Sonoma Mid-Year Market Report



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The Sonoma County Real Estate Market


Home Price Appreciation from a Variety of Angles
County Home Prices by City & Bedroom Count

Mid-Year 2018 Update

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Sonoma, Marin, SF, CA & U.S.
Median Home Price Trends








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Annual Median Sales Price Changes
by Dollar and by Percentage


Appreciation is typically viewed through the lens of percentage changes, but looking at dollar-value increases is another angle that is sometimes more interesting. Below are charts measuring appreciation by both parameters.







Comparing the first half of 2018 to 2017, the Sonoma County median house sales price increased by $56,000 or 9%. However, it is not a given that the second half of the year will see home price appreciation at similar rates: Prices could indeed increase further, or they might plateau or even tick down instead. We will have to see how the rest of the year plays out.

Median sales price is that price at which half the sales occurred for more and half for less, and it is often affected by other factors besides changes in fair market value, such as changes in inventory or in luxury home sales. Sometimes median sales prices in a particular community fluctuate without great meaningfulness. This is especially true in smaller towns with relatively few sales and wide ranges of sales prices. For example, in Sonoma County, Healdsburg sometimes has anomalous ups and downs in median price, sometimes of surprising magnitudes, that are unlikely to reflect actual changes in fair market value. A specific comparative market analysis of a particular property is sometimes the only way to gauge appreciation trends.


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Home Sales & Prices by City & Bedroom Count

Reflecting 12 Months Sales through Mid-2018











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Additional reports can be found here: Paragon Main Reports Page

Please let me know if you have questions
or if I can be of assistance in any other way.

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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group


Sonoma Median House Price
Hits New High

Median sales price appreciation, home values by city and town,
post-fire lot prices, media reports of impending Bay Area doom,
real estate market dynamics

Sonoma County Home Prices historical


April 2018 Report, Paragon Real Estate

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In Q1 2018, the Sonoma County median house sales price hit a new high of $681,000, 12% above the Q1 2017 price of $608,000, and 4% above the Q4 2017 price of $665,000. Prices usually increase from Q1 to Q2 as the spring selling season really gets going, so it will be interesting to see if the surge in values keeps rolling on.


Median House Sales Prices by Quarter
since 2012

Sonoma median home price by quarter


Long-Term Bay Area Home Price Trends
since 1987, per S&P Case-Shiller Home Price Index

The Case-Shiller Index does not use median sales prices to measure appreciation, but instead employs its own algorithm. This chart illustrates the appreciation trends for low- and mid-price-tier houses in the 5-county SF Metro Area. Sonoma is not actually part of the designated SF metro area, but these trend lines apply quite well to its real estate market. (The high price tier, not illustrated on this chart, applies best to markets in Central-Southern Marin and San Francisco.)

Lower-priced homes in Sonoma had a huge subprime bubble and gigantic crash as shown by the blue line on the chart below, with the mid-priced home segment (orange line) somewhat less dramatic in its rise and fall. Since 2012, both segments have seen spectacular recoveries.

In this chart, home prices in January 2000 are designated at a value of 100, thus the reading of 277 in December 2017 for the low-price tier signifies a price that has appreciated 177% in the 18 years since then, and a little above the previous peak hit in 2006-2007. This chart does not reflect Q1 2018 appreciation.

Sonoma County real estate cycles



As always, market dynamics often vary significantly by specific location, property type and price segment, and median prices are often affected by other factors besides changes in fair market value (such as fluctuations in luxury home and new construction sales, and in the average size of homes sold). Late reported sales may affect the median sales prices illustrated in the quarterly chart, though typically only to a minor degree.


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Sonoma County Home Values
by City & Town


Sales Reported to MLS, 10/1/17 – 4/10/18


Below is a glance at recent house median prices and average dollar per square foot values broken out by community, for sales reported to MLS in the last 6 months or so - basically since autumn sales began to close in early October.

Average house sizes vary: Of the cities, towns and regions listed in these charts, the smallest average house is in the Russian River region at 1255 square feet, then comes Santa Rosa SW at 1508 sq.ft.; Healdsburg, Sebastopol, the city of Sonoma and Cotati all have average house sizes between 1600 and 1800 sq.ft.; Windsor, Petaluma, Penngrove, Santa Rosa NE and Coastal Sonoma have averages ranging from 1800 to 2000 sq.ft.; and Sea Ranch has the largest average house size at 2032 sq.ft. (For sales of houses on lots of 2 acres or less, from 10/1/17 to 4/10/18)


Median House Sales Prices

Sonoma County Home Prices by City


Average Dollar per Square Foot Values

Sonoma County Dollar per Square Foot

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Post-Fire Residential Lot Market Activity
Santa Rosa Lot Sales by Lot Size

This chart reviews post-fire sales of residential lots in Santa Rosa by size and median sales price, as reported to MLS. It has been a very active market (and this chart does not include transactions unreported to MLS). Unsurprisingly, steps up in size correlate with increases in median sales price.

Santa Rosa Post-Fire Lot Sales

Additional Chart: Sonoma County Home Sales by Lot Size


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Sonoma Market Dynamics

The market has just begun what is typically the busiest selling season of the year, as new listings pour onto the market, and buyers jump on those listings. Buyers are jumping all over the Bay Area.


Seasonality in Sonoma Market


Sales Price to List Price Percentage
by Month

Sonoma sales prices to list prices


Average Days on Market

Sonoma days on market


Sonoma Home Sales of $1 Million+

The number of sales in Q1 2018 in this higher price segment was 43% higher than in Q1 2017. There is typically a big jump from Q1 to Q2 each year.

Sonoma homes over 1 million dollars

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The Facts Regarding Bay Area
Migration, Population & Employment Trends


Alarmist Media Reports Forecast Doom for Bay Area

Many semi-hysterical articles were published in March regarding Bay Area residents fleeing in droves, that more people are leaving than arriving, that Silicon Valley is over, and this may spell disaster for the region. That sounds very bad - but is not true: Though the rate of growth has considerably slowed from the torrid pace of recent years - which is probably a good thing, since the Bay Area is now bursting at the seams - more people are still arriving than leaving, and population and employment numbers are still increasing. Our report, Will the Last Person Leaving the Bay Area Please Turn Off the Lights covers this topic in much greater detail.

Though Sonoma is not technically part of the 5-county SF metro area, it is, of course, deeply connected to economic trends there.

Below are 3 charts from our full article, based on recent U.S. census and CA state employment data.


Net domestic and foreign migration in and out of the SF Metro Area,
natural population increases and annual net population growth

SF Bay Area Migration-Population-Jobs


The San Francisco Bay Area population continued to increase in 2017,
though slowing from the feverish growth rates of previous years.




The Bay Area continues to be a job-creating machine,
though hiring intermittently speeds up or slows down.



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Mortgage Interest Rates

Interest rate changes are one of many factors we reviewed in a recent report Positive & Negative Factors in Bay Area Markets. It may be that fears of impending rate increases are helping to fuel the strong buyer demand we are seeing so far in 2018.



30 Year Short Term Interest Rates


Additional reports, including for Marin, San Francisco and the Bay Area as a region, can be found here: Paragon Main Reports Page

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Very Strong Home Sales Dynamics
Continue into Early 2018

March 2018 Update

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Monthly Median Sales Price Changes

Sonoma monthly median sales prices


Year-over-Year Comparisons
Median Prices & Price per Square Foot

Sonoma year over year home price appreciation


It is not unusual for monthly median sales prices to drop during what is often described as the mid-winter market doldrums, but, as seen in the first chart above, not this year in Sonoma: Median prices have been consistently climbing since autumn began, with the fire clearly increasing demand since it occurred, and overriding typical seasonal dynamics. The second chart above illustrates year-over-year changes using the 3-month period of December, January and February sales: Dramatic appreciation percentages. It is still very early in the year to come to definitive conclusions, but so far in 2018, the entire Bay Area appears to have shrugged off concerns regarding increasing prices, rising interest rates, stock market volatility and federal tax law changes. We will know more once sales data from the spring selling season starts coming in.


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Home Values by Lot Size

In San Francisco, a house worth $1m can sit next to one worth $3m, each on its own narrow, 25-foot-wide, 2500 square foot lot, but in Sonoma, land clearly plays a big role in home values. This is what many people come to the county for: More space, somewhere to sit outside with the dog and a bottle of wine, maybe even enough room to grow some grapes. As the lot sizes grow larger in the chart below, land begins to balance and then, eventually, often outweigh the value of the house itself.




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Median House Sales Prices
since 2012 by City & Town

The next chart is a snapshot of appreciation in 5 Sonoma cities since 2012. In this analysis, home sales were limited to those with lot sizes of 2 acres or less. The trends seen here are generally true for communities across the county.




