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Hot Real Estate in Sonoma County

Nobody wants to buy at the top of the market. On the other hand, trying to practice market timing in real estate has proven to be almost impossible. Prices nationally are drifting slightly lower, but some markets have already started to strengthen and prices may be rising.
If you aren’t keeping track of what’s going on in your key neighborhoods and price ranges, you are missing one of the biggest real estate stories of 2012, the return of multiple offers and bidding wars.

Sonoma County REO Hotsheet
Sonoma County REO Hotsheet Trends

Let’s set the stage with a simple chart of REO activity in the last 30 days (REO stands for Real Estate Owned by lenders). Reading across the bottom of the chart shows the status of homes and the height of each column shows how many homes are in that status category. For almost all readers, this chart looks perfectly normal…until you realize that in typical times, the active column should be substantially higher. What we are seeing here is a torrid pace of sales that is drawing down the inventory much faster than it is being replenished. The Active and Sold columns are self explanatory, and you can see that they are almost matched. What is not as obvious is that all the other columns could be added to the Sold column since they represent property that is under contract to be sold. Some of the contingent sales will fall out of escrow due to bad inspections, financing that can’t be arranged, personal reasons including loss of job or divorce. Still, a large portion of the contingent sales (and all the pending sales) are going to be added to the Sold column. This simple chart shows that buyers are overwhelming the REO market.

Sonoma REO pricing
Sonoma REO Pricing Discounts

The next chart shows the impact of a surplus of buyers in the market. Each column represents a day of sales and the height of the column shows the relationship of the price paid to the listing price, with the listing price equal to 1.0.

When there are only a few buyers in the market, discounts are common, and it would be normal to see numbers between .85 and .95. As more buyers begin to compete for the smaller inventory of properties, it is much more common to see people paying list price for properties. What this chart shows is that in recent weeks, it is more common than not for buyers to be paying above list price, a practice known as overbidding. What isn’t evident on this chart, or even available as actual data, is that many of these sales had multiple offers from competing bidders. When you’re in the market shopping for homes, the call from the listing agent for you to prepare your “highest and best offer” is a sign that you may have waited too long to get into the market.

REO Sales Stats by Sonoma County Cities
REO Sales Stats by Sonoma County Cities

The final chart shows that Sonoma County is not universally in a bidding war. Some areas are much more frenzied than others. The bottom of the chart shows selected areas of Sonoma County as defined by the MLS. The set of colums for each city match the sales categories we just looked at for Sonoma County as a whole. The sold column in a dark brown is starkly taller than the active listing column in blue for both northwest and northeast Santa Rosa. Even though those two area show a significant number of new active listings in the last 30 days, the volume of sales, pending sales, and contingent sales is far larger. The southeast quadrant of Santa Rosa may be the only area in the county where inventory actually increased during this 30 day period.

As an agent, I am encouraging all my buyers to start paying serious attention to these market trends. Prices are still very affordable. Interest rates are still at near-record low rates. Just don’t expect to be scoring the record bargains that were avaialable when the competition among buyers didn’t exist.

  • Here’s a few insights I want to share:
  • The old days of low-ball initial offers are mainly over.
  • You can still find bargains.
  • Many fixers aren’t drawing the skilled wannabe homeowners who can convert them to charming homes.
  • Investors with cash are competing with renters needing loans.
  • Entry level homes are often selling for more than list price. If you see a bargain price, it may not be the realistic selling price.

I am going to be fielding questions about this on my Sonoma County Real Estate page on Facebook if you have questions about trends in the neighborhoods and price ranges you care about.

Posted in: Buyer Guide, Real Estate Guides, REO, Sales Trends, Santa Rosa Real Estate, Santa Rosa Real Estate

Emerald Ridge – Healdsburg’s Emerald Ranch Road

Architects and their clients have to be picky about where they choose to build. The right decision will save significant time and money.  A poorly selected site can cost much more to prepare for building than anyone anticipates.

A construction project starting on a raw parcel has a long list of tasks that have to be successfully performed before the real work of house building begins. For both architects and owners, the hidden costs can be far higher than budgeted for. The utilities required to service a home include obvious ones like road and driveway access, site grading and preparation,  and electric and telephone service. Water and septic development can cost substantial amounts as well as limiting what’s possible to do on a site.  At the very least,  delivering these services to a building site will take planning, permits, excavation, grading, and much coordination with engineers, contractors, inspectors, PG&E, AT&T, and others. It’s a full plate of work and much of  it has to happen before the project moves at full speed  into the house building phase.

Emerald Ridge

It’s the major reason that finished lots are popular with architects and owners. Building a house is enough of a challenge without having to get bogged down with the time and major expenses required for preparing the site. It is not unusual in Sonoma County for owners to spend half a million to a million dollars or more on roads and other needed utilities on estate sites. That cost doesn’t include finance costs related to the year long process required to manage wet weather perc testing, dry weather well testing, and the need to do excavation and grading when the soils are workable.  If you are planning to build from scratch, you will probably need to plan on at least a year before you are going to be able to break ground for your house.

