking the wine country lifestyle, feel free to contact me if you would like to explore the possibilities, and cheers!

Meanwhile–this video does a good job of capturing the flavor of barrel tasting weekend, and has scenes shot last week at Joseph Swan, Bella, Stryker and other Sonoma County wineries.

Sonoma County Home Sales Rate hits Two Year High, in February!

February just ended. It was a short, cold and rainy month but that did not deter home buyers and sellers from ratifying purchase contracts on 557 homes, from Santa Rosa to Petaluma, Sonoma to Healdsburg.

Every month I review the latest sales data for Sonoma County homes and country properties and make them available to you. This month there are some very striking results to report. The number of newly ratified sales contracts, which I reported as very high in January, has increased to the highest level in at least two years. Since February is seasonally a very slow, short month, this is particularly interesting.

In addition, Month’s Supply of Inventory is also at a two year low, and only 2.4 months supply of homes are available at the current rate of sales. Many of the homes available, if they haven’t sold in a few months, are purely not selling because they are priced too high for today’s market. This is particularly true for homes priced under $900,000. That means well-priced homes that are priced well and show well, are selling VERY FAST!

What does this mean for you if you are a buyer? If you want to take advantage of the $8,000 first time buyer or the $6,500 move up buyer tax credits, you must be in escrow (newly ratified sale) by April 30th, and close by June. At some price points and for particularly well-marketed, aggressively priced homes, you will likely encounter multiple offers and a competitive market place. It is important to have a good relationship with a strong realtor who is on top of the market so that you can take full advantage of home buying opportunities as they come up.

What does this mean for you if you are a seller? If you have been holding off putting your home on the market, following conventional strategy to put your home on the market in the spring, it is not too early to (A) start the preparations, and (B) think of moving up your timeframes to take advantage of the current low inventory and low interest rates and tax credits. The better you can prepare your home prior to market launch, if you will, the quicker it will sell and the more money you will earn. Please contact me for details.

(If your home is under-water, that is, if you owe more than it is worth, there is some hope the process of selling the home under those circumstances, will be improving in the coming months. That is subject for another post.)

Here are the rest of the data from this month’s reports. (Other points to note–the median price is up 15% versus last February, when it bottomed at $290,000. It is down from a whopping $619,000 a few years ago and down 20% versus February in 2008.)

Sonoma County Home Sales Trends March 1,2010 Pam Buda Prudential California Real Estate