Wine Country And Horses

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

Last week’s Press Democrat featured an article about the latest monthly home sales figures compiled by Rick Laws. Quick headline: HOME SALES DROP for the third month in a row!

The underlying story is a bit different. Inventory has declined significantly over the last two years. Newly pending sales (homes under contract but not yet sold) rose sharply to 496, one of the highest monthly rates in the last 13 months, even though January is typically slow. That is up 117% over January pending sales two years ago and up 17% over last year.

In early 2010, buyers remained active over the holidays. Pouring rain and football playoffs did not deter them in January, at most price ranges. Unlike last January, when activity was concentrated at the lowest price ranges (under $350K), this year the market is active up to about $800,000. There is also high buyer activity at price ranges from about $1,800,000 to $2,500,000. 37% of buyers in this price range paid cash in Q4 2009, making financing less of an issue for them, and buyers under $800,000 are finding conventional loans easier to obtain, putting the squeeze on sales in between those two price points.

I have compiled a report from the same data used to generate the Press Democrat’s stories and am posting it here. I pulled the data going back two years rather than just one so that the numbers can be viewed in the context of seasonal trends.

Most striking is the extreme increase in unit sales versus two years ago, the extreme decrease in inventory (from 3365 homes for sale to 2070)–thanks to the high rate of sales, and the increase in median price (year over year with last February representing a bottom in prices.) Please call or email me if you have any questions, or if you would like me to analyze a particular home or area. If you are considering selling your home but have been reluctant to do so “because of the market”, please get in touch. This may be a great time to sell!

Sonoma County Home Sale Trends January 2010

With 2009 moving into the rear view mirror, there has been much speculation among agents, clients and the press about 2010 and what portends in the housing market. Inman News recently published a sobering assessment of the events that will impact real estate markets in 2010, from increasing mortgage rates, tightening FHA credit standards, high unemployment and the expiration April 30th of the buyer tax credits.

Real estate agents and brokers typically look forward to spring as the season where homebuyers come out in force and sales pick up.

In 2010, the uncertainty created by the financial crisis makes it harder to bank on a seasonal uptick in sales — particularly in markets hit hard by unemployment.

Further complicating matters down the road are three potentially destabilizing events that are expected to occur in a tight timeframe during the spring buying season:

* At the end of March, the Federal Reserve is expected to wind up a $1.25 trillion program that’s kept mortgage rates low.
* The Federal Housing Administration’s announcement that it plans to tighten underwriting standards could take effect as soon as April.
* Congress is expected to allow the newly expanded homebuyer tax credit to expire, closing the door on buyers not under contract by April 30 and closing by June 30.

Economists must rely on a certain amount of guesswork in predicting what impact these changes will have when drawing up their forecasts for 2010. Many expect unemployment won’t peak until next year, and it’s almost certain mortgage rates can only go up from record lows.

But housing was hammered so badly, and for so long, that most forecasters expect housing prices to stabilize and sales to pick up in 2010, even if economic growth doesn’t spring back as fiercely as it usually does in a recovery.

“We are definitely in a recovery now, but this has been such a severe recession — we think the financial crisis and the credit retrenchment that’s occurred means this is going to be a fairly anemic recovery,” said Michael Fratantoni, the Mortgage Bankers Association’s vice president of research.

America has moved from a manufacturing to service-based economy, meaning “there’s not as much potential for a snapback” from a recession like the Reagan-era boom of the 1980s, Fratantoni said.

These events certainly will impact markets nationwide, but each area will respond differently. Many of us think that buyers will continue to feel urgency in Sonoma County to avoid rising rates and the expiring tax credit. Certainly, inventory is in very short supply and buyer activity has been surprisingly strong during the holiday period.

Plus, Sonoma County will continue to be perceived as a more affordable alternative to housing in Marin County and the rest of the Bay Area to the south. No one knows for sure how the shadow inventory of foreclosed homes will affect our markets. How many of them will reach the market, and at what rate?

What do you think 2010 will bring?

And most of all, Happy New Year! Thank you for your business, referrals and friendship in 2009. I look forward to working with you in 2010. No matter what condition the market, there are opportunities in real estate if you have patience, think long term and have good planning on your side! If you have any questions about buying or selling a home, please contact me and I will be glad to help you!