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Supply & Demand Statistics

As seen in the 2 charts following, as measured by several classic measures of supply and demand, the market in recent months has certainly not softened in comparison to the last 2 years. Indeed, it has become substantially stronger. Generally speaking, this is playing out around the Bay Area, but more dramatically in Sonoma than most other counties.


Months Supply of Inventory (MSI)
& Average Days on Market (DOM)








Listings Selling within 30 Days
Year-over-Year Comparisons




New Listings Coming on Market
& Listings Accepting Offers


This next chart graphs the intense seasonality of the Sonoma market: We are just on the cusp on what is typically the biggest selling season of the year.




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Sonoma Luxury Home Market




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Mortgage Interest Rates

Long-Term Trends

Long-Term Mortgage Interest Rate Trends

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Additional Sonoma analyses can be found here, if you scroll down to earlier reports: Sonoma Market Reports Page

More reports for those interested:

Positive & Negative Factors in Bay Area Markets

Survey of Bay Area Real Estate Markets

Looking Back on 2017
& Forward to 2018

January 2018 Home Price Map
Reflecting Sales Reported to MLS in 2017
Move Cursor over Map to Reveal Prices




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There was continued median home price appreciation throughout the Bay Area in 2017, with Sonoma seeing a noteworthy jump in the fourth quarter due to heightened demand after the tragic fires. From the 3rd to 4th quarters, the house median sales price increased 5%, and condos saw a particularly large percentage increase of 11%. (See third chart below.) However, too much should not be made of short-term data until substantiated over a longer term. Sonoma county home prices are still vastly more affordable than in Marin and San Francisco (as illustrated in the first chart below).

One new dynamic is the market for lots affected by the fires. Looking just at Northeast Santa Rosa, the area most severely damaged, as of January 8th approximately 60 fire-damaged lots have been listed for sale in the past 2 months, 19 of which have accepted offers, and 2 of which have been sold. The median list price of lots for sale or under contract is $325,000. The largest such lot on the market is 22 acres with a list price of $799,000. The median sales price of the 2 lots sold was $232,500. Note that other sales activity may be occurring outside of the MLS listing system. Undoubtedly, the market will continue to wrestle with the issue of what the fair market value of these lots is as more come on the market, and we will know more when the current batch of listings under contract close sale.

Sonoma, Marin, SF, CA, National Home Price Trends

Sonoma County Median Home Price Trends by Year

Sonoma County Median House and Condo Prices by Quarter

Additional chart: Bay Area Median Home Price Trends by County

Link to our report on Bay Area real estate cycles

Link to our updated survey of Bay Area markets


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Moving into 2018, there are a lot of spinning plates in the air - local, state, national and international factors that could affect markets. 2017 saw real estate markets surge and financial markets soar. After some cooling from mid-2015 to mid-2016, the Bay Area high-tech economy surged back into high speed. Unemployment rates have flirted with historic lows, and 2018 may see some major local IPOs, which could create great quantities of new wealth. The Bay Area still has probably the most dynamic, innovation-fueled economy in the world and indisputably remains among the great metro areas on the planet - but there are social, economic, political and environmental challenges looming as well.

Article link: Positive & Negative Factors in Bay Area Markets

Congress delivered an unpleasant holiday present to many Bay Area residents in the form of federal tax law changes limiting the deductibility of mortgage interest and state and local taxes. These changes will most dramatically affect counties with more expensive home markets such as Marin and San Francisco, but some Sonoma residents will also be adversely affected: Talk to your accountant or financial planner. Predictions regarding the effect of these tax changes on Bay Area housing markets and the business environment range from one extreme (economic devastation) to the other (shrug), and the state legislature is currently working on bills that might blunt the negative financial impacts. It is too early to guess how it will all play out. We live in interesting times.

This report will review real estate trends in 2017, and some of the economic factors that impacted them. Most of the charts are self-explanatory, so we have kept the text to a minimum. Towards the end is an extensive analysis of home prices by city and bedroom count.


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Sonoma year over year home price appreciation

Sonoma Annual Homes Sales Volume

Sonoma homes market seasonality

Sonoma Homes Selling Quickly

Sonoma Home Sales Price to List Price

Sonoma Average Days on Market by Year

SF Bay Area Months Supply of Inventory

California Migration Trends in 2016

Link to our analysis of domestic and foreign migration trends

Link to our survey of Bay Area demographics


S&P 500 Index by Year

Annual Mortgage Rate Trends

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Sonoma Luxury Homes Market

Sonoma Luxury Home Sales by Year

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Sonoma County Home Prices by City
& Bedroom Count


Sonoma Home Sales by Price Segment

Sonoma 2-bedroom house sales by city

Sonoma 3-bedroom house prices by city

Sonoma 4-bedroom home prices

Sonoma 5-bedroom home prices


All our Bay Area real estate analyses can be found here: Paragon Market Reports

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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group


Median Price Trends, Average Dollar per Square Foot Values, Luxury Home Sales,
Sales Breakdowns by Price Segment & Bedroom Count, Supply & Demand Analytics

The Paragon November 2017 Report

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We are a little reluctant to talk about real estate market dynamics amid the suffering of so many of our friends and neighbors, but since there are people who still need or want to buy or sell, we have put together the following report.

Obviously, the loss of housing from the recent fires is adding further pressure to both the resale and rental markets in both the wine country and adjacent counties, which were already characterized by low supply. There are distinct groups within the Sonoma market - people who lost their homes, buyers who were already in the market to buy when the fires struck, and second-home buyers, who historically play a significant role in demand here - and each of these groups will react to the changed circumstances in a different way. The market usually goes into semi-hibernation from just before Thanksgiving to mid-January. This year may be somewhat different. There has certainly been a sudden increase in demand from those affected by the fire and financially able to buy another home now, but greater clarity on longer-term buyer response will probably have to wait until the first and second quarters of 2018.

We are already hearing of investors interested in buying up lots in affected areas for future construction, which on some level is a vote of confidence in a rapid recovery, though, of course, it is fundamentally motivated by investment calculations. The decision as to whether it makes sense to sell now should be carefully thought out: Values of affected lots will be lowest in the immediate aftermath of the fire. On the other hand, there may be the reasonable desire to move on with life - rebuilding will not be a quick or easy task, despite efforts to streamline the process - and let someone else deal with the many complex issues pertinent to rebuilding. The neighborhoods that rise from the ashes may be substantially different from those existing before. This occurred after the big fire in the Oakland hills 26 years ago.

How the disaster will ultimately affect the real estate market will almost certainly be more nuanced than expected or predicted, and will only become clear with time. Other factors will undoubtedly impact the market, as they always do. The scars on both the land and the emotions will fade, many Sonoma towns were spared damage, and the wine country remains one of the most special places to live on the planet, but it will take time for the shock to pass and the recovery to take hold. Disasters have this effect, but as with the Oakland hills fire and the 1989 earthquake, there is no doubt in our minds that Sonoma too shall fully recover.

Following is a look at the Sonoma real estate market from a variety of angles.


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Median Home Price Appreciation Trends


Sonoma County Median Home Sales Price Trends


Average Dollar per Square Foot Values
by City & Town

Sonoma County Average Dollar per Square Foot Values

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Market Overviews

Sonoma County Average Home Sales Prices by Bedroom Count

Sonoma County Home Sales by Price Range - Pie Chart

Sonoma Home Sales and Prices by City

Sonoma Home Sales by Month - Seasonality

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Luxury Home Sales

Sonoma County Luxury Home Sales by Year

Sonoma County Luxury Home Sales by City

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Median Home Sales Price Trends
for Selected Sonoma Cities & Towns

Remember that changes in median sales prices are not perfect measurements of changes in fair market value: Median sales prices can be affected by a variety of factors.


Sonoma City median home sales price trends

Healdsburg median home sales price trends

Petaluma median home sales price trends

Penngrove median home sales price trends

Sebastopol median home sales price trends

Sonoma Coast median home price trends

Santa Rosa median home sales price trends

Russian River median home sales price trends

Cotati Rohnert Park median home sales price trends

If you would like information on a city or town not included
in this report, please let us know.

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Mortgage Interest Rates

Interest rates are somewhat above their all-time lows, but still very, very low by historic standards. This is of enormous importance to buyers financing their home purchases.


Short-Term Rate Trends

Short-Term Mortgage Interest Rate Trends


Long-Term Trends

Long-Term Mortgage Interest Rate Trends

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Three Suggestions: As recent events have reminded us, disasters can arrive suddenly and with little warning, so: 1) Contact your insurance agent to make sure your policy is updated to cover the full, current value of your home and possessions. 2) Get prepared: This website contains useful information regarding preparing and having a plan in the event disaster strikes: Disaster Preparation Guide & Resources. 3) Some communities now have early-warning communications programs that can automatically email, text or call you in the event of a disaster, and then provide useful ongoing updates on the situation. Check with your county and city governments to see what is available.

