Please see our UPDATED separate market report pages for the
Marin and Sonoma real estate markets:
Marin County Real Estate Market Report
Sonoma County Real Estate Market Report
North Bay Residential Real Estate Market Update
As is not unusual, the third quarter (summer) cooled down somewhat and was not as active as the second quarter (spring), but was still quite strong by any measure.
If you adjust your screen-view to zoom 125%, the charts will be easier to read.
Third Quarter Snapshot
74% of third quarter sales sold quickly without price reductions at an overall average of just a smidgen under list price. 26% of sales sold after one or more price reductions at an average discount to original list price of 9%, and a good number of listings didn’t sell at all, but ended up withdrawn from the market, typically due to being perceived as overpriced. Note the huge disparity in average days on market for those homes selling with and without price reductions: Pricing correctly makes a huge difference in market response.
Median House Sales Prices by County
Median prices continued to increase in Napa and Sonoma counties, while declining from a spring peak in Marin (which is also what happened in San Francisco). There are probably a number of dynamics behind this: the big decline of the distressed home segments in Napa and Sonoma, when these segments have already pretty much disappeared in Marin and SF. And then there is the second-home buyer dynamic in the Wine Country, while the high-end markets of most counties have a tendency to decline during the summer. In any case, what is important is the long-term trend, not quarterly fluctuations.
Median Home Sales Trends in San Francisco, California & U.S.
As context to what is occurring in the North Bay markets, this chart tracks long-term trends in the San Francisco, state and national markets. Right now, the recovery in home prices is quite general, though different markets experienced bubbles and crashes of different magnitudes in 2006-2011, and are now recovering at different speeds.
Trends in Average Dollar per Square Foot Values
As with median sales prices, the trajectory in dollar per square foot values has been significantly upward over the past year. Here we threw San Francisco into the mix as a point of comparison. Because of the scale of the chart, it may not look like the dollar per square foot values have increased that much, but the percentage increase from the bottom of the market is very dramatic in all these county markets.
Sales by Price Point by County
This 90-day snapshot gives a glimpse into the breakdown of home sales by price point in the three North Bay counties. Generally speaking, Marin home prices are much higher than in Napa and Sonoma, but all three counties have home sales at every price point, from lower to very high. Note that the Sonoma county market is as big as the Marin and Napa markets combined by number of home sales.
North Bay Luxury Home Sales
In this chart, luxury houses are defined, rather arbitrarily, as those selling for $1,500,000 and above: Sales of such homes surged in the second quarter, and then dropped somewhat in the third. The high-end home market typically has a tendency to subside during holiday seasons (summer, winter), which is what happened in Marin (and in San Francisco). Sonoma and Napa high-end sales stayed about the same, which may be because a strong component of their luxury home markets are composed of second-home buyers, who are enjoying these counties on holiday excursions. North Bay high-end sales are concentrated in Marin, but Napa and Sonoma also have significant luxury home segments.
Distressed Home Sales
Happily, distressed property sales in the North Bay are rapidly dwindling in all three counties. Since Napa and Sonoma were hit much harder than Marin (as a percentage of total sales), the decline of this market segment is providing an added boost to median prices in those counties.
Median House Sales Prices around the greater Bay Area
An interesting look at comparative home prices around the Bay Area. Remember that median home prices are huge generalities that almost always disguise enormous disparities in the underlying, individual home sales (especially in the larger cities). In the map below "k" signifies thousands of dollars and "m" signifies millions.
Interest Rates: The Sky is Not Falling
Not to diminish legitimate concerns regarding rising mortgage rates and their effects on housing costs, but this graph puts recent increases in context. At any time before 2011, the current interest rates, even after their recent big percentage jump, would be reason for conga lines of celebration in the streets. Rates had to rise from their historic and artificial lows – how far and fast this may continue is unknown to us, but we don’t presently expect big shocks to the real estate market in the near future. After the jump in June, interest rates actually declined a little bit in early October.
North Bay: Months Supply of Inventory (MSI)
Inventory began to creep up in the second and third quarters, but supply as compared to demand remains low. This, of course, is the major dynamic behind rising home values: the lower the MSI, the stronger the market. The current reading would be considered indicative of a strong "Seller's market."
North Bay: Percentage of Listings Accepting Offers
This statistic is an excellent measure of demand versus supply. The percentage of listings accepting offers fell a bit in the third quarter as compared to the extremely hot second quarter, as is not uncommon, but it is still very high by any historical measure.
All data from sources deemed reliable, but may contain errors and is subject to revision. Statistics are generalities and how they apply to any specific property is unknown. All numbers should be considered approximate.
© 2013 Paragon Real Estate Group