Archive for the 'Market updates' Category
April 30, 2012 Sonoma County Real Estate Stats Show Increasing Demand and Very Low Inventory of Homes for Sale
Something’s gotta give! Here is the full set of market statistics for the year in Sonoma County residential sales from April 1, 2011 through April 30, 2012. A short while ago I pointed out that April was one of the strongest months in years for newly opened escrows. At the current rate of sales we only have 1.6 months of inventory available which is indicative of a seller’s market. Indeed muliple offers at nearly all price points are the norm. They are no longer clustered in the entry level under $400,000 range. We are seeing offers and heavy activity in the $800,000 to $1,500,000 range as well! I’ll talk more in the next week about what this means for our real estate market, but for now I wanted to share with you the complete report for the last 13 months. Click through on the follow ing image to get all the details at my Scribd page.
The town of Sonoma has long had the most cachet in Sonoma County, although Healdsburg is coming fast. This sales report looks at the whole Valley of the Moon, including Glen Ellen and Kenwood as well as Sonoma town. There is a bit more sales volume here, but the sample size is somewhat small, while bigger than both Sebastopol and Healdsburg. Like the other towns, median sales prices can be impacted by outlier high end home and ranch sales, so beware of drawing too many conclusions. Bottom line, inventory is shrinking and sales are up. The chart below shows newly pending sales that have not yet closed. As of the end of April newly pending sales were at the highest level in Sonoma of any month in the last two years, exceeding even the normally higher summer months for new sales. Inventory is at only 2.6 months supply, very low considering that Sonoma has a big mix of some very high end homes and ranches factored in to these figures. This are may have the highest percentage rate of sales of properties over a million dollars in Sonoma County.
Declining inventory. Two years ago, inventory was already low, but real estate sales were concentrated under $300,000 or so. Now the market is finally more active at all price points. In April 2010 there were only 3.2 months supply of inventory. Anything between four to six months is considered “balanced” between buyers and sellers.
Fast forward to April 2012 and MONTHS SUPPLY OF INVENTORY is only 1.3, down a whopping SIXTY (60) PERCENT!
I think if we only looked at homes priced under $500,000 we would find that there are only TWO WEEKS of inventory available, similar to some hot markets in the immediate Bay Area. Something’s gotta give. Can you say “price increases”?
Much of Healdsburg’s charm stems from the fact that it is a small town. Small town sales volume does not lend itself to great real estate stats since the sample size is so small. That is why I mostly look at sales and real estate market stats county wide. Nevertheless, once in a while we look at individual communities. By looking back at charts over a two year period you can see the seasonality of the numbers and get a little more of a feel for the market. Beware though. Healdsburg has seen some of the highest sales prices in the county (in the many millions) and also has some more typical lower entry level prices around $300,000.
If you throw in a property that sells for many many millions of dollars one month in to the mix with only a few other homes and you will see wild fluctuations in median and average prices. That doesn’t mean the price of your Healdsburg home has gone up fifty percent in a month as the slide on median sold prices indicates! Probably the most telling slide is the one that shows supply and demand. Inventory of homes for sale is down 34% over the last two years, and the number of sold properties is up 24%. Increasing demand, declining supply. Same story you see throughout Sonoma County. Healdsburg for its size has a higher percentage of expensive homes and ranches, and has had fewer distressed sales.
Here is a look back at residential real estate sales in the Sebastopol area of Sonoma County, including Graton and Occidental, from April 2010 through April 2012. The reason I usually post county wide numbers is that it is easier to discern pricing and other trends on a month to month basis with the numbers for the county as a whole. You might be interested in just your town, so from time to time I will pull just the numbers for a specific locale, in this case the greater Sebastopol area. Though a small sample size makes it difficult to spot month to month trends, in general inventory is declining and sales activity rising, resulting in only 2.4 months supply of homes for sale in Sebastopol. Two years ago there were 4.6 months supply of inventory. Sales activity is strong but declined slightly (by one house–see what I mean?) in April 2012 compared to April 2010. Take a look through the reports and let me know if you have any questions! By the way, I archive these reports at a document sharing site called Scribd
I generally post a whole set of statistic sheets for county wide residential sales in Sonoma County real estate, but wanted to pick one which said it all. This is it. In April 715 homes went under contract to purchase, up from 647 in March, and significantly up over last April and April 2010.
The chart below shows the rate of newly opened escrows has been steadily climbing since late last year, and is hitting heights not seen in a number of years. Now granted, not all of these will close, but many of them will, and they are a good leading indicator of market trends. Also the reason inventory is at a many year low, only 1.4 months of homes available at the current rate of sales. That number is down 63% from two years ago! Also, the reason I have not been (she said sheepishly) blogging so much. My wonderful clients and I are responsible for a bunch of the numbers on the graph below.