All our Bay Area real estate analyses, including those for Marin and San Francisco, can be found here: Paragon Market Reports

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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group


Sonoma County Real Estate Report

The Autumn Market Begins

September 2017 Report

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Spring and summer are two most active selling seasons in Sonoma, but a substantial amount of business will still occur before the market starts to enter its winter holiday hibernation in mid-November. So far, 2017 has seen significant home price appreciation virtually throughout the county. As illustrated in the first chart below, a big factor is its much greater affordability when compared to Marin and San Francisco. Of course, Sonoma is also simply a wonderful and beautiful place to live and still be within relatively easy driving distance of the city and its amenities.


Sonoma, Marin, San Francisco, California
& United States Median Home Price Trends


Sonoma, Marin, California, US Home Price Trends

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Sonoma Median House Price Appreciation
by City & Town, 2011 to 2017 YTD

Median sales prices are not perfect indicators of changes in values for specific homes: They can be and often are affected by factors other than changes in fair market value, and shorter-term anomalies are not uncommon. What is certainly true is that every part of Sonoma County has seen substantial appreciation since the market recovery began about 6 years ago.




Sonoma County Home Price Appreciation

Sonoma Median House Price Appreciation

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Sonoma Median Home Prices
by City & Bedroom Count


Sonoma Median 2-Bedroom House Prices

Sonoma Median 3-Bedroom House Prices

Sonoma Median 4-Bedroom House Prices

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New Listings Coming on Market

This next chart illustrates the ebb and flow of activity by season. September-October typically sees the last significant surge of new listings until the market picks up significantly again in February-March.



Sonoma County New Home Listings

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Months Supply of Inventory (MSI)

The lower the months supply of inventory, the higher the demand as compared to the supply of homes available to purchase, i.e. a lower MSI equals a hotter market. The entire Bay Area has been experiencing very, very low MSI figures - under 2 months of inventory - since the feverishly hot spring market began.


Sonoma County and Bay Area Months Supply of Inventory

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National Housing Affordability

This next chart illustrates home affordability for selected metro areas across the country as calculated by the National Association of Realtors. The 7 Bay Area counties south of Sonoma, constituting the first 2 metro areas charted, are the least affordable in the nation. Among other ramifications, this is driving buyers to Sonoma, including first-time buyers, second-home buyers and people relocating from more expensive counties (i.e. selling in San Francisco, buying in Sonoma, pocketing the difference in prices, and living the good life).


U.S. Metro Area Housing Affordability


Bay Area House Markets

Since San Francisco is considered the big city in the Bay Area (though San Jose is actually larger), it seems counter-intuitive that its house market is one of the smallest (though it has the largest condo market in the Bay Area). The Marin house market is slightly smaller than in the city, and in Sonoma, it is twice as big as either. This plays a big role in supply and demand dynamics, and home prices.



Sonoma and Bay Area House Markets

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Mortgage Interest Rates

Since the election, interest rates have seen a wild ride, first up and then down. As of early September, rates hit their lowest point so far in 2017, a significant financial advantage for buyers.



Mortgage Interest Rate Trends


Please let us know if you have questions or we can be of assistance in any other way.

All our many Bay Area real estate analyses can be found here: Paragon Market Reports

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It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group


Strong Spring Markets In Sonoma
& Around the Bay Area

Sonoma Median House Sales Price Close to New High

June 2017 Market Update

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Year-over-Year 3-Month Median Sales Prices
March-May, since 2012: Sonoma, Marin & San Francisco



The chart above compares median house sales prices since 2012 for March through May sales, year-over-year, for Sonoma, Marin and San Francisco Counties: Sonoma prices are illustrated by the blue columns. Many Bay Area Counties hit new peaks in median sales prices this spring, while Sonoma, which started its recovery a bit later than counties closer to the high-tech boom, is just a tad below its previous peak in 2006. This is illustrated in the longer-term annual chart below.



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Sonoma Home Values by City & Town





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Sonoma Sales Volumes & Seasonality



The market ebbs and flows dramatically with the seasons. The most active months for closed sales in Sonoma typically run May through August, with activity declining in autumn and then plunging during the mid-winter holidays. Remember that sales negotiated in one month (which reflect buyer demand) typically close sale in the following month (or two). Thus the extremely slow December - January market is reflected in very low January - February sales volumes.

In most Bay Area counties, sales peak in spring and autumn, and drop during the summer holidays. But in Sonoma with its second-home market and busy summer tourist season, the months in the middle of the year dominate the year.


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Comparing National and Bay Area Trends

Home Price Appreciation since 1987
through March 2017

The numbers on the Case-Shiller chart below all relate to a home price of 100 in January 2000: 50 denotes a home price 50% below then; 230 signifies a price 130% above January 2000.



This chart compares the S&P Case-Shiller Home Price Indices for the 5-county San Francisco Metro Area market in the blue line and the United States market in the green line. It goes through March 2017, the last report Case-Shiller has released as of early June, so it will not reflect any April-May appreciation. Sonoma is not actually in the C-S SF metro area, but its trend lines are quite similar, except that its recovery through 2017 is not yet quite as high in comparison to the 2006 peak.

The national and Bay Area appreciation trend lines are similar except for 3 periods: Right after the 1989 earthquake, the rise and fall of the dotcom bubble, and the recent high-tech boom in the Bay Area.


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Sonoma County Luxury Home Market

The number of Sonoma homes priced at $1 million-plus accepting offers (red line) hit their highest points in years, if not ever, in April and May, while the number of active listings (blue columns) hit a high point in May.




Luxury Home Sales by City & Town
12 Months Sales Reported to MLS



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Months Supply of Inventory (MSI)
Homes Above & Below $1 Million



The MSI for homes selling for under $1m has been bumping along at near historic lows this spring, an indication of fierce demand amid low inventory. More expensive homes have a higher MSI figure, which is not unusual, but their MSI too has been quite low by the standards of the market segment.

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Market Statistics

Comparing Listings Selling With & Without Price Reductions


Sales Price to Original List Price (SP-OP) Percentage

In April and May of 2017, listings that sold without going through price reductions (blue columns), i.e. homes the market deemed appealing and well-priced, averaged a sales price just above asking price, signifying strong demand. Those listings that had to go through one or more price reductions before selling (green line) averaged a sales price 5 to 8% below original asking price.





Average Days on Market (DOM)

In April and May of 2017, listings that sold without going through price reductions (blue line) had an average days-on-market of 35 to 36 days, the lowest in years, while those listings that had to go through one or more price reductions before selling (green columns) averaged a days-on-market of 87 to 115 days.





The two charts above illustrate the positive effects of preparing, pricing and marketing a home properly (especially pricing correctly), and the negative effects of not doing so. Not illustrated is the fact that even amid a strong spring market, 160 Sonoma home listings expired without sale, typically because sellers were asking for more money than buyers were willing to pay.

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Mortgage Interest Rates

As of June 12, mortgage interest rates have continued their decline from the first of the year. Interest rates remaining so low by historical standards, and the fear that they may soon go up, is probably one of the factors behind the very hot markets seen around the Bay Area and the country this spring.





Many more Sonoma market analyses can be found further down this webpage.

All our Bay Area real estate reports can be found here: Paragon Market Reports

------------------------------------------------------------

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

© 2017 Paragon Real Estate Group

Sonoma & Napa Median Home Prices
Reflecting MLS Sales in 2016


Mouse over map for median price icons



More information on Sonoma home values by city and town can be found here: Sonoma County Home Prices & Trends by Community.

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We have updated our median home price maps for the entire Bay Area. To access them, click on the map image below.




The chart below is specific to the Sonoma County market, illustrating median house price movements since 1990. All parts of the Bay Area saw similar trends, though the percentages up and down varied significantly between markets.



In the last 25 years, Sonoma has seen three dramatic peak years in percentage home-price appreciation: 2000, the top of the dotcom bubble; 2005, the top of the subprime bubble; and, most recently, in 2013. Much more so than Marin or San Francisco, it was hit very badly by the crashing of the subprime bubble and the subsequent foreclosure/ distressed property crisis, but has been recovering very strongly in recent years.




Before we look at longer-term market statistical and appreciation trends in the county, this chart above looks at the ebb and flow of new inventory and sales activity during the year. New listings start pouring onto the market in February to peak in mid-spring and early summer. The jump in new inventory fuels sales activity which peaks in late spring and early/mid-summer. That is, Sonoma is just getting into full swing, and we will know a lot more about the direction of the 2017 market in a couple more months. From mid-summer, activity will typically slowly drop until plunging in mid-autumn and early winter, and then the cycle begins again in the new year.

