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Real Estate: The “Bright Spot” in California’s Economy

Posted on December 17, 2020 by Admin

The beginning of 2020 saw the California real estate market humming along at a good clip. Then came March and the COVID-19 lock-down and everything came to a screeching halt. Sellers pulled homes off the market, afraid of contagion, and buyers stopped looking, mostly for the same reason, as the entire US economy literally shut down for about the next three and a half months.

But in June of 2020 things began to change. Real estate was designated “essential” and Home buyers, driven by a refocused need of home as a refuge, began to come out again. This resurgence was in part fueled by a large segment of workers in our economy who needed to work remotely from home, many with children who were also schooling remotely from home. Home has always been held in high esteem, but the pandemic raised the idea of Home as a Refuge to new levels of demand not seen before.

In July, the California Association of Realtors (C.A.R.) reported that home sales across the state rose by a whopping 42% from May to June 2020. That’s partly due to the state’s gradual reopening which happened at that time as well as from pent up buyer demand.

What was a surprise and has since become a trend is the exodus of buyers leaving high priced, high-density urban areas, like San Francisco, for suburban areas that offered more space, privacy, and affordability. In fact, as we speak, San Francisco continues to experience a softening of prices in its housing market. And local news channels report that a significant number of San Francisco rentals are sitting vacant.

As an example, this trend was readily seen last summer in areas like the Russian River of the North Bay. Out of the way comparatively “cheap” river shacks along Rio Nido, Guerneville, Monte Rio and Cazadero were gobbled up like so many potato chips left unattended at a picnic with all-cash offers and little to no contingencies. Other rural to suburban areas, like Murphys, is experiencing similar value shifts in its housing market. With many now having the ability to work remotely, areas once inaccessible as a primary residence are now doable.

Home Buying Institute (HBI) predicts the following for the California real estate market in 2021:

  1. Home price appreciation will tick upwards as buyers and sellers realize that real estate deals can still be conducted despite the pandemic and because of upcoming vaccinations which will help to create confidence and normalize life.
  2. “Urban Flight” will continue to be a thing, with the desire for space and privacy at an all time premium which will continue to drive up prices in small towns, suburbs and more rural areas.
  3. Home inventory is expected to grow as more sellers get comfortable with putting their home on the market again and as we see more foreclosures come to market.
  4. Mortgage rates are expected to stay at an all time low at around 3-3.5% well through 2021.
  5. An increase in home sales is expected as the urban to suburban migration continues, which should keep California’s real estate market very active all through 2021.

In conclusion, the housing market continues to surprise economists and analysts. During this unprecedented pandemic it has been referred to, repeatedly, as the one “bright spot” in the nation’s economy. This surprisingly strong performance is expected to continue through the end of 2020 and well into 2021. And as we collectively face the challenges ahead, including what is now commonly termed a “dark winter” it’s nice to have a bright spot on the horizon. Finally, it’s worth remembering that the shortest, darkest day of the year is December 21st, but after that, days will get longer and brighter. Think of the pandemic as the shortest, darkest day of the year and look forward to things getting better and brighter.

Wishing you and your loved ones hope and brightness in the days to come. May 2021 be the year more of our hopes and dreams come true.

—Mark Stevens

December 18, 2020

 

 

Source citations:

Norada, https://www.noradarealestate.com/

HBI (Home Buying Institute), http://www.homebuyinginstitute.com/news/california-housing-predictions-for-2021/

Market Update for Sonoma County

Posted on August 06, 2018 by Admin

California home sales stumble in June as median price hits new high for second straight month

– Existing, single-family home sales totaled 410,800 in June on a seasonally adjusted annualized rate, up 0.4 percent from May and down 7.3 percent from June 2017.

– June’s statewide median home price was $602,760, up 0.3 percent from May and 8.5 percent from June 2017, hitting another peak.

– California condominiums/townhomes recorded a 7.0 percent price increase and a 7.1 percent sales decline from June 2017.

LOS ANGELES (July 23) – California’s median home price edged higher to another peak in June as year-over-year home sales lost steam for the second straight month.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 410,800 units in June, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

June’s sales figure was up 0.4 percent from the revised 409,270 level in May and down 7.3 percent compared with home sales in June 2017 of 443,120. The year-over-year sales decline was the largest in nearly four years.

“California’s housing market underperformed again, despite an increase in active listings for the third straight month,” said C.A.R. President Steve White. “The lackluster spring homebuying season could be a sign of waning buyer interest as endlessly rising home prices and buyer fatigue adversely affected pent-up demand.”

For the second straight month, the statewide median home price hit another peak price at $602,760 in June. The June statewide median price was up 0.3 percent from $600,860 in May and up 8.5 percent from a revised $555,420 in June 2017. June marked the fifth consecutive month that prices increased by more than 8 percent annually, indicating that price appreciation remains robust and is not showing any signs of leveling off. The median price is now 1.4 percent higher than the pre-recession peak and has been growing on a year-over-year basis for more than six years.

