The May 2015 Napa & Sonoma Real Estate Report

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


Median House Sales Prices

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.


Median House Sales Prices by City & Town

This chart gives an idea of comparative house values in a sampling of different communities of Sonoma and Napa. 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.


Home Sales of $1,000,000 & Above

In the Wine Country, higher-price home sales start increasing rapidly 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.


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.

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.

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.

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.

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.

© 2015 Paragon Real Estate Group