North Bay Market Report: Napa, Sonoma & Marin

March 5, 2013 by Amie

Classic Supply & Demand Dynamic Leads to Higher Prices

The Paragon Report for Napa, Sonoma & Marin

The equation: Add the repressed home-buyer demand that builds up during the years of an economic downturn to an improving economy, incredibly low interest rates and rising rents, and you get surging buyer demand. Take that increasing demand and mix it with a decreasing inventory of homes available to purchase, and you get upward pressure on prices. This dynamic reflects exactly what is happening now in the Marin, Napa and Sonoma home markets.
Comparing the 4th quarter of 2012 to that of 2011, overall median house sales prices and average dollar per square foot values in Marin have gone up about 6-7%; in Napa, they’ve risen about 12-14%; and in Sonoma, somewhere in the 16-20% range. These are generalities: a variety of factors can affect these statistics (besides changes in value), and these counties all contain micro markets of widely different qualities and prices. But the upward trend is clear.
For what it’s worth, the real estate website Zillow has recently predicted further increases here of up to 10 to 13% in 2013.
If you adjust your screenview to Zoom 125%, the charts below will be that much easier to read. On Windows systems that can be achieved by pressing the Control and + keys simultaneously.
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Median North Bay House Prices
1Map-Northbay_Medians

Sales by Price Range
There is a huge range of home values in these 3 counties: the majority sells for below $500,000, but sales prices range up to over $10 million. The greatest number of sales occurs in Sonoma.
2Northbay_Sales-by-Price-Range

Home Values by County
Of the 3 North Bay counties, the most expensive by far is Marin, whose median home price is now the highest in the state. (The chart below is just for houses, for which San Francisco has a higher median sales price, but for ALL home sales, including condos and TICs and such, Marin is higher.)
3Northbay_Values-by-County

Inventory of Listings for Sale
The supply of home listings available to purchase is now very, very low, as clearly illustrated below.
4Northbay_FS

Percentage of Listings Accepting Offers
This is one of the purer statistics comparing demand to supply: the higher the percentage of listings accepting offers, the hotter the market.
5Northbay_Percent_UC

Sales Price Percentages, Days on Market & Price Reductions
If a property is well priced, prepared and marketed, it usually sells relatively quickly for very close to (or even over) asking price. If it has to go through price reductions to sell, it closes at a large discount to original list price and, on average, takes a very long time to generate an accepted offer.
6Northbay_SP-OP_DOM

Months Supply of Inventory
Another standard statistic of supply and demand: The current reading would typically be considered to indicate strong “Seller’s markets” in Marin, Napa and Sonoma.
7Northbay_MSI

Foreclosures by County
One of the huge factors in the real estate market crash was the surge in distressed property sales: bank-owned property sales pursuant to foreclosure and short sales. The 3 North Bay counties were never as hard hit as many other counties, but to the extent they were, the distressed property market is now in rapid decline as the market recovers and values increase. This becomes a virtuous circle: the higher prices go, the fewer the number of owners underwater on their mortgage and the fewer the distressed sales; the fewer the distressed sales, the less their (very negative) influence on market values.
8Northbay_Foreclosures-by-County

Statistics are generalities and should be considered approximations: How they apply to any specific property is unknown. These analyses were performed in good faith with data derived from sources deemed reliable, but they may contain errors and are subject to revision. If you have any questions, please don’t hesitate to contact us.