Here I sit on New Year’s eve weekend–in the sunshine out by the pool writing some blog posts for the new year. What was going to be a sleepy quiet week between Christmas and New Year’s has been anything but! I have written two offers this week and have two new listings coming on the market in the next couple of weeks. Am also getting good activity on some other listings! What gives? Normally this is a pretty quiet time of year in the real estate market but activity has barely taken a breath for the holidays! I am not complaining, not by any means. I think it is a good sign that the market is so active. Other agents I know are very busy, home inspectors are booked solid and there is a decided hint of optimism in the air. Now I realize that there are lots of challenges and difficulties in our economy and the real estate world. About 30% of homeowners owe more than their homes are worth. We are not heading in to a dramatic turnaround anytime soon. By the same token though buyers don’t seem to be waiting on the sidelines and sellers with equity also have decided to get back on the playing field. With interest rates ridiculously low, this bodes for a busy January. Welcome to 2012! We will be back this week with a more detailed look at the market for real estate in Sonoma County. Until then, Happy New Year!
It’s early November and finally time to pull the home sale statistics from our Multiple Listings Service (MLS). I first pull one years stats and then pull stats going back two years and even three years as I try to decipher the trends. This month you can see what I learned by looking back at different timeframes.
Let me preface by saying that this autumn the market is VERY active, at least that is my perception, shared by other realtors I know as well as home and pest inspectors, etc. There seem to be more equity sellers and there seem to be more buyers, including at the upper price ranges. But I always like to go back and look at the market stats to further understand our market and anticipate future trends that can help my clients make the best choices about how to sell or buy a home.
Anyway, what jumped out at me this month was the fact that “Newly Opened Sales” are up 65% over last October at this time from 366 to 603! What a change–I guess it confirms the experiences we have been having, right? (Take a look below, and you can scroll through all the graphs for the latest stats I pulled. Also if you go to the Scribd website you can see previous stat collections I have published. To see all of them you can look through the archives of this blog, which I began in the summer of 2007.)
OK so a 65% increase in Newly Pending Sales is great news, but let’s look at two years history to see if we can learn anything else. Take a look below. From October 2009 through October 2011, Newly Pending Sales are up ‘ONLY” 31%, year over year. Still pretty good but not as mind-blowing!
And I recalled that last autumn was very slow, since the first time home buyers’ tax credit had expired and most people using it had pushed their purchases earlier in the year.
OK, so for those of you who are real data geeks, here is the same collection of stats going back THREE years through October 2009. This time the data are compressed in to quarterly figures, smoothing out some trends. Now when I look at the same Newly Pending Sales, they are only up 3% over 2009–and remember what a shocking time that was. Lots of foreclosure sales. Since then, bank owned pending sales have actually DECLINED 16%, meaning equity sales are accounting for a larger portion of home sales now versus three years ago. Make sure you note the “Months Supply of Inventory” figures in each graph (if you’re still with me.) That is probably the most telling trend. HOUSING INVENTORY is VERY LOW now at the current sales rate, with only 2.8 months supply versus 4.2 in autumn 2009. In 2010 the supply of homes was over six months, indicating the brief lull in sales.
Anyway enjoy reviewing this data. If you want my help in actually buying or selling a home, I can help you to do that too!
Since the first Monday morning after New Year’s Day, the Sonoma County real estate market has been incredibly active with some of the highest rates of pending sales in the last several years. Most realtors I know have been very encouraged by all the activity, particularly after activity in late 2010 ground to a near halt for most agents.
But many challenges and obstacles remain, and MANY opportunities exist in this market as well. We will continue to delve into these in more detail over the coming months but for now, here are some of the high points.
The median sales price in the county has declined over the last several months. What this generally means is not necessarily that values of individual properties have declined so much, although I think there has been some softening. What it means is that the action this last winter was in the low end of the market–that is homes under $350,000.
Our market is currently dominated by first time buyers, investors and, to a lesser degree, second-home/retirement buyers.
First time buyers are often FHA buyers with as little as 3.5% down. FHA allows these buyers to receive down payment assistance–either gifts from family members or government-sponsored down payment assistance programs such as CHAFA. (News Flash: CHAFA in California is currently on hold due to a funding shortfall.)
Real Estate Investors are out in force both in Sonoma County and nationwide. Bargain-basement pricing, interest rates in the fives and a strong rental market are attracting investors in record numbers. Previously high prices kept investors out of our markets for years.
Many investors are buying homes to hold and rent. With 25% down, you can buy a rental and pay interest in the low 5’s. Homes that cost $200,000 to $300,000 can cash flow today. Someday we will have appreciation again and you can add that to the tax benefits and cash flow of the current rental market. (Talk to your tax advisor about how a rental property can benefit you, and talk to me if you would like me to run some numbers for you.)
