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

Short-Term & Long-Term
Median Home Price Appreciation

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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.

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

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If you purchased the theoretical “median house” 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

Average Dollar per Square Foot Values

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

Napa & Sonoma Luxury Home Sales

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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 “home” sale, which can sometimes blur the line between luxury home and semi-commercial enterprise.

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

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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.

Home Sales by Price Range

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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.

Mortgage Interest Rate Trends

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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.

Bay Area Home Price Appreciation Rates

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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.

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