Generally speaking, the dynamic that prevailed in 2016 in the Bay Area was that the more affordable home segments, such as those found in many parts of Sonoma County, continued to appreciate quite significantly, while more expensive home segments saw prices plateau, or even tick down a little.


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Annual Trends in the Sonoma Market
Five Selected Angles

The advantage of reviewing annual data is how often the market trend lines clarify into a straightforward dynamic, instead of the constant up and down fluctuations often seen in monthly or quarterly data charts. (Monthly data is constantly abused by the media, when proper context is not given.) It is similar to standing back to look at a broad view of terrain as opposed to focusing on the one small piece that is right in front of your shoe.

As illustrated in the first 2 charts below, the hotter the market (the stronger the buyer demand), the greater the percentage of listings that sell quickly, and the more overbidding that occurs for such listings. However, in Sonoma, there is a great divide between listings that buyers respond to quickly upon arriving on the market, often bidding over asking price, and listings that buyers mostly ignore, typically because they are perceived as overpriced, and which can remain on the market for very long time periods. These latter often go through 1 or more price reductions before selling, or end up simply being withdrawn from the market without a sale taking place.








The decline of distressed home sales in recent years, from the staggering levels during the recession, has been a huge factor in home price appreciation






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Selected City & Region Snapshots

Annual Median Home Price Trends

As can be seen below, in virtually every part of Sonoma County, home prices continued to appreciate in 2016.




















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Mortgage Interest Rate Trends



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Gold, Google, Soybeans
& Sonoma Home Price Appreciation




This chart above is a somewhat lighthearted, but we believe accurate look at how various 2011 investments would have played out through 2016. When calculating appreciation, purchase and sale dates are critical factors, and changing those can alter the results significantly: Using 2011, the last bottom of the real estate market, as the purchase date certainly plays to the advantage of home price increases. If you bought gold or soybeans in 2011, you really should have sold them a couple years ago at the height of the commodity price boom.

Besides the appreciation percentage noted, buying a home in 2011 with all cash would have generated large, additional financial returns in the form of extremely low monthly housing costs. Buying it with 20% down supercharges the return on cash investment, and that is before adding in other advantages: Even with an 80% loan, by 2016 your monthly housing costs, with recent low interest rates and tax advantages, would be well below market rents. Then there is the huge capital gains exclusion on the sale of a primary residence, which would not apply to other investments.



Long-term Median Home Price Appreciation Trends



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Home Appreciation by City & Town, since 2011





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What Costs How Much Where in Sonoma

Sales & Prices by City and Bedroom Count










2016 Sonoma Home Sales by Price Segment




Sonoma Median Home Price Trends
By Quarter, Since 2012




Sonoma, Marin, San Francisco, CA & US Home Prices
By Year, Longer-Term Trends



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Overview: November 2016

While much of the Bay Area has begun to see cooler real estate markets, the Sonoma market continues to maintain substantial heat, with strong buyer demand and low inventory still the general prevailing situation. Besides the other benefits of living in Sonoma, the relative affordability of homes here when compared to other Bay Area counties is a major factor in this dynamic. In fact, it is a consistent trend across the region that the more affordable home-price segments have continued to be the strongest. The market is definitely softer for what would be defined as luxury homes in each county.

The real estate market usually goes into semi-hibernation from just before Thanksgiving through mid-January, with listing and sale activity plunging during the holiday season. However, this can still be an excellent time for buyers, because competition for listings declines rapidly.


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Selected Market Dynamics Statistics


Months Supply of Inventory (MSI)


The lower the MSI, the stronger the demand as compared to the supply of homes for sale. The under $1 million market remains deep in seller-market territory. The market for higher-priced homes is significantly cooler and subject to more dramatic fluctuations in MSI.






Average Days on Market

Average days on market for homes selling without prior price reductions have not changed substantially from Q3 2015 & 2014. As will be seen in later charts, homes that go through price reductions before selling usually take much, much longer to sell.





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Sales Price to List Price Percentage & Average Days on Market
With & Without Price Reductions


The 2 charts below dive into pricing and overpricing issues by breaking out 1) homes that sell without going through a prior price reduction, 2) listings that sell subsequent to price reductions, and 3) listings that simply do not sell (expire). The first chart is for the house and condo market under $1,000,000, and the second is specifically for luxury homes, defined here as homes selling for $1 million or more.


Sonoma Homes under $1 Million




Sonoma Luxury Homes, $1 Million+



Homes that are priced well at the moment of hitting the market, prepared to show and marketed comprehensively, are still selling very quickly at high percentages of asking price. However, overpricing usually has significant negative ramifications, including the possibility of no sale at all.

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Luxury Home Sales by City



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Bay Area Case-Shiller Home Price Index
Rate of appreciation changes by price segment
5-County SF Metro Area

Case-Shiller Index numbers all refer to a January 2000 price of 100, and track appreciation since then. Thus 243 on the chart signifies a price 143% above that of January 2000. For the purposes of this report, the direction of the trend lines is more important than the actual numbers.




Across the Bay Area, the pressure of demand has shifted in the past year, and that is showing up in the appreciation movements of the different price segments. The Case-Shiller Index does not measure changes in median sales prices, but has its own special algorithm to determine same-home appreciation. This short-term chart illustrates how lower-priced houses have continued to appreciate rapidly (as in Sonoma), while appreciation for mid-price houses is slowing, and the prices of more expensive houses have more or less plateaued or even ticked down a bit. Bay Area condo prices have also begun to decline, but this statistic is probably being unduly influenced by the condo market in San Francisco, where condo prices are much higher, and where a large number of new-project condos have recently been hitting the market. The Bay Area Index for August 2016 was published in late October.

Chart: Long-Term, Case-Shiller Bay Area Home Price Trends

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Bay Area Average Asking Rents



The same dynamic regarding comparative affordability is playing out in the rental market as in the for-sale market.


2016 1st Half Review

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Long-term Trends in Median Home Sales Prices



Sonoma continued to see considerable home sales price appreciation in the first half of 2016. As a point of comparison, in San Francisco, where the market has begun to distinctly cool, median sales prices have started to plateau on a year-over-year basis.


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Sonoma Median Home Price Appreciation by City
2011 to 2015 to 2016 YTD

These next 2 charts below look at median sales price appreciation 2011 to 2015, a period of very fast home-price increases starting in the depths of the distressed property crisis, and then more recent changes, 2015 through 2016 YTD. Except for Sea Ranch, every city in our analysis saw an increase in 2016 in median sales price, sometimes a small tick up and sometimes a substantial jump.

Most of these communities saw a large number of sales in 2016 to date. Santa Rosa, Petaluma and the city of Sonoma, respectively, had the most sales, and Penngrove, Coastal Sonoma and Sea Ranch had the least.Typically, the more sales, the more reliable are the statistics, but remember that median price changes do not correlate exactly with changes in home values, as they can be affected by a number of factors. It is impossible to know how median price changes apply to any particular property without a specific comparative analysis.






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Affordability: Sonoma vs. the Bay Area

One of the trends showing up recently in Bay Area real estate markets is that homes in the more affordable price ranges, such as those in Sonoma, have continued to see home price growth, while median prices have plateaued or even ticked down in more expensive areas of San Francisco, Marin and the East Bay. The 2 charts following illustrate quite dramatically that Sonoma remains an extraordinarily good value when compared to most other Bay Area counties, and this is clearly a major factor in the strength of its market.

However, it should be noted that if other local markets are starting to cool down, as they seem to be, it may be a sign of an upcoming transition in the Sonoma market as well.





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Market Seasonality



In Sonoma, listing inventory gradually builds up in the spring and early summer with a parallel increase in sales. For the last few years, July has been the month with the greatest number of closed sales. Sales activity typically starts to decline in August and continues to subside through autumn and mid-winter before coming back to life in early spring. Because of the second homes market, Sonoma has a different cycle than other Bay Area markets, which usually peak in spring, drop in summer, climb again for an autumn spike, and then plunge for the mid-winter holiday season.


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Mortgage Interest Rate Trends



Enduring financial market volatility, most recently caused by the Brexit vote in Great Britain, has continued to push mortgage interest rates lower. It is now just above the all-time low hit 3 years ago. Decreasing interest rates play a big role in lowering ongoing housing costs for buyers (and owners who choose to refinance). For the time being, this is a very good time to get a new home loan.


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Negative Ramifications of Overpricing



We have undertaken studies of thousands of home sales that have occurred in recent years, looking at both homes that sold without going through a prior price reduction and homes selling subsequent to one or more price reductions. Across the Bay Area, the results are remarkably consistent: Overpricing a listing when it first comes on the market will typically result in the home selling for less money than it would have if it had been priced properly to begin with, sometimes much less.