“Although home prices increased year-over-year in virtually every region of the state in June, at the same time, nearly every county experienced a significant contraction in home sales from a year ago,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “With the year-to-date sales tally now in negative territory, the back-to-back sales declines could be an early sign that the market is transitioning, especially since further rate increases are expected to hamper homebuyers’ affordability and put a cap on how much they are willing to pay for their new home.”

Other key points from C.A.R.’s June 2018 resale housing report include:

  • On a regionwide, non-seasonally adjusted basis, all regions recorded year-over-year sales declines. Sales in the Bay Area dipped 0.8 percent monthly and fell 8.2 percent annually. Sales in the Inland Empire slipped 1.2 percent from May and was down 14.5 percent from a year ago. Sales in the Los Angeles metro region edged up 0.9 percent from May but was down 12.4 percent annually.
  • The Bay Area Region, which previously led the state in home sales, registered significant year-to-year sales decreases in seven of nine Bay Area counties. Only Alameda and San Francisco counties recorded annual sales gains, while Contra Costa, Marin, Napa, San Mateo, Santa Clara, Solano, and Sonoma counties experienced annual sales declines.
  • The Central Valley Region experienced the smallest sales contraction with sales falling 6 percent on an annual basis. Only Merced County posted a year-over-year sales increase, rising 15.2 percent from a year ago. Five counties – including Glenn, Kings, Madera, San Benito, and San Joaquin – posted double-digit annual declines, while Fresno, Kern, Placer, Sacramento, Stanislaus, and Tulare recorded single-digit annual decreases.
  • The Southern California Region suffered the largest home sales drop, falling 11.7 percent from May. Every county within the region posted declines with all but Orange and San Diego counties experiencing a year-over-year, double-digit pullback. Even the Inland Empire, which had been buoyed by San Bernardino County for the past several months, experienced significant declines.
  • By price segments, sales in every price category under $1 million contracted but lower-priced homes registered the largest sales decline as homes priced below $300,000 fell 23.8 percent from a year ago. At the other end of the spectrum, sales of homes priced $1 million and above increased 7.2 percent from June 2017. The very top end of the market, in particular, continues to post double-digits gains with homes priced over $2 million rising year-over-year by more than 13 percent in June.
  • The Bay Area continued to register the strongest home price gains with the region as a whole recording a 16.1 percent annual increase. While Contra Costa, Solano, and Napa counties experienced single-digit price advancements, the remaining regions experienced an uptick of more than 10 percent. Despite being two of the state’s least affordable markets outside of San Francisco, San Mateo and Santa Clara counties led the pack in price gains.
  • Home price growth in Southern California was more tepid by comparison, increasing by mid- to high-single-digits. Prices in San Bernardino – the most affordable county in the region – had the largest growth rate, and prices throughout the rest of the region grew at a more modest rate ranging between 5.1 percent and 6.9 percent.
  • Statewide active listings improved for the third consecutive month, increasing 8.1 percent from the previous year. The year-over-year increase was slightly below that of last month, which was the largest since January 2015, when active listings jumped 11.0 percent.
  • As sales declined from a year ago, the unsold inventory index, which is a ratio of inventory over sales, increased on a year-over-year basis as well. The statewide unsold inventory index edged up to 3.0 months in June from 2.7 months in June 2017. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
  • The median number of days it took to sell a California single-family home remained low at 15 days in June, unchanged from 15 days in June 2017.
  • A.R.’s statewide sales price-to-list price ratio* was 100 percent in June, unchanged from June 2017.
  • The average statewide price per square foot** for an existing, single-family home statewide was $290 in June, up from $270 in June 2017.
  • The 30-year, fixed-mortgage interest rates averaged 4.57 percent in June, down from 4.59 percent in May and up from 3.90 percent in June 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate, however, edged higher in June to an average of 3.82 percent from 3.79 percent in May and from 3.14 percent in June 2017.

Article courtesy of California Association of Realtors, July 23, 2018

North Bay Wildfire Clean Up Complete

Posted on June 14, 2018 by Admin

 

State and federal officials Monday declared the debris removal from the North Bay wildfires — the largest such effort since the 1906 earthquake — complete.

The government sponsored cleanup work in Sonoma, Napa, Mendocino and Lake counties has been winding down for months as the number of sites remaining to be cleared has dwindled. The last of the 4,563 parcels that signed up for the cleanup program was cleared last week.

The North Bay wildfires were the costliest in U.S. history, with insured losses approaching $10 billion. They also killed 40 people and destroyed 6,200 homes. That work that resulted in an estimated 2.2 million tons of ash and fire-related debris being hauled off. In the case of concrete from foundations, some was recycled, while much of it was buried in the Sonoma County Central Landfill.

Michael Wolff, a contractor whose firm has cleared more than 150 sites and assisted in hundreds of others, said while initially skeptical of the timeline, he was impressed with the coordination federal and state officials brought to the monumental task.

“For the most part, I felt like the (Army Corps of Engineers) did a great job,” Wolff said. “I was blown away by how well things came together and how much work was done in such a short period of time.”

Wolff said his company worked on the final lot to receive clearance, a site off Crown Hill Drive in the devastated Fountaingrove neighborhood that needed additional concrete removed, he said.

The Army Corps said it has “deactivated” its Rohnert Park office and would complete any additional work from Sacramento.

