An Upturn in the Housing Market May Be Reversing – NYTimes.com
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.