Author: Pam Buda

November 2008 Sonoma County Real Estate Sales still cooking

Given the short month, the holiday season and oh yes, the economic meltdown in the news, real estate sales are holding steady as viewed at the end of November, 2008 in Sonoma County California. I will have more detailed information by price points later in the month but here is a quick tidbit of post-Thanksgiving real estate stats. The number of units sold will increase with the final report since there is a several day lag on sales closed at the end of each month while the reporting catches up. This information is provided by Rick Laws, my broker at Coldwell Banker Santa Rosa, and is based upon sales reported via the MLS here by Brokermetrics.                                      Nov 07         Nov 08          #Units Change          Percent Change Under Contract          206              455                   249                     120.9 % Sold                               242             320                   78                        32.2 % New Listings                474              370                 -104                    -21.9 % First thing that jumps out is that there were 120.9 % MORE brave souls who wrote offers on properties in this wild short month of November versus last year at this time.  The number of closed sales is up at least 32 % year to year as well.   The number of new listings has declined nearly 22 % versus last November, as many people hunker down.  This makes for some interesting trend lines year over year, as well as expected seasonal declines in units sold as we head into the winter months.   Anecdotally, the buyers are split about evenly between investors and first-time home buyers.  Units sold are dominated by the low-end of our market, under $400,000.  Since the one point drop in mortgage rates just before Thanksgiving really was not much of a factor in November's sales, it will be interesting to see how that boosts (or not) our  real estate sales for Sonoma County in December.   Stay tuned....

Months Supply of Sonoma County Entry Level Real Estate Declines Sharply

One of the most interesting measures of the tension between buyers and sellers in a real estate market is the "Months Supply of Inventory" figure. What this number tells us is the number of months it would take to sell the existing number of homes for sale at the present rate of closed sales. Buyers Market or Sellers Market? Generally six months of inventory is considered to be a market balanced between buyers and sellers. Anything less, and sellers are advantaged in negotiations. Anything more, and the trend favors buyers. Two years ago in Sonoma county, there were 6.2 months of entry level inventory for sale. When the first wave of foreclosed properties began hitting our market in force in 2007, the inventory piled up to a high point that so few properties were selling, as many more were coming on the market. Consequently, MSI (Months Supply of Inventory) ballooned to a 14.8 months supply, a strongly favored buyers market. Early in 2008, banks began slashing prices and buyers have been increasingly active ever since. (See my posts under market updates beginning in March to track this trend.) The lower priced properties, driven by foreclosures, have steadily been absorbed by first time buyers and investors. They have been gobbling up REO's so quickly that now there are only 2.7 months of inventory available at the current rate of new listings and sales, a strongly favored sellers market. If you are a buyer interested in purchasing an REO home, it is important for buyers to be prepared for the market realities especially for the most solid homes in the best locations. 1. You must have a STRONG pre-approval. In many cases first time buyers will be competing with all cash investors for the same properties. 2. You may need to make multiple offers on a stream of properties before you land the right one. 3. It ALL DEPENDS. Make sure you have a committed working relationship with a realtor who is knowledgeable about the changing market, and who knows how to present and negotiate your offer(s) in the best light. Just as sellers have learned (in some cases!) to be realistic, it is important for buyers to do the same. Happy hunting! ...

Sonoma County Real Estate Market Dynamics through October 2008

At first glance the overall supply and demand trends for Sonoma County real estate from October 2006 through October 2008 show gentle trend lines that belie the turbulence of our market. The number of units for sale (all residential types and all price ranges) is down modestly (3.9%) from 3284 units then to 3155 units now. The peak was 3608 units for sale in August 2007 with some seasonal trending over the 25 months. The number of units sold has increased by a robust 33% however, to 508 units from 381 units in October 2007. Days on market for properties in contract has declined from 93 days (peak 112 in January 2007) and the number of properties under contract has grown significantly from 372 to 553. The number of pending Sonoma County home sales is the highest in 4 years. Last year at this time, pending sales were hovering between 166 and 286 units per month! Now they are running 450 to 550. The reason for the change? Banks got aggressive and drastically lowered the list prices of bank-owned (REO) properties creating lots of competitive, interested buyers. The true story behind any particular home investment is driven by intensely local conditions rather than broad average trends: single family home, country property, vineyard property, fixer or condo. It is absolutely a function of price point with the bulk of the activity under $500,000. The following graph shows the same trend lines as above(active inventory versus sold listings) for all residential Sonoma County sales under $500,000.  Since the median home price was nearly $600,000 at the market peak in 2005-2006, very little was available under $500K. Since then, it has declined county wide on average jut over 30%--there's that word again, on average.    While the overall number homes for sale has declined slightly since October 2006, under $500,000. it has nearly doubled.  The number of units sold in this price range has increased nearly 200% in the last 25 months.  Bottom line is the banks figured out pretty quickly how to move REO inventory and both investors and first time buyers are competing for the best of these homes.  Result--inventory is declining faster than it is coming on the market and overall sales velocity has increased, all fueled by the REO bargains.  ...