Plenty of work remains in the city and county, however, said Paul Lowenthal, Santa Rosa assistant fire marshal.

“Even though the Army Corps is stating that this part of the mission is complete, the city and county are still here, and we know there is still a long road to recovery,” Lowenthal said. “We’re not going anywhere.”

There are still two lots that need to be cleared in the city — a residential property and an apartment complex on Hopper Lane. Neither went through the government cleanup nor the private cleanup processes. Instead, the city’s legal department has been forced to initiate abatement proceedings against the two properties. It’s not clear how many such properties remain to the cleared in Sonoma County.

Some cleared properties still have issues, such as over-excavation, Lowenthal said.

An estimated 200 properties in Sonoma County may have been over-excavated by Army Corps contractors, and the state Office of Emergency Services is working with the county to identify them and return dirt to the site at no cost to property owners.

Of the 4,563 properties cleared, the vast majority, 3,674 or 81 percent, where in Sonoma County, where the Tubbs fire ravaged entire Santa Rosa neighborhoods. The Corps cleared 439 lots in Napa, 306 in Mendocino, and 144 in Lake County.

While the Corps has completed all debris removal on the 4,563 parcels, 22 sites still need to have additional work, such as soil testing and erosion control, before rebuilding can proceed, Lowenthal said.

Source: NorthBay Business Journal & Press Democrat

Story by Kevin McCallum, June 13, 2018

News This Week: Living Roofs and Floating Houses

Posted on June 01, 2018 by Admin

EACH WEEK WE COLLECT TOP STORIES HOT OFF THE PRESS FOR YOUR WEEKEND CLICKING PLEASURE.

New Wine Education Center in Sonoma County
Sonoma State University (SSU) has just opened a new wine education center as part of its Wine Business Program. SSU is hoping that the center will “cement the school’s status as the premier location for the study and research of the business of wine.” READ MORE

Living Roof Design Ideas
Living roofs are a gorgeous way to finish your home. Discover how to design your own green roof. READ MORE

Floating Village in San Jose
A company in San Jose is hoping they may be able to help with the housing shortage with their innovated design that makes building in flood zones less risky. READ MORE

Portable Wine
There’s no reason to think that great wine can’t come out of a box or a can. Wine Spectator released their list of the top 24 wines to have on the go. READ MORE

 

Our Top 5 Home Improvements That Increase Value Quickly Without Breaking the Bank

Posted on May 22, 2018 by Admin

If you’re thinking of selling your home or real estate investment, it can be hard to know how to invest in your home to increase its value. Many people spend up to a year prepping their home for a sale. When the economy is peaking in a seller’s market, however, keeping updates and innovations simple and directed can help minimize the time needed to prep a home and save thousands (if not hundreds of thousands) in the long run. After all, you don’t want to miss out on the ideal time for putting your home on the market. Discover our top recommendations for making your home more desirable and increasing the value quickly – without breaking the bank.

Here are 5 simple and easy tips for getting the most out of your investment:

1. Start Small

Make sure that you are keeping up on home maintenance. Potential buyers may be turned away by something as small as dirty grout or chipped paint. Fixing these relatively minor issues can be simple, taking just a little elbow grease or a small investment, and they can yield a large result. Some projects that we suggest are: fresh paint, updated fixtures, switching fluorescent lights to LED, removing/cleaning old carpet, and replacing old toilets.

2. Go Green

Today’s buyers value energy efficiency and green-living, so make sure your home uses energy wisely. Invest in small projects, such as installing on-demand water heating. Water heating can account for as much as 16% of the energy costs. That said, heating the rest of your home can use more than twice as much energy as heating your water, so installing a smart thermostat can also entice potential buyers as well as lead to significant savings on utility bills. And, last but not least, upgrading from single-pane to double-pane windows can make a huge difference, but may take more time or money than you want to spend.

3. Upgrade the Kitchen

According to Consumer Reports, a “modern/updated kitchen” was the #1 desirable feature in a home for millenials. Again, don’t go overboard here – for only a few thousand dollars, you can invest in new appliances, fixtures and lighting. Also, adding a fresh coat of paint to walls and cabinets will freshen the look, and make the space feel new. If your kitchen is in need of a deeper remodel, new counters can make the difference you are seeking. Our choice material is quartz with an undermount sink – it looks modern and is easy to maintain.

4. Improve the Bathroom

Bathroom improvements should follow the same principles as kitchen improvements. Replace old plumbing with new and matching fixtures. Coordinate the plumbing with any towel bars and toilet paper holders to create a cohesive look. Make sure to deeply clean tile and other hard surfaces – and consider reglazing any chipped or worn basins and tubs.

5. Curb Appeal

First impressions count! Now’s the time to repaint the house if it hasn’t been done in the last ten years, or if there is any damage to the existing paint. Consider replacing the front door – it is the focal point of a home’s exterior. Make sure that landscaping is easy to maintain. If you don’t have an irrigation system, now’s the time to install one. If you have the space for it, highlight any outdoor living space by adding some nice chairs and an outdoor rug to a deck. You can spruce up the space with a fire ring on your patio and a well-maintained yard.