Archive for the 'Market updates' Category
A winter chill seemed to come early to Sonoma County’s real estate market. Sales were at their lowest level for October since 2007. Sales also dropped from September of 2010, which makes me wonder if the news of robo-signing of foreclosure documents just put a huge wet blanket on already skittish buyers.
Inventory was up only slightly, and newly pending sales maintained a very good pace, belying the drop in closed sales. It is possible that all the concern about the possible risk of buying foreclosed properties put a damper on sales. In that case short sales might be marginally more attractive to buyers. (Editor’s Comment: it is hard to make a short sale (they are anything but short) attractive to a potential buyer, but if it is the only game in town then I guess they look better, more about that in another post.)
The median home price dropped about 9% to $342,500. It has been bouncing around in the mid-$300,000 range for over a year.
I have been tracking home sales on this blog since mid-2007. This is the first big (non seasonal) drop in sales volume since late 2008. One month does not a trend make however. It will be interesting to see if is a temporary reaction to the headlines, or represents a more sustained trend.
What does this mean for you if you are a Buyer? If your income situation is stable (a big if for a lot of people), then this winter could present an excellent buying opportunity. Rates have dropped even since the summer to a decades low. Bottom line if you are a buyer now and the numbers work for you, this may be a great chance to buy with less competition at very low cost.
If you are a Seller? Without a doubt the drop in sales has got to give you pause if you are a seller. However, to whatever degree there is uncertainty about foreclosure inventory, your “normal” home is going to look a lot more attractive, but not if you overprice it.
I can think of any number of “normal” homes that are not priced in line with the competition and are just sitting, getting stale. If you are considering selling within the next two to three years, then you will want to be aggressive and pro-active about how you approach your sale, given the circumstances. It is better to be ahead of the market trends if you are a seller, not behind them.
Your home is not going to sell at a good price if it doesn’t show in tip top condition, and not if your listing agent does not know how to market it online. (Hint: talk to me about what it will take to get your home sold in this market!)
Anyway–for a closer look at the sales data and trends, visit the document below. You can find previous sales data for Sonoma County there as well.
And if you have any questions about Sonoma County real estate, and what these numbers mean to your real estate situation, please email or phone me.
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.
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.
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!
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%
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!)
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.)
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!
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!
When Sonoma County real estate prices were booming in 2004 and 2005, those of us who sell country property noted that appreciation was lower for country properties than it was for “standard” homes on suburban lots. Now we know why–it was the rapid expansion of mortgage lending to first time buyers and investors which really spurred the market for entry level homes. It did ultimately push up the prices for country homes in the county.
I thought I would pull the most recent sales data from our MLS (multiple listing service) to see what price trends have been like for country property over the last two years. For the purposes of this post, I pulled homes listed as single family residences or farms and ranches on lots of 2 acres or more.
You can get a property that might feel like country with a smaller lot size, but 2 acres seems like a practical dividing line in terms of what most people want. The County of Sonoma uses 2 acres for a dividing line for some of the zoning designations in terms of housing density, allowing second units on some lots of 2 acres or more. (note: don’t assume because you are interested in a property on 2 acres that you can build a second unit on it–it is way more complicated than that, contact me for specifics).
A 2 year low 12 units of country property sold in March of 2009 and 2009. The highest month’s sales total was 33 last October (very interesting due to the financial markets last fall.) The rate of sales seems to be picking up in the second half of this year. It generally bounces around in the teens and twenties, spiking towards 30 occasionally. Not the largest sample size which is why I am including all county sales in these figures as opposed to breaking out Healdsburg or Sebastopol for example.
Median price of country property in Sonoma County is down 14% since November 2007 when it was $1,200,000 versus $1,037,500 now. The lowest median price was in February (surprise!) at $620,000, just showing only the least expensive properties were selling last winter, not that individual property values fluctuated so much.
Months Supply of Inventory is at a two year low of 6 months at the end of November versus 19 months two years ago–with a high of 35 months supply in June 2008!
Here is the graph of median price as well as the underlying data. You can click on either of the images to enlarge them.
The median price of a Sonoma County home was $340,000 at the end of November, down slightly from $345,000 the previous month but up for the low hit last February of $290,000. This reflects several trends: shrinking inventory due to increased sales, initially led by the surge of entry-level home sales begun last spring, and followed by a late full increase in the sale of upper-end and mid-range homes. Most agents I talk to are upbeat about the coming market this winter and spring. We also wonder what the impact of the so called shadow market of foreclosures will bring to the Sonoma County housing market. If you were considering selling your home but reluctant due to the tough market conditions of the last couple of years, you might think about putting your home on the market this winter. Even with the holidays, there are a lot of buyers still active in the market. Please contact me if you would like to explore your options!
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