The longer a home stays on market, the less value it holds in the minds of prospective buyers, and the less likely buyers will compete for its purchase. It is vitally important not to overprice and waste the optimum period of marketing, i.e. when the home first hits the market and motivated buyers are paying most attention.


Please let me know if you have any questions or I can be of assistance in any other way.
These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Statistics are generalities, longer term trends are much more meaningful than short-term, and we will always know more about what is actually going on in the present, in the future.

© 2016 Paragon Real Estate Group


Sonoma County Real Estate Report

Strong 2016 Start to Sonoma Homes Market

April 2016 report






Comparing Q1 2016 with Q1 2015, the Sonoma median house sales price jumped 13% and its median condo price increased 15%. Those are larger jumps than seen in either San Francisco or Marin, which probably has to do with the much greater affordability of Sonoma homes. The inventory of listings available to purchase in the county dropped a little year over year, but, conversely, the number of sales actually increased a little, which is a clear indication of increasing demand.

Q2 & Q3 are typically the most active quarters of the year in the Sonoma real estate market, with substantially greater volumes of new listings and sales. It will be interesting to see if the market continues to heat up further into the year.


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Market Supply & Demand Trends


The following 2 charts illustrate some of the dynamics of the Sonoma market over the past few years, and are broken out by houses under and over $1 million. It is common for the market for more affordable homes to be hotter than that for more expensive homes, and indeed market pressure has generally increased around the Bay Area in the more affordable price ranges as buyers look, sometimes desperately, for purchase options they can still afford.

Properties under $1 million maintained an extremely high percentage of listings accepting offers in the quarter, and those listings that sold without going through price reductions averaged a sales price just a tad above asking price (100.2%). For home listings above $1 million, where the buyer pool is smaller and inventory sells more slowly, the average sales price for homes selling without price reductions was about 3% below list price. For those more expensive homes that went through price reductions before selling, the discount plunges to 17% off original list price, a clear sign of dramatic overpricing. Homes over $1 million also, on average, take significantly longer to sell than the more affordable price segment.





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Comparative Home Values






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Stock Markets & Interest Rates

After all the travail regarding the stock market volatility since last summer, it is now, as of early-mid April, pretty much back to where it began. And interest rates have actually fallen since the Fed raised the benchmark rate in mid-December. These conditions are typically considered very positive for real estate markets, though both can be subject to sudden and significant change.





Chart: Short-term Interest Rate Trends

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 to 6 weeks earlier, thus a fair number of YTD 2016 sales reflect market activity in late 2015.

© 2016 Paragon Real Estate Group


The Sonoma County Real Estate Market Report

March 2016

Sonoma Median House Sales Prices
By Month



Chart: Sonoma Median House Price since 1990

For the past 11 months, since the spring 2015 market began, the median house price in Sonoma County has been bouncing up and down between $525,000 and $545,000. Monthly fluctuations in median sales price do not necessarily say much about changes in fair market value since they are affected by a number of factors, but, for what it is worth, the median price this past February was 11% higher than in February 2015.

The trend since 2011 has been one of substantial home-price appreciation, though the Sonoma median is still below its 2006 peak-of-bubble price. (Appreciation trends will vary by city and town.) In coming months, once the new spring selling season really gets started, we will get a better sense of the direction of the market in 2016, and see if the recent financial market volatility will have any sustained effect.


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Where to Buy a Home in Sonoma
for the Money You Want to Spend








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Sales Prices to List Prices, Days on Market, Price Reductions
& Expired Listings




This chart illustrates the strength of the market for well-priced homes in Sonoma: On average, they sell relatively quickly for full list price. It also shows the dangers of overpricing: the Sales Price to Original List Price percentage plunges, and average days on market jump to almost 2 months longer. And hundreds of listings do not sell at all, but simply expire and are withdrawn from the market. Contrary to common belief, most buyers will not even make offers on listings they believe to be significantly overpriced.


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Mortgage Interest Rate Trends

Short-Term Changes since the Fed Raised Rates



Chart: Long-Term Interest Rate Trends

Since the Federal Reserve Bank raised the benchmark interest rate in mid-December, interest rates have actually dropped by about 8% (as of March 3), which makes a significant difference in monthly mortgage costs and loan underwriting qualification. This downward pressure on rates is generally ascribed to the volatility in the stock market since the year began. (Investors often pour money into bonds in times of stock market volatility, which then lowers the interest rate.) It is famously difficult to predict interest rate movements, which can be sudden and dramatic, but for the time being, they are getting closer to the all-time low in 2013. While it lasts, that is good news for the Sonoma real estate market.


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Bay Area Housing Affordability
by County





Chart: Long-Term Trends in Housing Affordability

The California Association of Realtors recently released its Housing Affordability Index (HAI) for the 4th quarter of 2015, and above are 3 of 10 charts in our updated analysis. Sonoma is the second most affordable county in the Bay Area after Solano, and much more so than Marin, San Francisco and San Mateo, the latter two being at the heart of the high-tech boom and approaching historic lows in housing affordability. Interest rates play a big role in this calculation and, as noted earlier, have been falling in 2016.

Our full report:Bay Area Housing Affordability


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Long-Term Median Price Trends
for Selected Sonoma Communities







If you would like information on another town or city, or if I can be of assistance in any other way, please let me know.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 to 6 weeks earlier, thus a fair number of YTD 2016 sales reflect market activity in late 2015.

The photo at the top of the newsletter was taken on the Sonoma coast by dpaul Brown.

© 2016 Paragon Real Estate Group


Sonoma County Home Price Appreciation
2011 to 2015, by City & Town

A Paragon Special Report


While waiting for the 2016 real estate market to really wake up and start generating useful statistical data, below is a look at Sonoma County house and condo values over the past 5 years, broken out by city and town. In most areas of the county, the market bottomed out in 2011 or 2012, with the current market recovery beginning thereafter and then quickly accelerating.

Important context: Median sales price is a general statistic, often concealing an enormous variety of values in the underlying individual sales. It can be and often is affected by other factors besides changes in fair market value, such as major changes in the distressed property, luxury home, or new-home construction segments. Sometimes median prices fluctuate without great significance: Substantially different groups of homes (larger, smaller, older, newer, etc.) simply sold in the periods being compared. Assessing appreciation by changes in dollar per square foot values, instead of by changes in median sales prices, can sometimes deliver significantly different appreciation rates.


Sonoma County Median House Price Changes
2011 to 2015







Longer-Term Home Price Appreciation Trends by City

We have also updated our charts showing longer term appreciation trends in most Sonoma County communities. If you would like information on a city not included in the sampling below, please call or email.









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These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. All numbers should be considered approximate.

© 2016, Paragon Real Estate Group


The Sonoma County Real Estate Market in 2015

Median sales prices, home sales over $1 million, dollar per square foot
values, era of construction, interest rates and distressed home sales

Despite anxiety about interest rates, stock markets, housing affordability and over-valued, high-tech unicorns, 2015 was another year of solid home price appreciation in Sonoma. Even with rising prices, Sonoma’s real estate is much more affordable than in Marin and San Francisco. And, of course, there are many other excellent reasons why people want to live here.



Sonoma County Home Values





Chart: Sonoma Home Prices by Quarter

We’ve also recently updated our popular home price maps of Sonoma, Marin, San Francisco and the greater Bay Area:Sonoma Home Prices by City & Town& Bay Area Home Price Maps


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2015 Real Estate Market Details





Sonoma County has a real estate market about twice the size of Marin County. Much of this has to do with the fact that Marin’s new-home construction slowed way down after 1980, as anti-growth policies came into effect, while Sonoma’s went into high gear.

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Sonoma Home Sales of $1,000,000+



Chart: Wine Country Luxury Home Sales by City

Sonoma has seen dramatic growth in its high-end home segment since the market recovery began in 2012.


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Sonoma Market Dynamics Statistics





These 2 charts illustrate the big role seasonality plays in the Sonoma market. Starting in January, and accelerating in February, March and April, new listings typically start pouring onto the market and buyers start jumping back in looking for homes to buy. The market usually stays quite active through mid-summer – second-home buyers playing a significant role – and then declines through the rest of the year to hit its low point in December.


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Distressed Home Sales



Sonoma was hammered by foreclosures, bank-owned home sales and short sales after the 2008 market crash – mostly caused by predatory lending, the refinancing frenzy, and the general collapse of loan underwriting standards in the previous 4 – 5 years. Happily, with the recovery in home prices, distressed home sales have been rapidly dwindling since 2012, and are now on the verge of disappearing as a significant market segment.


