Sonoma Valley Real Estate

The Sonoma Real Estate Buzz

The real estate market has warmed up significantly in the last months. And while it is true that spring is the hottest time for real estate, these increasing numbers are people who want to take advantage of the good rates and deals out there.

Besides there is a growing belief that the market has reached or is very close to its bottom.

From March 1 to May 31, 2009, 107 Sonoma Valley homes sold at a median price of $350,000 and an average price of about $603,000. They were an average of 103 days on the market.

The total dollar volume was $62,005,024. The sold listings prices achieved 95% of their asking price.Compared to 2008 the number of sales is up from 99 houses sold in 2008 in these same months with a total volume $85,540,495.

Of these sales 70 closed for under $500,000, 24 were in the price bracket between $500,000 and $1,000,000. 9 sold between $1,000,000 and $2,000,000, and 4 sold for $2,000,000+.

Good signs:

Now the inventory is down from a 7 month inventory in March to a 5 month inventory. The average sq ft price climbed from $271 in March to $416 in May.

How short sales manipulate the statistics:

As of June 5th, there were 1,525 homes are actively for sale in Sonoma County, 1,289 are in escrow. Sonoma Valley has 238 homes active on the market and 79 homes in escrow. (Not all of those will actually close escrow as the fall-out rate is still high by historical standards.)

The numbers in Sonoma County are astonishing and need some explanation. 1,525 active versus 1,289 in escrow looks like almost a sellers market again.

Well, that is not exactly true. From these 1,289 houses in escrow, 713 are short sales and short sales have a closing time of an average of 100 days or even more.

So if you deduct the 713 from the 1289 you have 576 "normal" houses in escrow. Divide 713 by 3 and add it to the 576, the result is 814. Which would be the number if you would have with a normal closing time of 30 days.

Some thoughts on REO's - Bank Owned Properties.

It seems that everybody thinks this is a path to wealth. Since it is definitely not wrong, it is not the only truth either.

REO's are often in deferred maintenance since these homes are empty for a while, sometimes up to a year. And before they were vacant, people lived there who couldn't make the payments on the mortgage, and they probably saved on maintenance too, like not taking care of the pool or the once so beautiful garden. Since it also takes up to a year before an owner gets kicked out of the property, we're ending up with two years or more deferred maintenance.

This reflects on the property. Sometimes the house needs some paint and TLC, sometimes the deferred maintenance has left deeper wounds to the property.

On the other hand, the market is down, and this has reached almost every single seller in the country. The houses which are coming on the market are from sellers who really want to sell and often buy somewhere else. These sellers did the math and know they getting less for the property than expected two years ago, but they are also paying much less for their new home. And these homes are often in much better condition.

The numbers of REO on the market are actually surprising:

In Marin we have 33 Bank Owned Properties active on the market, compared to the 1,089 active residential houses overall. From these 33 REOs 22 are listed in San Rafael and Novato.

Sonoma County has a significantly higher number: 132 active REOs. 56 of these are located in Santa Rosa and only 10 in Sonoma Valley. Overall Sonoma County has 1,525 active listings.