Camels and Dressage?

OK I really am working on a more serious post about the 4 year high in home sales we experienced in Sonoma County real estate for the month of October 2008, with plunging inventory, but first this fun video for my horse (and camel) friends, from @WalkingHorse, a Twitter friend. ...

Smart Voters finally approve SMART Train for Sonoma and Marin Counties

At long last both Marin County and Sonoma County voters have approved a 1/2 cent increase in the county sales tax to fund the development of the SMART train which will run on already existing train tracks from Cloverdale in North Sonoma County to Larkspur in Central Marin county, where it will be easy to connect via bus or ferry to San Francisco's financial district.Imagine a North Bay with a transportation network of buses, shuttles, ferries, trollies, bike paths and sidewalks all connected with a centralized rail line that makes it possible to easily travel around Marin and Sonoma counties without ever getting behind the wheel of a car. It’s hard to envision such a network in 2008, when driving on Highway 101 is virtually the sole alternative for travel between the two counties. But the public already owns an asset capable of changing that reality. The Sonoma-Marin Area Rail Transit District – SMART – proposes a 70-mile passenger railroad and parallel bicycle-pedestrian path along the publicly owned Northwestern Pacific Railroad right of way through the two counties. The rail line runs from Cloverdale, at the north end of Sonoma County, to Larkspur, where the Golden Gate Ferry connects Marin County with San Francisco. Along the way SMART will have stations at the major population and job centers of the North Bay: San Rafael, Novato, Petaluma, Cotati, Rohnert Park, Santa Rosa, Windsor and Healdsburg.For a cool video view of a similar system in San Diego click here....

October Sonoma County Real Estate Sales Snapshot

This week I received this quick sales snapshot from Rick Laws, my broker at Coldwell Banker.   It provides a 13 month overview of Sonoma County residential sales activity at all price ranges and in all locations county wide.  Sales activity and area trends vary widely by price and location but this is a quick view based upon MLS data pulled by Brokermetrics. In about a week I will have more detailed information available covering the various price points and separating out condo activity. Sonoma County Real Estate Market Dynamics October 2008                                 Oct 07        Oct 08         # Units Change       % Change Under contract       227              604                        377                      166% Sold                       227              488                         261                     115% New listings            530               551                           28                       5% The biggest takeaway here is that this is the first time in over two years that the number of newly opened escrows has exceeded the number of new listings.   Despite everything that happened in the financial markets in October, the number of newly opened escrows was up 166% and hit its highest point year over year.  In addition, the number of closed escrows reached a new high for the year.  We all know that not every opened escrow will close-but the number of newly ratified sales continues its upward trend, and bucks the national trend. The tail wagging the dog in this market continues to be the REO (bank-owned) home at the low end with an increasingly high volume of sales under $500,000 for both single family homes and condos.  Sales through October seem to be driven (this is anecdotal) equally by first time buyers or owner occupants and  real estate investors....

