Archive for the 'Market updates' Category
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.
This is the 7th of the series looking at housing sales trends in Sonoma County. Windsor, sandwiched between Santa Rosa and Healdsburg, has probably the most homogenous housing supply in the county, with many tract homes all clustered in the mid-price ranges.
There are estate properties at Shiloh on the east side of 101, and many vineyard, horse and estate homes on the west side of town off Starr Road and others, and I often advise my country property buyers not to overlook Windsor because there are some beautiful wine country homes that can be easily overlooked in a search. But the preponderance are 3-4 bedroom homes priced in the mid-price ranges. Maybe that is why the recovery doesn’t look quite so strong here yet in terms of prices. The median price in October 2007 was $620,000 and is now at $357,500, up from a low of $325,000 in April (not February!). Unit sales hit a near peak last month of 42 (the two year peak was 46 and the low was 11 in December 2007 when sales in the mid price ranges started their stall.
Month’s supply of inventory followed a steep decline from a high peak of 17.5 months two years ago to a low of 2 months over the course of September and October.
I hope this series has been helpful! It has been interesting for me to look at individual towns in this way, and the stats seem to confirm my own impressions from my knowledge on the ground of the markets in each of the communities we’ve discussed. Each property, each location, each home is unique. If you would like some specific information about a home you are thinking of buying or selling, please let me know!
As I reach Post 6 of this series looking at housing inventory trends around Sonoma County, I am struck by how relatively stable pricing has been in the Russian River area, from the farms of Forestville to the Redwoods of Guerneville and Monte Rio to the ocean at Jenner. Prices have always been lower “on the river” and the median has declined only 3% over the past two years, from $326,500 to $317,000. It hit a low of $190,000 in February and March of this year. Again-this probably has to do with an increase in sales in the mid and upper ranges after an almost exclusive focus on the low end of the market. Unit sales hit a two year high of 30 units in June of 2009 after a low of 8 last November, 2008. Unit sales usually are in the teens and twenties. Months supply of inventory is down to 3.6 from 5.8 two years ago. It did hover around 17.5 months last year at this time however.
Here is Part 5 of my series looking at the supply of homes for sale (Months Supply of Inventory is the measure) in various Sonoma County communities.
Petaluma consists of two MLS (Multiple Listings Service) areas-West and East–with very different characteristics. For the purposes of this post we will combine the two. It was very interesting to look at the trends here over the last two years because I think Petaluma is where the housing market crawled back over the bottom soonest. 80 units were sold in October 2008 which really put a crimp in supply for the winter months. The bottom was hit in February 2009 (noticing a pattern here?) when only 25 units sold, but sales are usually in the 20’s and 30’s. Median price was at $510,000 in October 2007 and is at $425,000 now, down 17%. But prices are up significantly from the low, which was $323,000. The median price does not fluctuate too widely in Petaluma compared to other Sonoma towns. Inventory peaked at an 8.5 months supply two years ago, but is a sparse 2.5 months now.
The Valley of the Moon represents the other Sonoma, not the county but the towns of Sonoma, Kenwood, Glen Ellen and Boyes Hot Springs. Sales volume ranged the last two years from a low of 15 units in December 2007 to a high of 45 units last May. The range of price points is very large, as in Healdsburg but overall the media price declined from $705,000 two years ago to a low of $323,000 in April 2009. It has bounced up and is currently at $390,000-down 45% over the two years, probably disproportionately aided by the slower sales of high end homes. Months supply of inventory was nearly 20 in October 2007, peaked at over 22.5 in December 2007 and is now tied for its low at 5.1 months, a seller’s market.
Sebastopol, like Healdsburg, is one of the strongest markets in Sonoma County real estate. The number of units sold per month over the last two years ranged from a low of 6 units in December 2007 to recent highs of 26 units with sales generally in the teens and twenties. A bit bigger supply then Healdsburg but not much. Over the last two years the median price did not see the wide swings that Healdsburg did (Healdsburg has more outlier properties for sale well into the $3 to $6 million range). Sebastopol median price was $824,000 in October 2007 and is $575,000 today. Overall the median price decline was 30%, but I think it has been more affected by the preponderance of sales at the lower price points and on small to no acreage. Market values have declined somewhat but many sellers were able to withdraw their more expensive homes for sale. The market for those appears to be picking up. The median price hit a low of $475,000 in February of this year, as elsewhere in the county.
Interestingly, Sebastopol had only 5 months of inventory for sale in October 2007, trended above 7 for a few months and is now at 3.8 months supply. Inventory never really got too out of hand.
Here is the next in my series looking at market conditions for various communities in Sonoma County.
Healdsburg real estate represents a small sample size with monthly sales ranging from 2 units to 24 units and median price ranging from $352,000 to over $3,000,000 on any give month over the last two years, with several months in which the median price was just over a million. So take this with a little grain of salt. Nonetheless, inventory never really spiked for long, sales are on the upswing, median price is down 27% since October 2007.
Month’s supply of inventory moved downward from 14 months in October 2007 to 6 months today, a balanced market, probably reflecting the amount of high priced inventory on the market here. MSI peaked at 25 months in February 2008.
I have been writing a lot lately about Month’s Supply of Inventory as it relates the national and California real estate markets to the Sonoma County real estate market. Inventory here is much lower then either nationally or statewide, putting Sonoma County in a real seller’s market, primarily at the lower price points but we are also seeing a lot more movement of mid-priced and upper end properties over a million dollars. That price point was dead much of this year.
I thought I would do a series of quick snapshots of inventory supply in each of the major Sonoma County MLS regions so we could see the variation within the county. Some of these have small sample sizes but I think they are big enough to spot trends. If you asked me about 3 bedroom homes on quarter acre lots in Northeast Santa Rosa, we might not have a big enough sample to be meaningful, but you can try me. If you would like more detailed information about your community’s sales trends, please email or phone me and I will send you more detailed reports.
Santa Rosa is the largest area in the county, spanning four different quadrants: NE, SE, SW and NW. I could pull reports for each one and I suspect we would find some good variation but let’s start here.
The median price of single family homes (including condominiums and farms and ranches) is down 33% from October 2007 when it was $450,000. The low was reached in February of 2009 at $250,000. It is currently just over $300,000 for the first time since September 2008.
Months supply of inventory is only TWO MONTHS, down from a peak of 16 in both October and December 2007. Anything under 5-7 months is considered a seller’s market.
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%!
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