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Interest Rates



After being bludgeoned in 2015 by thousands of articles, predictions and warnings regarding mortgage interest rates, here is a look at how much they actually changed over the course of the year. With the Fed starting to make some moves, presumably mortgage rates will rise in 2016, but expectations have been confounded far too often over the past 6 years to be sure. Significant increases would certainly affect the affordability equation for homebuyers.


Please call or email if you have any questions about this report,
or if I can help you in any other way.

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Some 2015 totals are projections based on MLS data available within the month of December. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. All numbers should be considered approximate.

© 2015–2016, Paragon Real Estate Group


The Sonoma County Real Estate Report

December 2015 update, including 9 custom charts

Median home prices, housing affordability, interest rates,
luxury home sales, supply and demand statistics,
and comparing the Shanghai and S&P 500 stock indices

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Unlike most Bay Area real estate markets, which surge in spring, slow in summer, spike again in autumn and then plunge in winter, the Sonoma County market typically starts heating up in spring to peak in mid-summer, and then cools until the next spring season.Presumably, this has to do with the importance of the second-home market in the Wine Country.

The median Sonoma house sales price in October and November dropped a little from the previous 2 quarters, but the size of the decline is probably not statistically significant.The condo median price remained relatively stable.The longer-term trend in median prices is much more meaningful than short-term fluctuations, and for the past 4 years that trend has been distinctly upward.

As a point of comparison, the median house price in San Francisco is now $1,300,000, and in Marin, $1,200,000.




47% of Sonoma County house sales occur between $400,000 and $599,000, while the great majority of its condo sales are under $399,000. Of course, home prices vary enormously between different communities, and some estates sell for prices that rival those anywhere in the Bay Area.

More information on Sonoma home values can be found here: Sonoma County Home Prices & Trends by City

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Except for Solano County, Sonoma has the most affordable home market in the Bay Area, as measured by the California Association of Realtors Home Affordability Index – which uses a calculation that includes median prices, median household income and current mortgage interest rates.Though, like everywhere else in the Bay Area, Sonoma’s housing affordability rating has been sinking dramatically in recent years, the county is markedly more affordable than Marin and San Francisco. This is an important factor in what’s going on in Sonoma’s real estate market.

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A snapshot of the luxury home market in Sonoma and Napa. Some estates sell at prices in excess of $10 million.

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One indication of the heat of the market is how sales prices compare to asking prices.For the past couple years, Sonoma homes selling without price reductions have averaged a selling price a little bit above list price. Homes that were perceived as overpriced, going through one or more price reductions prior to selling, sold at significant discounts to original list price.




Another classic statistical measurement is how quickly listings accept offers.In Sonoma, the market responded relatively quickly to most listings, while, again, listings considered overpriced took much longer to sell – or indeed didn’t sell at all.




Months supply of inventory measures buyer demand against the supply of homes available to purchase: The lower the MSI, the hotter the market. The market for Sonoma homes selling under $1,000,000 has consistently remained a seller’s market for some time now. The higher-priced home market is not as strong – the higher the price, the fewer the potential buyers (and more expensive homes are also most prone to overpricing) – and it’s heat ebbs and flows dramatically, often straying into buyer’s market territory. The entire market slows down for the winter holidays, but the higher-priced home segment slows way, way down.


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After the semi-hysteria – already half forgotten – that erupted in late August and September regarding the Chinese stock market and its impact on the U.S. stock market and economy, and possibly the Bay Area housing market, we thought it interesting to take a look back at how it has played out so far.


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It is widely expected that the Fed will raise interest rates in December, probably by some minimal increment, but for the time being, as of the first week of December, rates have remained below 4%.


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These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. Sales statistics of one month generally reflect offers negotiated 3 – 6 weeks earlier.Short-term fluctuations are much less meaningful than longer-term trends.

© 2015 Paragon Real Estate Group


The Sonoma County Real Estate Market

Home-Buying in Sonoma vs. Gold & Apple Stock – as an Investment,
Median Home Price Appreciation & Sonoma Community Values

October 2015 Report, including 11 Custom Charts

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The autumn selling season started right after Labor Day, but it will be another month or so before preliminary statistical data is available on home sales negotiated since then. However, it is clear that the recent volatility in national and international financial markets has not so far caused a severe adjustment to local home prices.


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Sonoma County Home Price Appreciation
Short-Term & Long-Term


2012 – 2015, by Quarter



The second and third quarters of the year are typically the strongest seasons for Sonoma County home sales and in 2015 median sales prices continued their upward trajectory since the market recovery began in 2012.



1990 –2015, by Year



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Return on Cash Investment

Comparing Buying a Home in Sonoma
to Inflation, Gold, the S&P 500 & Apple Stock



For the purposes of this analysis, we’ve broken home ownership into 2 aspects, the first being ongoing housingcosts – mortgage interest, home insurance, property taxes, maintenance – which after tax deductions could be compared to the cost of renting a similar home. The second aspect, illustrated in the chart above, is the cash investment side of buying a home and the compound annual return on that investment, after closing costs and loan principal repayment are deducted, if one had purchased a median Sonoma house in 1994.

For the Sonoma County Median House calculation, we used the 1994 median house sales price ($193,000), with a 20% downpayment ($38,600) and paying 1.5% in buy-side closing costs ($2895) for a total cash investment of $41,495. Net proceeds were calculated using the Q3 2015 median house sales price ($540,000), deducting 6% in sell-side closing costs ($32,400) and the original 80% mortgage balance ($154,400), which equals $353,200. This equals an annual compound return on investment of 10.7% over the 21-year period, a huge premium over the inflation rate.

All of us should have put every penny we had into Apple stock in 1994, but barring that, purchasing a home in Sonoma would have been an excellent investment alternative. Three factors not included in the above analysis further increase the financial benefits of home purchase over the other investments graphed:1) the $250,000/$500,000 capital gains tax exclusion on the sale of a primary residence (potentially saving up to $75,000 in taxes), 2) the '#8220;forced savings'#8221; effect of gradually paying off one’s mortgage (if one resists refinancing out growing home equity), which has a substantial wealth-building effect, and 3) over time, the ongoing cost of housing with a fixed rate loan, strategically refinanced when rates go significantly lower, will usually fall well below rental costs that continue to rise with inflation.

With financial assets subject to market cycles, changing the buy or sell dates in this analysis can dramatically affect the return. This is simply one scenario.


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Median Sales & Prices
by Community & Bedroom Count








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Median Home Price Appreciation
by Sonoma City and Town, 1999 - 2015












Since the above charts track the combined median sales price for both houses and condos, those communities with larger numbers of condo sales will have comparatively lower median prices: In Sonoma, condos sell for much lower prices than houses.

We performed the above analysis for 5 other Sonoma towns or regions, and our full report can be found here:Sonoma County Home Prices & Trends by City. Simply scroll down the webpage.


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3rd Quarter Market Snapshot




If you have any questions regarding this report or if I can help
in any other way, please don’t hesitate to contact me.

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These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. We are not qualified to render legal or tax advice of any kind. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.

© 2015 Paragon Real Estate Group




Sonoma County Home Values by City

Updated October 2015, Paragon Real Estate
Including 18 custom charts

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Sonoma & Napa Median Home Prices
Reflecting MLS Sales 3/1/15 - 9/7/15

Mouse over map for median price icons




Median sales price is that price at which half the sales occurred for more and half for less. It is a very general statistic, which typically disguises a huge range of prices in the underlying individual sales. It can be affected by other factors besides changes to fair market value, such as inventory available to purchase, interest rates, and significant changes in the luxury, new-construction or distressed-home market segments. Homes in different communities often cannot be compared on an apples-to-apples basis, but median sales prices do give an indication of comparative home values and longer term trends in home prices.Some cities have significant condo markets which will lower the overall home median sales price: In Sonoma, condos typically sell for substantially lower prices than houses.

How a city’s median sales price applies to a particular property is unknown with a specific comparative market analysis.

Sonoma Home Values by Bedroom Count








Sonoma Home Sales by Price Segment








Sonoma County Home-Price Trend Overviews
By Quarter & by Year






Average Dollar per Square Foot Values by City




Sonoma Home Values & Trends by City




















Dollar Appreciation since 2011, by City

 


Note that median sales prices will usually change if the period being measured is changed even slightly. Especially if the number of sales is relatively small, prices can sometimes fluctuate dramatically, simply depending on the specific homes that sold within the period. How a city’s median sales price applies to a particular property is unknown with a specific comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.