For many architects, the year long delay is the price they have to pay to find the site they want. Most of the coveted sites that are close to town have already been built on. Some clients can afford to buy a nice home to tear down and start over, but it’s an expensive way to get a vacant, developed lot.  Other sites may have perfect exposure to the sun and views that make them worthy candidates to spend time and money on. Occasionally, the perfect view and solar site may also have decent locations and privacy.  Other times the pursuit of seclusion ends up chasing clients farther from the towns, restaurants, and wineries they are building their wine country estate to enjoy.

The Emerald Ridge lots just outside Healdsburg are special because they resolve the development and location issues perfectly. Architects looking for a site with great sun, views, privacy, and interesting terrain will be delighted with the potential on the three newly available sold 20 acre properties. Once they understand the costs and delays common to raw land, owners will be thrilled that the unknowns costs and delays of rural development have already been eliminated and they can work with their architect on drawing up house plans immediately. The chance to build something special that is also readily accessible to Healdsburg provides a unique opportunity.

Well, not unique. There are three zero lots available, so the chance to build at Emerald Ridge is limited rather than unique.  These lots have been in development for over five years and have just become available to purchase in December of 2011 (all sold as of early 2013).  Call or email me to arrange your personal tour…of other properties.

707-869-1884 or dave@sonoma.net

 

Posted in: Country Land, Healdsburg Real Estate, Luxury Homes

Healdsburg Emerald Ridge Estate Lots

Emerald Ridge estate lots outside Healdsburg are all sold.  The lot creation process took time, and the creation of these twenty acre lots was at least a five year process of planning,  government approvals, and site work.  The asphalt roads and driveways have been completed and each lot now has underground water installed. The electrical and telephone cables are pulled through already installed underground conduits .   The only thing that hasn’t been updated on the site is the geography. These lots started out very close to Healdsburg. They still are.

Emerald Ridge
Emerald Ridge

For architects looking for an ideal location to design a wine country estate, Emerald Ridge offers views, sun, great building envelopes, and a forested environment. The views from each of the lots are different, but they all include Fitch Mountain, Mt. St. Helena, and portions of the Dry Creek Valley.  It will be up to the proud, new owners of the lots working with their architect and landscape architect to determine just how much of the view to open up by selective thinning or limbing.

In the same way that the property developers have done a sensitive job of opening up the views just enough to reveal them, they have created building envelopes that are big enough to be flexible, but contained enough to help maintain the privacy among all the lots. Each parcel has several acres of the twenty acres that are set aside for buildings.  It will be fascinating to see the compounds and main homes designed by the architects fortunate enough to have one of these lots to work with.

 

Updated Selling Information on 02/13/13…all the lots are sold.

Posted in: Country Land, Healdsburg Real Estate

Healdsburg Luxury Real Estate

Luxury real estate in Healdsburg got a boost recently with three beautiful newly listed homes  ranging from $1.25 million to $3.95 million, a wonderful 56 acre Chalk Hill view parcel with money making vineyards,  and an unlisted and off market showing of a $10,000,000 ultra-premium estate property that is sure to find favor with discreet buyers looking for a wine country getaway to add to their real estate portfolio.

Matheson St. Bungalow - A luxury property in Healdsburg
Matheson St. Bungalow - rear and side

556 Matheson is the downtown classic home many Healdsburg real estate buyers are looking for. It’s an easy walk to the Healdsburg Plaza and is loaded with charm.  Built in 1918 it has only had three owners, and the most recent owners have created superb garden spaces on the property. This is a turnkey “walk to the plaza” property that so many people ask for.

Provencal estate in Chalk Hill near Healdsburg
Entrance to Provencal Style Estate Residence

14849 Chalk Hill Road is a Provencal style estate inspired by French country living. Remodeled in 200o, the home features timeless elements combined with modern conveniences.  The fifteen acre cabernet sauvignon vineyard adds an element of realism to the dream of a wine country lifestyle. In addition to the main house, there are multiple outbuildings including office space, guest bedrooms, a pool house, etc. There are very few amenitites that aren’t already part of this property.

Vineyard Parcel in Chalk Hill
Vineyard Parcel and Estate Site in Chalk Hill

Nearby at 13421 Flora Ranch Road, also in Chalk Hill appellation, is a new luxury land listing that’s tailor made for a buyer with dreams of building their own estate.  This vineyard property has hilltop views in every direction, magnificent old oaks, a pond, and great neighbors. The grapes are under contract until 2016 and have been a reliable source of income to help defray some of the costs of ownership. The tree house gracing the top of this blog post is adjacent to one of the premium building sites with 360 degree views. There is also a tent cabin nearby for hanging out at the property while you plan what you are going to build.

book lined hallway in country french Healdsburg home
Books and magazines line hallway

The third luxury Healdsburg residential listing is a lovely country farmhouse on 10 acres in the Russian River Valley. 3294 Westside Road is set back from the road on the river side and is surrounded by vineyards. The recent remodel includes a warm, rustic oak floor, a wonderful floor plan, and charming details everywhere. I particularly liked the book and magazine lined hallway, but lovely touches were everywhere. I hate to play favorites, but I think this was the most appealing home of our tour.