Healdsburg Menus and Wineries-Handy Web Site Guide

When I found out my favorite Healdsburg brunch spot, the tiny Ravenette, is closed for a while, I wanted to find a new Sunday brunch spot to meet some friends (and clients) who just moved to Headsburg full time from San Diego. Google turned me on to a handy website, healdsburgmenus.com with menus and links to most of the good dining spots in town. I think Healdsburg has more quality restaurants per capita than any place I know outside Manhattan or Paris. (OK it is a small town but you can't walk more than a few steps without finding great food and wine.) The site is called healdsburgmenus.com I thought we might meet at the Downtown Bakery and Creamery. This spot has been serving up great breads, cakes, cookies and ice cream since 1984 and was one of the first "gourmet down home" spots in Healdsburg. I always made a pit stop here on my way to Mendocino. They have expanded their bakery operation (open since 1984) to include table seating and a nice breakfast menu. Or maybe we'll head to Bovolo behind the new Copperfield's Bookstore for some of John Stewart and Duskie Estes (of Zazu fame) robust fare. Or maybe we'll head to Barndiva for some stylish country food. Hmmmm. Well we actually had a nice breakfast at the newly and greatly expanded Costeaux French Bakery a block north of the Plaza. The place was packed indoors and out with a crowd of mostly locals and a few tourists. I don't know how you can spot tourists exactly, but you can. ;) While we're at it I've got to let you know about my classic Healdsburg bungalow listing at 414 Piper Street, only 4/10ths of a mile from all these yummy spots. Well this is a real estate blog you know. Honestly, with a Walkscore of 83 think how much fine dining you could have and how much gasoline you could save? Good for you and good for the planet!...

Are banks still funding home loans in Sonoma County?

Everyone is unsettled these days and no surprise.  There are a few questions or comments that I am hearing repeatedly from clients and friends.  The first is the question above. With a cataclysmic world-wide banking crisis occurring over the last few weeks, I guess that is a logical question to ask.  Can I still get a home loan today? Well, home sales are still occurring, especially at the entry-level as indicated in previous posts.  Jumbo loans are dicier and the larger jumbo loan limits expire at the end of December so we perhaps that is a cause of the flurry of real estate sales activity in our county in the mid-price ranges of $500,000 to $1 million. While rules have tightened to sometime excruciatingly comical levels (some of the stories I have heard could fill another post or two) the flow of mortgage funds  has continued.  Kenneth Harney, in the San Francisco Chronicle on Sunday October 19th, gives a good overview of our current state of home lending.  Credit squeeze, credit freeze, credit system seizures: Everybody knows how severe and painful the global financial breakdown has been - with banks unwilling to lend even to other banks. But what about mortgages and real estate? Can you still get a home loan with less than a 20 or 30 percent down payment? Or with a credit score below 720? Absolutely. It would be a big stretch to label housing the sunny side of the market at the moment, but there's a lot more light there than in most other financial sectors. Consider these facts: -- There is no shortage of money available for home mortgages, no freezing of credit to purchase or refinance a house. Why? Because the American mortgage market effectively has been federalized - at least for the time being. More than 90 percent of new loans now are being made through the Federal Housing Administration insurance program, plus Fannie Mae and Freddie Mac. FHA is owned by the federal government, and Fannie and Freddie are operating under federal conservator-ship. All three have unfettered access to global capital markets at rock-bottom costs because their borrowings are fully guaranteed by the Treasury. Ginnie Mae, which is FHA's pipeline to the bond market, recorded an all-time high of $29 billion in new mortgage-backed securities issued in August. -- Loan terms and credit underwriting standards have been toughened up, but you can still put down 3 percent (3.5 percent after Jan. 1) on...

Sonoma County Real Estate Market Pulse October 2008

The market for single-family homes under $400,000 is so strong in Sonoma County that it makes the overall sales rate in the county qualify as a sellers market, with only 4.5 months supply of inventory based at the current sales rate.  Last September there were 14 months of inventory available county wide. The fact is that the banks who have foreclosed here are the dominant seller in the county with over 40% of the sales.  Since last fall they figured out they needed to slash prices in order to get them moving, and the strategy has been successful.  One lender, Otto Kobler of Maximum Mortgage in Santa Rosa has told me that we are halfway through digesting the major wave of adjusting loans from 2005 which began hitting the market as REO's last September. Since March, open escrows month by month have exceeded the sales volumes of the last two years and they continue to climb.  Real estate investors and first time buyers are snatching up homes at prices not seen since 2002 in some cases.    Condominiums are selling fast with median prices under $200,000.  The number of newly ratified contracts (open escrows) is increasing rapidly as the number of new listings county wide slows. These overall market trends are very misleading however as sales volumes and inventories at higher price points are in very different territory.  The action is at the low end and sellers of more expensive properties are seeing definite declines in volume.  The market needs to digest the inventory at the lower end to acheive some stability.  There are some amazing bargains out there for first time buyers and investors. ...

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