© 2015 Paragon Real Estate Group


North Bay Autumn Selling Season Begins
Against Backdrop of Market Volatility

September 2015 Report for Marin & Sonoma Counties
by Paragon Real Estate Group
Including 12 custom charts

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Real estate markets are essentially determined by the balance – or imbalance, as is often the case – between buyer demand and seller supply of homes to purchase. Underlying that dynamic are economic, political and demographic factors – some local, some not – such as population growth, employment, new home construction, high-tech booms, consumer confidence, interest rates, affordability, stock market movements, shenanigans in Congress, and ballot proposals, to name a few. Even environmental factors, such as droughts and earthquakes, can jump in and affect the market. These factors are all jostling for effect, ebbing and flowing, sometimes appearing out of nowhere to shake things up, or suddenly shrinking and quickly forgotten.

We are neither blithe optimists, for whom boom times will never end, nor inveterate pessimists, who see bubbles and crashes behind every shrub. For what it’s worth, based on our survey of current economic fundamentals, we don’t expect an imminent crash in the U.S. stock market or in Bay Area real estate values. (This short New Yorker article is excellent on recent market volatility: Drop in the Bucket) However, economies and markets naturally experience fluctuations – short-term ups and downs, times of slowing and flattening – and it’s certainly possible that the balance between buyers and sellers might shift, that the frenzy in our market may subside, and that home prices may plateau or even tick down to some degree. On the other hand, due to the scale of the Bay Area’s economic boom and our generally inadequate supply of housing, demand may continue to exceed supply, and the pressures of recent years may continue.


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New Listings Coming on Market



In Marin, September kicks off the autumn selling season, the second busiest after spring, and the listings that come on market in the 4-5 weeks after Labor Day sustain the market until the mid-November slowdown. In Sonoma, the bigger market of the two (mostly because of Santa Rosa) and where second-home sales play a significant role, the most active period of sales stretches from early spring to mid-summer. It then gradually declines through the end of the year. Preliminary indications are that this September may be a very active month for new listings. If this is true, and especially if it marks the beginning of a trend of more listings coming on market, that might cool the competitive, low-inventory, '#8220;seller’s market'#8221; of recent years . If buyers are more hesitant due to recent financial-market volatility, that would also affect the market dynamic. In our opinion, neither factor is likely to flip us into a crashing or recessionary market.


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Percentage of Listings Accepting Offers



This chart above illustrates the surge in buyer demand from the end of the last recession through the 2012 – 2015 recovery. Having the percentage of listings accepting offers in a given quarter over 50% and, during this past quarter, hitting 60% in Sonoma and 62% in Marin – extremely high percentages historically – has applied consistent upward pressure on home prices.


Months Supply of Inventory (MSI)



Months Supply of Inventory is another statistic clearly delineating the high demand/low supply dynamic that has prevailed in Marin and Sonoma, and indeed throughout the Bay Area.


Average Days on Market



Generally speaking, homes sell more quickly in Marin than in Sonoma, and, right now during its current market frenzy, sell even faster in San Francisco (SF not shown on chart). Average days on market increase and decrease seasonally depending on the county’s market cycles: In Marin, they drop dramatically in spring – typically the most competitive season – usually increase in summer, drop again in autumn, and then jump dramatically during the winter holiday months.As mentioned, Sonoma has a slightly different cycle, with days on market dropping lowest in spring/early summer and then gradually increasing until hitting their peak at the end of the year.

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S&P Case-Shiller Home Price Index



An updated Case-Shiller Index chart for the San Francisco Metro Area, outlining the real estate market cycles going back to the 1980’s. (The June Index was released on August 25th.) Over the past several decades, we’ve never seen a crash or significant '#8220;correction'#8221; in Bay Area real estate that was not in conjunction with a major, sustained, national economic event. This chart is for all price segments, but the highest priced homes actually had the smallest bubble and crash, and are now above their 2006-2007 price points; the lowest priced homes had an enormous bubble and crash (due to the subprime-loan fiasco) and are still well below 2006 peak values; and the mid-price home tier’s bubble and crash was about halfway between high and low, and the mid-price tier has just hit previous peak values again.Very generally speaking, heading north from Golden Gate Bridge through Marin and into Sonoma, one moves from high-price to mid-price to low-price tiers (but various communities buck that trend).

The numbers on the graph refer to a January 2000 price of 100; thus, the number 215 signifies a price 115% above then. It is interesting to note, that as of the June Index report, all three Bay Area home-price tiers – low, mid and high – have readings reflecting the exact same appreciation rate since 2000, which may be a sign of an equilibrium being reached in the market. Our full report: Case-Shiller for SF Bay Area

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Housing Affordability



The California Association of Realtors recently released its Housing Affordability Index for the 2nd quarter of 2015. All Bay Area counties saw declines in affordability – as measured by the percentage of households that can afford to buy the median priced single family dwelling. Sonoma is more affordable than Marin, and Marin is more affordable than San Francisco, which is now only 2 percentage points above its all-time low of 8% in Q3 2007. The city has higher home prices and lower household incomes than Marin, thus its affordability rating is lower.

HOUSING AFFORDABILITY IS A COMPLEX SUBJECT AND OUR FULL REPORT, which also charts median home prices, rents, interest rates and inflation-adjusted housing costs by county, is here: Bay Area Housing Affordability


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Median Home Prices and Economic Indicators

Median home prices for Marin, Sonoma and California since 1990; also showing
San Francisco’s for 2014-2015 YTD.Home values vary, but trend lines are similar.



National, Marin, Sonoma & SF unemployment trends: All positive.
Marin consistently maintains one of the lowest rates in the nation.



National household-debt-to-GDP and mortgage-debt-service ratios –
huge issues in the 2007-2008 crash – have declined significantly since then.





Sustained movements in the S&P 500 largely correlate to Bay Area home-
price trends. Short-term financial-market fluctuations typically have no effect.



Price to Earnings (PE) Ratios of the S&P 500 Index climbed a bit high
in mid-2015, but not egregiously so compared to historical averages.
With the recent correction, the ratio has declined again.



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'#8220;Renting can make sense as a lifestyle choice or because of income constraints. As a means to building wealth, however, there is no practical substitute for homeownership.'#8221;
Homeownership & Wealth Creation, 11/30/14, NYT op-ed article


Sonoma isn’t actually one of the 5 counties in Case-Shiller’s San Francisco Metro Statistical Area, but we believe the home-price trends delineated in the C-S Index generally apply to all Bay Area counties.

Our goal is not to convince you of a certain position, or to minimize the effects of market cycles, but to provide you with what we believe to be straightforward data, so that you can make your own informed financial decisions pertaining to the buying and selling of real estate.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier.

© 2015 Paragon Real Estate Group


Where to Buy a Home in Sonoma County
for the Money You Want to Spend

August 24, 2015 Report by Paragon Real Estate


The charts below are based upon 2015 transactions reported to Sonoma MLS by August 15th, breaking out the towns and cities with the most sales within given price points. Other communities not listed in one of the charts below might have smaller numbers of home sales within a given price segment.

Sonoma’s homes market is a little bigger than San Francisco’s in terms of numbers sold, and about 75% bigger than Marin’s. Its homes are vastly more affordable than either of those two counties, with a median home sales price – for house and condo sales – 47% below that of Marin County and 57% below San Francisco’s. However, some of Sonoma’s home sales – estates generally – rival prices anywhere in Northern California, with a number of recent sales between $6 million and $11 million.

Santa Rosa is by far the largest market in Sonoma, making up over 40% of total sales, followed by Petaluma, the City of Sonoma and Cotati/Rohnert Park, each of which make up 10% to 12% of county sales. Healdsburg has the highest median sales price – over $800,000 – with about 4% of sales.


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Where to Buy a HOUSE in Sonoma
for under $1,000,000


The overall median house price in Sonoma in the 2nd quarter of 2015 was $540,500, and this chart is broken into 3 price segments for sales under $1 million for each city, town or region. As can be seen, Santa Rosa and Petaluma dominate these price segments.




Buying a HOUSE in Sonoma
for $1,000,000 & Above


When house prices move into the $1,000,000 and up range, the City of Sonoma and Healdsburg join Santa Rosa as the major markets.





Buying a CONDO in Sonoma


The Sonoma median condo price in the 2nd quarter of 2015 was $300,000, and by units sold, condos make up about 12% of the county’s home market. (As a point of comparison, condo sales now outnumber house sales in San Francisco, and the median condo price there in Q2 was over $1,100,000.) Again, Santa Rosa leads, with 38% of total sales; Cotati/Rohnert Park has 32%; Petaluma, 12%; and the City of Sonoma, 7% of sales.

27% of Sonoma County condo sales sell for under $250,000; 68% sell for $250,000 to $499,999; and 5% sell for $500,000 or more.


Much more information on the Sonoma County real estate market can be found here: North Bay Market Reports

As always, the quality of the specific location (within the county and within a particular town or city) and the range of amenities of the property; its curb appeal, condition, size, privacy and graciousness; and the existence and quality of views and outside space can all significantly impact values.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and how they apply to any specific property is unknown without a tailored comparative market analysis.All numbers should be considered approximate.

