Have we hit bottom in the Sonoma County real estate market cycle?
Actually the only way you know is when it has passed by. A few weeks ago an agent friend and I were visiting as I fed the horses one early spring evening. She was telling me of the difficulties she was having successfully securing a home for first time buyers. This a great agent with many years of experience who was working with entry level low income buyers in Sonoma County. They were looking for a home priced under $200,000 in the Santa Rosa city limits. They were pre-approved for FHA financing with the reputable lender who had referred them to my client. They are eligible for a $10,000 down payment assistance from the city of Santa Rosa which will subsidize their down payment. Their income and credit qualified them for an FHA (Federal Housing Administration) loan. Although they qualify for the federal government first time buyer $8,000 tax credit, that cash won't reach their pockets until after the sale has closed. This couple was competing in many multiple offer situations with all cash investor buyers or other first time buyers such as themselves. Many properties in their price range were in such poor condition that they would not meet the strict FHA property condition guidelines, and the repairs needed would have put them beyond the couple's limited budget. I don't know how many offers they wrote but they were not having luck. As my friend detailed the many days and hours she spent with this couple, she said it was seeming increasingly unlikely that they would make it into the market. I paused as I asked her, "Do you think we have hit the bottom here in Sonoma County?". She said yes--good properties are selling extremely fast and sometimes at over asking price. I had to agree. What had seemed a consistently active but still laid back market this winter was falling into high gear as the days got longer. As some of my buyer clients and I surmised in January and February, we felt that things would be much more competitive as spring arrived, and that seems to be true. In fact, the southern part of Sonoma County, in Petaluma was already scorching hot at Christmas and New Year's time. And that same scorch-ability (sp?) seemed to be tracking north along the 101 corridor. The...
Been Down So Long It Looks Like Up To Me
The title of my last blog post was so upbeat I was a tad embarrassed on reflection. Was I just drinking the real estate Koolaid?  If you read the body of the post last week, you'd realize that my comments were a little more nuanced, but there was good reason for my optimism. I was in the midst of a multiple offer competition on a property in Healdsburg (my buyers are now in escrow and very happy), there were many properties going into escrow in the last couple of weeks in Sonoma County, and not just in the bottom end of the REO pool. Some really special country properties in Sebastopol and Graton that interested a number of my clients sold within a week of coming on the market before people could even get up here from out of town to see them. Open houses were packed all over the county. My transaction coordinator, Alise Posman, had 10 newly opened escrow files on her desk Monday morning and she is only one of several TC's at our office. It seems that there is a lot of pent up demand, and people with cash are deciding to invest in real estate here rather than stuff it under a mattress. Some are buying rentals, some are buying homes for the first time. Some are buying weekend homes, or rentals that will eventually become their wine country retirement homes. Some are searching for horse properties and there are some great deals at a variety of price points. That said, I felt a little sheepish about the headline, given the brutal reality of current conditions in our country. The old title of Richard Farina's 1966 book came to mind: "Been Down So Long It Looks Like Up To Me". I guess we are taking these signs of life as encouragement where we can this spring. No one has any illusions that happy days are here again but there are little glimmers of hope, kind of like the first bulbs coming up in the spring. It will be interesting to see how this year unfolds. But don't believe if you are a buyer that you will be without competition for the best properties, well-priced and in good condition this spring. If you are a seller take heed, and do what it takes to be perceived as a deal right out of the chute. You might be pleasantly surprised....
Sonoma County Real Estate Market sizzling hot up to $1 Million
But not over a million. That part of our market is very slow. But signs are very encouraging for a more balanced market in 2009 at all price points under a million. The experience of most Sonoma County realtors I know is that buyers are out if force for January, following a very busy holiday season. The big difference is that we are finally seeing sales movement at prices between $400,000 and $1 million, as buyers in those price ranges seem to be stepping off the fence. Both single family homes and condos are selling at a rapid clip. More details to come but here is a quick snapshot for single family dwellings in all price ranges through January 30, 2009. ...
