Big Spring Surge in North Bay Home Values
Paragon Update for Napa, Sonoma & Marin Counties
As is occurring in real estate markets across the country, the increase in home values in Marin, Napa and Sonoma counties which began in 2012 accelerated in 2013, especially in the months of March, April and May, when sales began to reflect the accepted offer activity of early 2013. (Sales follow market conditions by 4-8 weeks, the time between offers being negotiated and close of escrow.)
The chart above reflects median sales prices for all home sales, regular and distressed sales. If distressed property sales were excluded from the analysis, the median sales price for April-May would rise to $995,000 in Marin – not far off peak values reached in 2007; Napa’s would rise to $510,000 and Sonoma’s to $460,000: the two wine country counties are still approximately 20% – 25% below previous peak values. It may be that median prices may fluctuate or even fall over the summer with the impacts of seasonality or changes in interest rates, though right now the trend is clearly and dramatically upward.
Distressed home sales have played a huge role in depressing median home prices, with the effect depending on their percentage of total sales. Napa and Sonoma, like many other California counties, were severely affected: the percentage of bank and short sales went as high as 50-60% during the downturn (declining to about 20% in May 2013); Marin, like San Francisco, was less affected: distressed sales, at their height, were about 20-25% of sales (declining to about 7% in May 2013 for Marin and 3% for SF). Marin and San Francisco had lesser price declines and so have had less lost value to make up. Many neighborhoods of San Francisco, especially those benefiting from high-tech buyers, have either regained all value lost since the peak years, or indeed have now exceeded previous peak values. Napa and Sonoma, like Alameda and Contra Costa, fell much further. Though their home prices are now rising rapidly, they have more ground to make up before regaining the peak values of 2006-2007.
And, of course, it must be noted that each county is made up of many distinct city and neighborhood micro-markets which fell at different rates and are now recovering at different speeds.
MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends, and significant changes in the distressed and luxury home segments of the market. The median sales price for homes (in all their huge variety) is not like the price for a share of stock (all the same), and monthly fluctuations in median price are often meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.