The national and international news we are exposed to daily has been consistently volatile for the past three-to-four years. Q3 ’11 marked both the worst quarter since ’09 for the Dow Jones Industrial Average and a 160% increase in the VIX (volatility index). In Fall 2008, we experienced similar economically jarring news (October – February 2008) temporarily stalling our local real estate markets.
The good news is real estate is a local business! We do not necessarily follow, react or respond to national trends. While our clients’ confidence, job security and investment strategies are very much influenced by national and international news stories, our local real estate results are fairly stable and certainly do not reflect the volatility of the national, international, political or economic unrest.
It is our feeling that Napa County housing prices will remain fairly stable for the next 15 – 18 months. We expect mortgage rates to remain in the five-percent (5%) range (in some loan products lower). As of August 31, 2011, the Napa County unemployment index was 8.8% v the California average of 11.9%. This means 91.2% of all those looking for work in Napa County are employed. We recognize a market recovery will be led by quality job creation, which will be followed by an increase in our clients’ confidence.
In general, Napa County real estate market conditions are well off the pricing and homes sold from ’06 through the first half of ’08, but buyers with a five plus year investment perspective are seizing attractive opportunities in the market every day.
We have certainly benefited from more realistic sellers in the marketplace. This may be a result of access to plenty of meaningful comparable sales in the market as well as great examples of over-priced homes. Time on the market is clearly not a seller’s friend – statistics from the MLS confirm that homes on the market for over 90 days sold for 89% off their original listing price. This means -$110,000 under original asking price on a $1 million home. Conversely, homes that sell in less than thirty (30) days on the market enjoy a sale price of nearly 98% of the original listing price. Pricing decisions in this market are paramount to achieving a timely sale and maximizing seller’s proceeds.
Buyers in the market are very well educated, conversant on recent sales and new listing inventory – which by the way is well below last year’s at this same time. We find buyers to be generally patient, focused, seeking value and not willing to make offers on overpriced listings. This makes the pool of qualified buyers keenly focused on the best priced inventory. Most buyers are approaching the primary home market as an investment in their home vs. speculation on an appreciating housing market.
However volatile the national and international news may be, we still see opportunity in our market every day for buyers and sellers. Real estate is a very local business – we have micro-markets in Napa County neighborhoods that are far more robust than others. We welcome the opportunity to visit with you about your specific needs, housing interest or the real estate markets in general.
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