Real Estate Guides – Sonoma County Blog

Raw Land Development in Sonoma County

Sonoma County is facing a shortage of readily buildable lots. There’s plenty of raw land, but there is a big difference between undeveloped land and a buildable parcel.

If you plan to build, you have to determine whether the parcel you are interested in meets the minimum requirements for building. A simple checklist of the mandatory elements for permission to build would include

well or public water
septic or public sewer
fire safety (access in particular)

Expanding that list to suit desirable elements of a modern lifestyles would add:

power
access to shopping
high speed internet
phone service

Expanding into amenities might involve:

views
water features
trees
privacy
quiet

drill — Drilling for water in West Dry Creek Valley

A smart buyer will choose an agent who knows the right questions to ask about the mandatory elements (Not every agent is a rural specialist and many urban real estate professionals have zero experience with country property issues.). Working with their agent, prospective buyers can contact appropriate professionals to develop an understanding of likely development costs. For instance, a well driller could provide a range of depths and the costs associated with wells in a specific neighborhood. Other locations might have deeper or more shallow wells on average, but working with a professional will help provide a realistic range of prices.

Septic systems require occasional pumping

The same approach applies to septic systems. A functional septic system remains one of the critical “must have” conditions for any property to be buildable. A standard septic system is a proven method that requires very little maintenance. It just works. For land that isn’t suitable for a standard system, alternative solutions are available, but they are both more expensive and require annual monitoring by the County. The first step in determining whether a parcel is suitable for a septic system is to get a Registered Environmental Health Specialist (REHS) on the property to being exploring for soils suitable for a septic system. It is rare that a property has zero potential for a septic system, but it does happen. You don’t want to be that buyer.

Completing the mandatory elements for a buildable lot is fire safe access. This is a tough condition to meet on remote, hilly properties. Roads have to be installed that are suitable for fire fighting equipment. Included in the specifications are road width, turn-around spaces at the end of the road, paved sections where the road is steep, bridge capacity and other conditions. It’s common for a raw piece of land to lack great roads, but an experienced agent can help identify the portions of the access that might have to be upgraded to get permission to build a home.

Sonoma County FAQ on well and septic systems

Fire Safe Standards

Saving for a Down Payment

How to Overcome the Challenges of Saving for a Down Payment for Your Home

One of the biggest challenges to buying a home of your own is saving enough for a down payment. Though in some instances it is possible to buy a house with little or zero down payment, nowadays it’s not as common as 8-10 years ago. Plus, your financial advisor will tell you that it is always better to place a down payment of at least 20 percent your buying amount since this will help you obtain the best possible interest rates and you will no longer have to worry about buying Private Mortgage Insurance (PMI).

But this means that you need to come up with at least $50,000 if you are planning to buy a home worth $250,000. How does one go about saving thousands of dollars in today’s fluctuating economic conditions? Read on for the best tips for overcoming the challenges of saving for a down payment for your home.

Plan, plan, plan

It’s never too early to invest in your own home. Establish a timeline for yourself and set aside a fixed portion of your monthly salary as savings for your down payment. Give your bank a standing instruction to transfer this amount from a checking account to a high-yield savings account earmarked for this purpose on the fifth of every month. This will reduce your chances of spending this money elsewhere. And don’t forget to shop around for the best bank with the highest interest rates.

Did you know that a first-time buyer can withdraw up to $10,000 from his individual retirement account without paying a penalty fee for early withdrawal? Find out if you are eligible for this, but then be aware that you will still have to pay income tax on the amount that you have withdrawn.

Track your expenses

Note down each and every expense you make using an online expense tracker for maximum ease and clarity. This will help you understand how much you have been spending monthly on various categories such as food, housing, travel, entertainment and on other miscellaneous items.

If you are spending most of your income on rent, you can consider taking on a roommate, moving in with family or moving into a smaller and cheaper apartment. This might save you hundreds of dollars every month. Or use your reputation as an ideal tenant to get your landlord to reduce the rent. Most landlords are aware that it is hard to find a reliable tenant who makes his payments on time and maintains the property in a good condition.