This story from Inman News was published a day after my previous post about the national real estate market–and reinforces the point I was making about the differences in our market and its phase in the recovery process.California resale inventory shrinking | Real Estate and Technology News for Agents, Brokers and Investors | Inman News

Inventories of existing single-family homes in California are dwindling, reaching just four months of supply as the sales pace picked up from September to October, the California Association of Realtors reported.

Home sales historically trail off during the fall and winter months, CAR said, but affordable home prices, low mortgage rates, and the extension and expansion of the federal homebuyer tax credit are expected to drive home sales through the end of the year and into early 2010.

Existing single-family detached homes sold at a seasonally adjusted annual rate of 562,400 in October, up 5.9 percent from September and 1 percent from a year ago, the group said.

The months supply of inventory fell from 4.2 months in September and 6.1 months a year ago. A 6-month supply of inventory is about what analysts consider an even balance between supply and demand.

It took a median of 34.1 days on market to sell a home in California in October 2009, compared with 45.5 days for the same period a year ago. At $297,500, median home price was essentially unchanged from September, but down 3.2 percent from a year ago.

Although the $890 increase in median price from September to October amounted to 0.3 percent, it was the eighth consecutive monthly gain. CAR Chief Economist Leslie Appleton-Young cited that trend, along with continued strength in sales, as “signs that California has hit and passed the bottom of this real estate cycle.”

For the first-time since July 2007, she said, sales of homes priced $1 million or more rose in year-to-year comparisons, and the number of distressed sales as a share of total sales has shown considerable improvement since the beginning of the year.

In Sonoma County and much of the Bay Area of Northern California, inventory supply is hovering around 2 to 3 months, reflecting the strong regional differences in the California markets. The Bay area and North Bay are limited geographic areas bounded by mountains, hills, the Bay and Pacific Ocean. In the central valley of California new home construction booms simply expanded communities into flat, seemingly limitless former farmland. Those areas from Stockton and Sacramento south and east of the Bay Area in Antioch and Brentwood, were much harder hit by the foreclosure wave.

8 of the 10 cities in the state with the highest growth in median price are in the Bay Area, probably reflecting the recent increase in sales of million dollar plus properties. (Bay Area towns are bolded.)

Cities with the greatest median home price increases were Palo Alto (49.1 percent), Atascadero (33.3 percent), Cupertino (24.2 percent), San Rafael (24 percent), Emeryville (22.2 percent), Livermore (20.5 percent), Culver City (19.4 percent), Pleasant Hill (17 percent), La Habra (16.2 percent), and Novato (15.4 percent).

But what about Sonoma County and Northern California? If you read this article in the business section of today’s New York Times, An Upturn in the Housing Market May Be Reversing – NYTimes.com you’d find very justifiable skepticism about the increase in real estate sales volume nationally that we’ve experienced this summer and fall. As some friends and I discussed at dinner in Healdsburg Monday night, no one is convinced that the economy is on firmly recovering footing, Wall Street enthusiasm aside. So are we up for a “W” recovery–meaning another downturn in housing prices? From the article, which discussed the latest Case Shiller Housing Index Report:

The two housing price reports lag, by a month, the figures on the volume of home resales, which were issued Monday for October. Home resales jumped 10.1 percent to the highest level in two years, better than analysts had expected.

Much of the increase was attributed to the $8,000 first-time buyer’s tax credit, which had been set to expire Nov. 30 but has been renewed through spring. Buyers who have already owned a home are now eligible for a $6,500 credit.

While brisk sales volume should, in theory, push up prices, Maureen Maitland, the vice president for index services at S.& P., said the oversupply of inventory was acting as a brake. “You can look down the street and have 10 houses to choose from,” she said.

About 3.57 million used homes are for sale, a number that has been declining but is still higher than the historic average. It represents seven months of inventory at the current sales rate.

Ms. Maitland speculated that the housing market might follow a “W” pattern, as the price lows plumbed last spring are tested again this winter.

It’s all well and good to look at national statistics, but (and this is a cliche so forgive me)–looking at the national housing market to try to determine what is happening with home values in your neighborhood is like trying to know what the weather will be like by knowing what the average temperature in the US is at any given time. Just look at the paragraph above–7 months available inventory nationwide.