Other investors are buying to renovate and flip. I have seem some great flip jobs and some bad ones, but for the most part I think these investors are doing a service in renovating some of the really troubled real estate inventory out there. Some of these investors are buying foreclosed properties off the courthouse steps (not recommended for the amateur), others are looking for good opportunities on the open market. A listing of mine just sold–it was a HAFA short sale by Wells Fargo. It was purchased by a cash buyer who is going to do some renovations to the property and put it back on the market in 3 or 4 months. I am seeing a lot of new home builders who are spending the recession taking this approach to business.
The other segment that is seeing signs of life is the upper-end market. In the wine country of Sonoma County and beyond, there are MANY MANY more sales of properties priced at $1,000,000 or above. The luxury market is gaining strength and cash buyers are out in force to take advantage of bargain prices. There seems to be a consensus that prices have dropped to a more accurate level as sellers have become more realistic about today’s market valuations.
But there is a gaping hole in the move-up market. If people owe more than their home is worth then they have no equity to take and put in something bigger or different. Sales of homes from $500,000 to a million are pretty sluggish. There are some great opportunities to buy properties at a great discount in this price range.
Who will be taking advantage of these bargains?
I work with many out of town buyers new to the wine country, typically coming from urban areas looking for a wine country lifestyle. They might be selling their home in the San Francisco Bay Area, Los Angeles or NYC. This would be a sideways move or maybe a downsize. Maybe the kids are off in college or retirement is in sight.
I also see many second home buyers who are taking advantage of our bargain pricing to own a home that they can use as a weekend place or rental now. Generally there is a plan to move in fulltime someday. Often these are folks who love gardening, food and wine or have horses and want to keep them at home.
As the headline said, challenges remain. Lending standards are tight and often shifting. (I am glad to see standards tighter, don’t get me wrong, but it pays to be aware that they are constantly changing.) The cost of home-buying for FHA buyers went up this week. Rates have inched up slightly. The jumbo loan limits will increase this fall. Many people are concerned about their jobs or have lost them or been cut back. The move-up market is nearly non-existent.
But that said, there are opportunities in challenging times. You just need to know where to look!
I thought I would kick of 2011 by looking back at the Sonoma County home sales data for 2010. I pulled the closed sales data for all residence types in all of Sonoma County for the last 13 months (December 2009 through December 2010.) This includes single family residences, farms and ranches and condominiums.
It is difficult to discern any particular long term trends in the last quarter’s data. There has been a slight decrease in the number of home sales and a slight increase in listings of homes for sale over the last 2 or 3 months. When inventory climbs and sales drop for an extended period we see price declines. You can certainly see that if you look back at the sales figures from 2007 through 2010.
I don’t think that is what we are seeing in this case. What seems to be happening is that “regular” home-sellers removed their unsold homes from the market for the holidays, which is a pretty typical pattern. That left bank-owned homes on the market and indeed they represented a slightly higher percentage of sales in the fourth quarter. I also do think that we had a early winter this year, not just all the rain we had early, but in the sense that the first time homebuyer tax credit expired over the summer and it had caused some buyers to accelerate their buying to earlier in 2010.
Been Down So Long it Looks Like Up to Me?
We have seen a greater increase in the number of non-distressed homes on the market over the last 15 months or so. We have also seen more higher priced homes come on the market, both distressed and non-distressed. The increase in unit sales of the higher priced homes led to a gradual slight increase in the median price. So when the median price has gone up it is NOT because the value of individual homes has increased, but because the mix in prices of homes sold has changed to include more expensive homes. (NOTE: In 2009 the vast majority of sales were for homes price under or at $300,000 dollars.)
What most local Sonoma County agents that I have spoken with seem to feel is that we have achieved stability in prices under $400,000 over the last couple of years. I can’t believe it but it has been two years (!!!) since I first called a bottom in the median Sonoma County home price. Wow, what a tough two years.
What we continue to see however is softness in prices as the value of individual homes increases above $500,000, one million dollars and two million dollars. Buyers are out there at all these price points (in diminishing numbers) and it is interesting to see how they will studiously ignore homes that are overpriced, and how they will pounce (with multiple offers typically) when a listing price hits that magic number that the market perceives as a good value.
Two Different Looks at Last Year’s Home Sales Numbers
Here are the sales figures for 2010. I will post a three year view along with these numbers at my Scribd account. It is interesting to look at the trends over a longer timeframe.
Meanwhile, please call or email me if you have any questions about this data and what it might mean for your particular real estate needs.
Listings by Community
- Market updates
- Building and Remodeling
- This and That
- West County
- Country Property
- Horses and Wine Country
- Finance and Lending
- Wine Country Living
- Real Estate 2.0