I can’t say much about the unlisted  $10,000,000 estate due to non disclosure requirements. The owners want their privacy respected and photographs were not allowed during our tour. I can say the setting is wonderful and private, the buildings are architecturally stunning and the the overall feel is a casual, country comfort that would be a wine country getaway of choice for foodies and wine lovers with an entourage.

 Healdsburg Luxury Homes  (Over $1,000,000)

 

 

Posted in: Areas, Healdsburg Real Estate, Luxury Homes, Real Estate

Advice for Fence-Sitting Buyers in Sonoma County

If your cousin, brother,  or best friend’s dog was warning about the housing bubble in 2006, I would pay a lot of attention to them today. Unfortunately, almost everyone else missed the bubble  in spite of all sorts of warning signs that we were in an unsustainable market. It’s human nature to go with the crowd, but as we saw with the housing bubble, it can be dangerous not to pay attention to fundamentals such as affordability and historic trends.

That comfort in being part of a pack was a significant contributor to the bubble.  Today, herd thinking is contributing to to a large number of ready and willing buyers sitting on the sidelines waiting for better prices, better interest rates, or better selection. It’s smart to want to avoid a mistake when you buy a house. It’s a big investment and we all know people who have lost their savings and their credit because of the housing bubble. At the same time, it’s important to realize that every bubble comes to earth eventually and markets do stabilize and recover. Smart buyers who want to make sure they don’t get caught flat-footed when the housing market in Sonoma County recovers need to pay attention to current trends to make sure they don’t wait too long.

Rohnert Park, Windsor, and Cloverdale Residential Sale Chart
Rohnert Park, Windsor, and Cloverdale Residential Sale Chart

This Rohnert Park/Cotati, Windsor, and Cloverdale sales chart for the last year has valuable information to help buyers decide if now is a good time to buy. Three key indicators I look at include number of units available, sales volume, and whether the pending trend shows increasing or decreasing sales (pending is a real estate term for a contract with all the contingencies satisfied and ready to mark “sold” when the close of escrow date arrives). What we see in this chart are strong indicators of a recovering housing market in these three Sonoma County cities.

  1. The “homes for sale” inventory has declined from 390 to 267 over the last year.
  2. The sales trend is definitely up. September is down from the highest months in the spring, but is substantially up from a year ago.
  3. The pending trend (the red ine with triangles) should be ringing alarm bells for you if you are a buyer sitting on the fence. Pending sales will go into the “sold” column in the near future, so it’s easy to see a significant increase in future sales is already embedded in this trend. Look at it again. This line is sales that are essentially already done, but the paperwork hasn’t become official yet.

Sonoma residential housing trends clearly show more homes going into contract.  This sales activity has reduced the available inventory by a third from a year ago. What it means in stark terms for home buyers is that you have fewer homes to choose from. Whether current buyers are investors or owner-occupants, there are clearly more people every month who are getting off the fence and making offers to purchase Sonoma residential property.

One technical term for how quickly homes sell is the absorption rate. What we are seeing today is a three to four month absorption rate compared to an absorption rate of six months from a year ago. 

The danger isn’t that there will be no houses available. There are always houses for sale. The danger is in jumping into a market that already has many other buyers looking for the same bargain properties. Almost any agent can tell you horror stories of multiple offer situations when the listing price is just a number that’s the starting point for a winning bidder. Your question to sellers today of “how low an offer will you accept?” becomes, “how much do I have to bid over the listing price?”. Trust me, you don’t want to be asking over-bid questions. It’s complicated enough to buy a house without worrying whether you will even get the chance to make the purchase.  If you are a qualified buyer, you want to house shop during a buyer’s market where your options are greater and your flexibility is at a maximum.

Prices are still likely to move, either up or down. Buying today isn’t a guarantee that the property you purchase won’t decline in value. However, given the historically low interest rates available to creditworthy borrowers, a few thousand dollars higher or lower in purchase price will be insignificant over a five, seven, or thirty year stay in the house. The risk of inaction is in facing more competition, fewer choices, and a more frenetic buying experience. I didn’t predict the bubble, so I don’t get a gold star as a prognosticator. However, I pay a lot of attention to Sonoma County market trends and think this is an excellent time to get off the sidelines and start writing offers on property that fits your needs.

Posted in: Buyer Guide, Cloverdale Real Estate, Cotati Real Estate, Real Estate, Real Estate Guides, Rohnert Park Real Estate, Sales Trends, Stats, Uncategorized, Windsor Real Estate

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