© 2015 Paragon Real Estate Group


Napa & Sonoma Real Estate Markets
The Paragon Mid-Year Report

Median Price Appreciation Trends, Luxury Home Sales, Dollar per Square Foot Values,
Interest Rates, Sales by Price Range, Sales Price to List Price & Days on Market

July 2015, Paragon Real Estate Group

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Short-Term & Long-Term
Median Home Price Appreciation








In 2015, median home prices continued to experience significant appreciation; however they still remain below the previous peak values reached in 2006 and 2007. Napa and Sonoma had very large subprime bubbles and suffered particularly severe crashes, and though their markets have rebounded dramatically, it may be a while before their previous peak prices are reached again. However, the situation varies greatly depending on the location and price segment of the specific home.

The reason why the overall median home price in Sonoma is typically lower than that in Napa is due to the comparatively huge volume of Santa Rosa home sales and its impact on Sonoma home price statistics.


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Home Price Appreciation by City & Town:
Dollar Increases in Median Sales Prices




If you purchased the theoretical '#8220;median house'#8221; at the bottom of the market in 2011, this chart shows the increase in its value through mid-2015. Not surprisingly, higher-priced neighborhoods saw the greatest amount of appreciation in dollar terms. Overall, median house prices in Napa-Sonoma appreciated by about 65% over this period.

Our interactive maps of North Bay median home prices can be found here:North Bay Home Values Maps


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Average Dollar per Square Foot Values



Average dollar per square foot values have increased across the board in Napa & Sonoma communities in 2015.


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Napa & Sonoma Luxury Home Sales



High-end home sales play a significant role in the Wine Country’s real estate market and some of the prices rival top prices anywhere in the state. However, it is true in this area that substantial acreage – not unusually in planted vineyards – is often included in the '#8220;home'#8221; sale, which can sometimes blur the line between luxury home and semi-commercial enterprise.


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Price Reductions, Sales Prices to List Prices
and Days on Market




In the 2nd quarter, the majority of Napa-Sonoma home sales sold without prior price reductions; these sold relatively quickly, at an average of 1% over the original list price. These are indications of a generally competitive market, though not one anywhere as frenzied as in San Francisco, where the average was an insane 14% over asking price in Q2. Those Wine Country listings that were price reduced prior to sale took much longer to sell, at a significant discount to original list price. And a substantial number of listings expired or were withdrawn from the market without selling, typically due to being perceived as significantly overpriced: Even in a strong market, buyers usually walk away from such listings.


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Home Sales by Price Range



An overview of how Napa and Sonoma home sales break down by price segment, which gives much more context to the market beyond county median sales prices.

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Mortgage Interest Rate Trends



What is often overlooked in the focus on home prices is the enormous difference mortgage interest rates make in ongoing housing costs. Over the last 4 years, the big decline in interest rates from those in 2007 – approximately 35% – has largely subsidized the increase in home prices since the market recovery began in 2012.


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Bay Area Home Price Appreciation Rates



Besides the general economic recovery, there are a number of factors in different counties affecting home price appreciation over the past 4 years: 1) the huge decline in distressed property sales in those counties most affected by them during the downturn (which include Napa and Sonoma), 2) the dramatic surge in luxury home sales in the most expensive markets, and 3) the effect of the high-tech boom in employment and wealth, which radiates out from San Francisco/Silicon Valley: the farther away a market is from this white-hot center, the less the effect on home prices.

Note that this analysis uses the combined median county sales price of both houses and condos, so they will not match those on earlier charts.

Median sales prices are often affected by other factors besides changes in fair market value. Seasonality; big changes in the distressed, luxury and new-construction market segments or simply the inventory available to purchase;interest rate fluctuations; and other economic variables can all impact median prices. Short term fluctuations are less reliable than longer term trends.

These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and how they apply to any specific property is unknown without a tailored comparative market analysis. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier. All numbers should be considered approximate.

© 2015 Paragon Real Estate Group



The Napa & Sonoma Real Estate Report

Spring Sales Season Heats Up

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Median Sales Prices; Luxury Home Sales; Housing Affordability Index;
Supply, Demand & Overbidding; Home Values by City; Bay Area Markets

May 2015, Paragon Real Estate Group


Median House Sales Price Trends

As the spring market got going, April’s median home sales prices accelerated to new highs since the market crash of 2008. The particularly big jump in Napa is probably anomalous: The data set is relatively small and monthly figures sometimes fluctuate dramatically simply due to the particular basket of homes that sold within the period. Second quarter data will give us a better picture. However, the acceleration of home prices in early spring appears to be general around the Bay Area.


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Median House Sales Prices by City & Town

This chart gives an idea of comparative house values in a sampling of different communities. Median prices often disguise an enormous variety of values in the underlying individual home sales, and can fluctuate for a number of reasons, such as seasonality, interest rates, buyer profile, and significant changes in inventory available to purchase and in the distressed, luxury and new-home segments.


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Home Sales of $1,000,000 & Above

In the Wine Country, higher-price home sales start increasing in spring, but unlike most other markets – where sales also peak in spring – they usually peak here in mid-summer. This is almost certainly due to the big role of the second-home market in Napa and Sonoma. If current trends continue, 2015 should break the record for number of home sales over $1m.

As a point of comparison, these sales constitute about 10% to 12% of the market here. In San Francisco, sales over $1m make up approximately 60% of the market. One gets a lot more home for one’s money in the Wine Country than one does in San Francisco or Marin.


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Sales Prices to List Prices

One of the clearest signs of the competitiveness of the market is the percentage of asking price achieved upon sale: the higher the percentage, the stronger the buyer demand. In recent years, the percentage has peaked during the spring selling season, and indeed In April, it began to climb in both counties.(This analysis used transactions up to a sales price of $1.25m to limit the distorting effect of higher-price sales on this statistic.)

To give an idea of the ferocious market in San Francisco, the average there in April was 10% over asking. In Marin, it was 3% over.


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Supply & Demand

Days on Market, Months Supply of Inventory, Listing Activity








The 3 charts above illustrate supply and demand dynamics, which fluctuate both according to the overall heat of the market and seasonality. The days-on-market and months-supply-of-inventory statistics both indicate a significant strengthening of the market in early-mid spring 2015.

It’s not unusual for average days on market to be longer in areas with sizeable second-homes markets: The urgency behind buyer demand is less than for those needing to buy a primary residence.


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Distressed Home Sales



Happily, the foreclosure/distressed home property crisis which followed the subprime loan/refinancing bubble crash has been rapidly dwindling since late 2012.


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Housing Affordability



This CAR Housing Affordability Index (HAI) is calculated using median price, household income, interest rates and other financial criteria to determine what percentage of households can afford to buy in a given area. At 24% & 29% in Q4 2014, Sonoma and Napa have much higher affordability percentages than San Francisco or Marin (14% - 15%), but still much lower percentages that for the U.S. (59%). The HAI is a relatively clumsy tool because of the complexity and nuances of the issue, but one can’t argue with the general trend lines. When the market heats up and prices rise, affordability goes down; when the market goes into a recession (or crashes), affordability bounces back up. It might be argued that when affordability declines beyond a certain point, it becomes an indicator of an overvalued real estate market.

Note: CAR HAI figures for Napa are only available going back to 2010, but it appears that the 2 counties follow similar trend lines.


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Comparing Bay Area Real Estate Markets



This is 1 of 10 charts from our report comparing different county markets around the Bay Area. The data is slightly out of date, since the spring selling season got started right after the analysis was completed, but the comparative realities between the counties are still valid and quite fascinating. Generally speaking, the counties of San Francisco and San Mateo, and to a slightly lesser degree, Alameda, constitute the red hot core of the overall Bay Area real estate market, with the heat radiating out and diminishing from there.The boom in high tech is the major factor behind this dynamic.

Note that the markets of counties surrounding the core are generally still quite strong, just not quite as fiercely competitive as in the heart of the high-tech employment and wealth surge.

The full report can be found here: Bay Area RE Markets Comparison.


These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and how they apply to any specific property is unknown without a tailored comparative market analysis. Sales statistics of one month generally reflect offers negotiated 4 – 6 weeks earlier, i.e. they are a month or so behind what’s actually occurring in the market as buyers and sellers make deals. All numbers should be considered approximate.Please contact us with any questions or concerns.

Header photograph, Vineyards of Napa Valley Panorama, was taken by Brocken Inaglory and is used here under the Creative Commons license.

© 2015 Paragon Real Estate Group

Webpage header photo by Brocken Inaglory used by permission under the Creative Commons license.