All Signs Point to Rising Home Values in Sonoma County and the Bay Area
The number of homes for sale in Sonoma County is the fewest in many decades, according to a panel of real estate appraisers who recently presented their thoughts at the North Bay Association of Realtors’ weekly breakfast meeting in Santa Rosa. At the end of May of the 1900 homes technically available on our MLS, over 1,000 were already in contract, leaving only 900 homes available. This was roughly a forty percent drop from last May.
Inventory is declining due to a steady increase in new and pending sales, documented here. Interest rates are ridiculously low and buyers at all price ranges conitnue to leap off the sidelines. Appraisals are often a challenge now as the market is moving too fast and overbids in pending sales are not yet reflected as SOLD data, creating large challenges for the 70% of buyers who are applying for home mortgages today.
All signs point to gradually increasing home vales. Decreasing supply and increasing demand.
Part of this may be attributed to the “Facebook” effect, much touted for months even before Facebook’s beleaguered IPO earlier this spring. The IPO and generally strong tech economy are lifting the Silicon Valley and San Francisco housing markets to red hot levels.
I was in San Francisco this morning for a seminar on real estate legal topics and heard some interesting stories that are coming out of this frenzied market.
Many properties, even in the six to twelve MILLION dollar range are receiving multiple cash offers.
What happens when some buyers lose out–they get creative. It is increasingly common for losing Buyers to offer cash incentives to the buyers in first position (the winning buyer) so that they will assign their rights to buy the home to the frustrated loser. How can this happen?
Most standard real estate contracts are assignable, unless specifically amended. In one case winning buyer accepted $100,000 from a losing buyer to assign their right to purchase a home to the second buyer. Can you imagine how the seller feels seeing that $100,000 go to some one else?
Needless to say this creates some interesting challenges for sellers and their agents to be aware of–that is why the good brokerages such as Wine Country Group, my firm, offer continuing legal education to their agents.