If travel is taking up a considerable portion of your monthly take-home pay, start car-pooling or use public transportation. Restaurant bills eating up your savings? Brush up your cooking skills and minimize eating out. Shop wisely, make use of coupons at the grocery store and try buying staples in bulk at lower rates.

Cut down on all non-essential spending, such as gourmet coffee, branded clothes, expensive gym memberships and so on. Avoid shopping online and minimize the use of credit cards.
Re-evaluate your cell phone and internet plans if you had subscribed to them a long time ago. Your provider may have come up with new plans or your needs may have changed, enabling you to switch to a less expensive plan. Check your cable package. Are you unnecessarily paying for extra channels than you never watch?

Though these tips may sound harsh, remember that many of these moves are temporary to speed the process of getting you into a home you will love and enjoy for many years to come.

Involve your family

If you are married with children, you cannot cut down on expenses without involving your entire family in that decision. Talk with them openly, discuss the reasons behind your decision and enlist their support.

Choose the right financial advisor

Get hold of the right financial advisor who can evaluate your financial situation and tell you how to boost your savings and reduce your debt. Find out if you can minimize your credit debt by shifting all other balances to a low-interest credit card.

Find alternate sources of income?

It’s not that you cannot buy a house only with one income; multiple sources of income will help you achieve your goal much faster. Work overtime if company is ready to pay you for the extra hours that you put in. Take on a part-time job, or if your profession allows, try freelancing to earn some extra money that can be set aside entirely towards your down payment. You can even earn money running errands for others. The work might be unglamorous and even stressful at times, but the end result is going to be worth it!

You can also try convert a skill that you already have or a hobby into a source of income so that you do not lose interest. For example, you can try working part-time at your local library if you are interested in books. Or if you’ve always been an organized person, you can consider expanding it into a part-time job as a virtual assistant.

Liquidate your belongings

A garage sale may not make a substantial contribution to your down payment savings, but every single penny counts in the long run! Go through your belongings with a critical eye and make a list of all things that you do not necessarily need but which are in good condition and can help you net some much-needed extra cash.

Don’t forget to check out online marketplaces such as Craigslist and eBay which can help you strike good deals for your belongings. The luxury handbag which you bought out of sheer curiosity and the ornate lampshade that someone gifted you five years ago might find some willing buyers online.

Saving money for a down payment is a long drawn-out, challenging process, but not impossible. With smart spending and proper financial planning, you can cut down on expenditures, improve your savings and come up with a sizable down payment without throwing your lifestyle in the dump. And before you know it, you’ll be walking in through the front door of your own home!

Kurt Jacobson is a surfing enthusiast with a background in real estate. Having moved 10 times in the past 7 years, he thrives on helping others learn from his experiences. When he’s not out shredding waves he writes about houses for rent in Norman OK.

Sonoma Housing Demand Pushes Prices Higher

Full price isn’t high enough.

It’s strange to write those words after six months of free-falling home values in 2008 and four years of bumping along a fitful bottom since then.

What we are seeing both nationally and locally is that owner occupants and investors have returned to the market in large numbers. We are seeing record low residential inventories for sale and the emergence of a strong sellers’ market. For buyers, the emerging problem is that the tight inventories may persist. There’s a chance that the improving market may finally convince more sellers that now is the right time to sell, but until the listings start appearing, there are too many buyers chasing too few homes.

I did some analysis of all Sonoma County home sales for the first two months of 2013. Not surprisingly, the lower inventory has produced fewer sales than we had last year at this time. The first chart is for all residential activity, both single family homes and condos. There are three pieces of information in the chart for each month; the number of homes for sale, the number that are pended (meaning a contract is in place and all contingencies have been removed), and the number of homes sold. I know graphs are painful and you probably want to skip over it, but the charts in this post explain a lot about the real estate market, so please bear with me. Look at the light green column for January 2012. It’s the second column in from the left. The number at the top of the bar is 1098. That’s how many homes were for sale a year ago in January. Now look at the corresponding chart for January 2013. It’s the second from the right and the number of homes for sale is 592, a little more than half as many. The dark green columns for January and February of 2012 show sales of 387 and 396 homes respectively. The same months for 2013 show sales of 330 and 319 homes. It’s a significant fall off in sales, but you can’t look at the chart without noticing that there just aren’t as many homes to choose from.