Sonoma County Home Sales Surge 24.5% As Prices Roll Back to 2002 Levels
Many times I have shared the latest Sonoma County real estate sales statistics for residential properties. These are compiled on a monthly basis by my broker at Coldwell Banker, Rick Laws, based on actual sales data for the entire county as reported on the Bay Area Real Estate Information Services, our multiple listings service. The reporting software is Brokermetrics, from Terradatum.  Fellow agent, Craig Curreri, has taken it upon himself to go back to 1990 and summarize this data so that we have a nineteen year perspective on our bit of Northern California wine country real estate values.  Thanks to Craig for the headline above. There is no doubt that this is a very difficult time in real estate for many people. It helps to put events of the last couple of years into perspective. Thanks Craig and Rick!...
Mid-Price Range Real Estate Trends in Sonoma County for 2008
My last post this week detailed real estate supply, demand and price trends for Sonoma County real estate. The story of last year was bargain basement pricing by the banks looking to clear their inventory of foreclosed homes. County-wide the median price dropped 30% year over year through December 2008. The bulk of the sales action was in the sub-$500,000 price range and really lower than that. It is possible to find single family homes under $300,000 and even under $200,000 in some cases. With conforming loan rates ducking under 5% for thirty year fixed rate loans, first time buyers and investors are snatching up properties at a record pace. Condominium sales are just as hot. Meanwhile, let's take a look at homes in the mid-range tier of pricing, between $500,000 and $1 million dollars. In this range currently you will start to see larger homes, possibly with acreage in communities all over Sonoma County such as Santa Rosa, Sonoma, Glen Ellen, Healdsburg, Sebastopol and Petaluma.  The bulk of the lower priced properties are concentrated along the 101 corridor in Santa Rosa (primarily west of 101) , east Petaluma, Rohnert Park/Cotati and Windsor. It is not safe to over generalize about communities if you are looking for property however as we have a wide variation of homes and locales. Here is a view of supply and demand for Sonoma County homes priced between $500,000 and $1 million dollars. The first chart shows the change, or lack of change, in median price over the course of 2008. Median price rose a modest 2.5% in this price range. The reason prices did not drop drastically in this price range was that the supply of new homes dwindled at the same rate as the number of sales, as sellers who did not need to sell retreated. The rate of sales and new listings were cut in half year over year. There was also a recalibration of pricing above a million and below $500K as properties sought new levels. Clearly there has been a less dramatic softening in prices but the median was left essentially unchanged. There was a slight increase in sales at the end of the year and a leveling of new listings coming on the market. What do you think this information means for the spring market?...
2008 Sonoma County Real Estate: Three Quick Sales Trends
These three graphs tell the quick story of pricing, supply and demand trends for housing in Sonoma County from December 2007 through 2008. But the real story for your home depends on the price range for your house and the part of the county in which you live, or seek to live. You cannot automatically say that every home in the country dropped 30%. The price dropped most steeply in those communities with high rates of distressed housing: West Santa Rosa, East Petaluma, Windsor and Rohnert Park/Cotati. But, on average, and in summary: The median price dropped 30% year over year. The number of newly ratified sales contracts grew steadily all year and lead to a 184% increase year over year. Months supply of inventory dropped dramatically (73%) and steadily all year, exceeding the drop in prices. From a very strong buyers market in December '07, with over 14 months supply of homes at last December's sales rate, this December saw only 3.7 months supply. Six months is considered a balanced market. Anything under is a seller's market--in this case the banks who own nearly half the properties sold. ...
Sonoma County Real Estate Pending Sales up 96% versus December 2006
There was no seasonal dip in newly opened escrows this December as brave (or desperate) buyers and investors sought a home for their cash, literally. Despite the horrendous news in the financial markets, the rate of sales actually increased and the number of new listings continued to decline over the most recent months. Maybe the 2 point drop in interest rates over the last three months has continued to spur buyer activity, and not just at the low end of the market (under $500K--or really under $350K). I just got my hands on all sorts of juicy data and four major price points so you will hear more from me as I analyze the results. The steadily increasing sales continues a trend lead by low-priced REO properties we first noted in February and March of 2008. Meanwhile, here is the quick overview. (Thanks to my broker, Rick Laws, of Coldwell Banker, who is a data geek. He pulls Sonoma County real estate sales data from the local multiple listings service (BAREIS) via the Brokermetrics service.) Since December 2006: Pending Sales are up 96% Closed Sales up 7% New Listings up 48% Take a look at the trend lines over two years, because that tells a partial story of our market in Sonoma County real estate. More to come. Stay tuned. ...
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.  ...