In Sonoma County we have less than three months of inventory available county wide, and less than two months at the lower price ranges. Even at the upper price ranges we have about 10 months of inventory and I suspect that is changing as we speak. Next week I will take a look at the market for properties priced over a million dollars. (In Sonoma County that would be considered high end.) In southern Marin, Palo Alto, Piedmont or San Francisco $1 to $2M for a house will get you a tract house or nice condo.)

I have been struck by how active our market currently is, and how many properties at the mid to upper price ranges have been selling in the last month or so, after laying dormant for so long. I think buyers in those price ranges are perceiving good value and striking quickly when they see what they want. A property closed in Healdsburg yesterday: the quintessential wine country farmhouse on 12 acres in Dry Creek Valley, pool, nice house, vineyards, wrap-around porch. It was listed at $2,650,000 and received four offers, selling for $2,825,000. I am told there was a backup offer over the eventual sales price.

Another stylish property on acreage with lavendar and olive fields in Sebastopol, sold recently after receiving four all cash offers, for about $1.7 M. Stylish properties, well-priced with classic locations and settings, are finding that there are buyers out there who have decided that it is again time to put there money in wine country real estate. I am also hearing the same kinds of stories from agents in San Francisco, the East Bay and the Peninsula.

Will this last? How will values be affected? It is too soon to tell, but interesting to signs of life in parts of the market that were dead most of this year. One factor which encourages me is that the tech companies in the Bay Area are experiencing sales growth, venture capitalists are investing in startups again, and the IPO market has some life, witness the succesful IPO earlier this year for Open Table. Facebook is starting to take some steps along their path to a public offering–all those factors are positive ones in our Bay Area economy. After so long a time of negative news and still a lot of hard times for many people, there do seem to be some glimmers of hope. And as I noted in one of my earliest blog posts a couple of years ago, the rising Bay Area real estate tide definitely floats Sonoma County’s real estate boat.

I figure when my clients or blog visitors are asking me questions that there may be a few of you out there with the same sort of questions. Recently I was asked by a homeowner if this might be a time to consider selling their current home in a very nice Santa Rosa neighborhood. They were hesitant because in the fall of 2008 they put their home on the market briefly hoping to buy a country home with some more land for their hobbies and a little closer for their commutes.

We all remember last fall at this time. Many people put any plans to buy and sell on hold as Lehman Brothers collapsed and we seemed (as another client put it) to be headed for financial Armageddon. (!!!)

Since that time many markets, including Sonoma County’s, have been dominated by the sales of distressed properties. In our case that means properties priced under $350,000 to $400,000 dollars.

Foreclosures and short sales dominated the inventory and this year buyers have flocked to them in high numbers. As a result, prices have come up 3 to 7% in the lower price ranges since an apparent bottom in January or February of 2009.

Last winter, savvy buyers (you know who you are!), perceived a chance to drive some bargains in the winter months. They were willing to get ahead of the home buying curve before the mainstream media caught on to what was happening. Instead of competing with 10 or 20 other buyers for the same properties that ultimately sold over asking, they were able to buy homes with less competition and at lower prices.

I think something similar may be happening now for properties priced under $550,000 or so on the seller side. If you have been thinking of selling your home and “moving up” to a country property for example, there may be a nice window of opportunity for you to make the move, particularly since the revised and expanded buyer tax credit now may apply to you or the buyers of your home and put another $6,500 in your pocket. Check the links for details on these credits as they don’t apply to everyone and all situations. I suspect the media will be talking about this topic- a window of opportunity for mid-priced home sellers–over the coming months. Often the best opportunities lie in acting in advance of the mainstream acceptance of a trend. Usually the trend is months ahead of the media talk.

Certainly there is expected to be a new wave in the spring of foreclosure properties but right now there is very little inventory of homes for sale in Sonoma County between $450,000 and $550,000. And there are great bargains to be had in country property or slightly more expensive homes. In every market, there are opportunities, you just need to be aware of the current trends and be opportunistic! Granted you are not going to sell your home for what it would have fetched 2 or 3 years ago, but neither will you pay what you would have on the other end.

Here is a picture of supply and demand for single family homes between $450,000 and $550,000 in Sonoma County over the last two years. You can see that while unit sales are down 10% from 2007 at this time, the supply of inventory is down a whopping 70%!

Month’s Supply of Inventory (MSI) is down sharply from last year.

Sales of existing single family homes fell slightly last quarter as first time buyers and investors busily snatched up entry level homes price under $350,000. At the present moment, November 2, 2009, there are only 1190 homes for sale Unit sales are down also, from priced under $500,000 county wide, versus 2,458 at the end of October 2008, meaning there are only 2.8 months of inventory supply if sales continue at their current rate. Anything under a five to seven months supply is considered to be a sellers market. Inventory is in very short supply and sales seem to be increasing even moving up to the higher price points. Please call or email me if you would like to sell your home. If you have been hesitating to sell your home because of the market, conditions may be more favorable than you think.

County wide sales trend in Sonoma County don’t tell the whole story about our real estate market, since the lower priced properties ($400,000 and under) are the tail wagging our real estate market dog. (!!) But we have to start somewhere so here you go.  (Click on the image for a larger, clearer view.)

Median Home Sales Price August 2008 through August 2009

Year over year the median Sonoma County home price dropped 5% to $359,000.  However, the apparent bottom for this market (whether a V, U or W is yet to be determined) was in February when the median price was $315,000.  Some of my smart buyer clients (you know who you are) are happily ensconced in homes they bought in January and February, sensing the (a?) bottom had arrived.  We (please forgive a pat on the back here) called it in March. The price increase is being driven by the shortage of entry level listings and multiple offer bidding wars driving what inventory is out there up in price.   Prices at the upper ranges ($800,000 and up, particularly over a million dollars) are very soft.  Choice properties in choice locations are selling, sometimes with multiple offers in Sebastopol, Healdsburg and Sonoma, but they are the exception rather than the rule.

13 month Real Estate Sales Trends Sonoma County

Inventory has dropped DRAMATICALLY.  Is this due to the shadow inventory of foreclosed being held back by the banks?  Or is it a reflection of the inventory that piled up before prices began their steepest decline, and the market caught up with reality?

The number or newly opened escrows, or sales marked “Under Contract” where the sale has not yet been completed, has been steadily increasing.  (NOTE:  Not all of these will close.  In fact a large number are falling out of contract. I had heard this week as many as 40% but do not have documentation of that fact.   I can tell you that most of the escrows I open for clients DO close but that is another story.)

Many bloggers and real estate writers have written about the decline of unit sales in August, which was unexpected.  What does that mean?  I am less concerned because the trend of newly under contract sales is steadily growing.  Time will tell if that data point reflects a trend, or if it is just an anomaly.

The long days and sunny weather have taken me away from my computer–sorry it has been so long since my last post. I have a new iPhone (fun and without a doubt best new productivity tool in a long time–probably since my first Palm Pilot in 1996). I am available by phone or email or Twitter, Facebook, etc. if you have an immediate question, please feel free to contact me. And thanks to those of you who already have!

We are in the thick of a hot summer market here in Sonoma County. Buyers have been coming back into our market in increasing numbers since late last year. Now, nearly every property sold under $400,000 has multiple offers. First time buyers or conventional buyers with ten or twenty percent down should expect to have to write offers on multiple properties before they get “the one”. There is only 2-4 months supply of inventory available at the current rate of sales (at price points under a million dollars).

What about the new wave of “shadow” inventory of foreclosure properties being held back from the market by the bank? At this point, it would appear that the market of existing buyers (both first time buyers and investors) will absorb it fairly readily.

Brokermetrics, a real estate data analysis service provided by Terradatum, is currently beta-testing a new tool for analyzing real estate sales trends by price range. This is really welcome as far as I am concerned because our market is so hot at the low end (under $400,000) and so slow at higher price points that it is really difficult to make sense of market stats country wide for all price ranges. It takes a lot of slicing and dicing to confirm what most of us already know, that mid and upper price range properties are moving much more slowly than entry level homes being snatched up by first time buyers and investors. So here is a look at the new Brokermetrics graph. I know you really need your microscope to read these images, so don’t forget to click on them so you can go to a larger version than fits in my middle column here.