The other piece of data to pay attention to is the red line running across the charts. Those are “pended” sales that show up in the sales figures, typically for the next month, but sometimes longer. They are a leading indicator of where sales are going. You can see that both January and February of 2013 show pended sales that are very strong relative to the number of homes on the market. (Please click on this or any other chart on this blog to see a larger version.)

That chart, believe it or not, has the good inventory numbers. It includes all price points including the luxury estate property in Healdsburg and Sonoma that drives the wine country lifestyle dreams of so many buyers. The battle for the first rung on the ladder of home ownership is fought at entry level pricing. I’m going to arbitrarily call Sonoma County entry level housing at up to $300,000.

Entry level sonoma county residential sales — Sonoma County Residential Sales under $300K

I prepared the same chart as above, but just for entry level housing. This is seriously scary for anyone who wants the American dream of home ownership available to all. Compare January and February of 2012 to the same months in 2013 for the For Sale and Sold columns. The light green of For Sale is almost invisible in 2013, buried behind strong sales represented in dark green. In fact, since April of 2012, the number of homes sold has outpaced the number available For Sale. The trend analysis (red line) shows the market continuing to take off in February of 2012 with more pended sales than available homes. That’s not a tight market. It’s crazy.

When buyers sense a market that isn’t slowing down to let them jump on, they only have a couple of alternatives. One is to stay on the sidelines and continue as a renter or a stuck-in-place home owner. The other is to jump in and grab what they can…paying what they have to. That’s the origin of the lead sentence where I say “Full price isn’t enough”. The final chart is an analysis of the selling price for all the homes compared to the listing price. Other terms for listing price would be full price or asking price. It’s what you see when you look at the price of a home online. What my new chart and the data behind it is telling us is that a lot of homes are selling for more than their full price. If you are planning on jumping into this market, be warned that even if you make a full price offer, there is a good chance that someone else may end up buying the home.

sonoma county residential price chart showing underbids and overbids — Sonoma County Overbids and Underbids

Reading this chart is a little different than the first two. The key element here is a horizontal line running across the chart at 0.0%. That represents the asking price for a home. Any vertical bar above that line means the average of homes sold that day was for more than the listing price. If the bar is under the zero line, people paid less than asking price. The chart starts on January 1, 2013 on the left and finishes at February 28, 2013 on the right. Again, the vertical lines represent the average of the overbids and underbids for three types of properties:

REO or bank owned properties (orange)
Short Sales where the bank must accept less than is owed on the home (green)
None which represents a traditional owner selling their home for more than the outstanding mortgage. (blue)

Take a deep breath and stay with me. This chart is going to help you think about your strategy for buying a home. Let’s start with some clear facts:

The traditional open market home sales (in blue) are typically selling for less than asking price
REO homes are typically selling for up to 5% or more over the asking price
Short sales are likely to be selling for more than asking, but not by as much as REO listings.
The pricing trend line for REO homes is climbing. Pricing designed to get multiple offers is working.

Please keep in mind that these are averages. Different neighborhoods, quality of improvements, lot size, and other factors still play important roles. Learning as much as you can about the inventory and recent trends is key to making a smart offer. Knowing whether you are looking at an REO property, a short sale, or an open market sale will help determine whether or not you will offer over the listing price or not. Knowing what has sold in that neighborhood recently will also be an important factor. Even with perfect knowledge, a great lender, a fantastic agent, and a winning smile, you can still lose out with a thoughtful offer. You may have run into a more desparate buyer who wants it more. You may be competing with an all-cash investor who is willing to pay above market prices to get another rental unit. What is guaranteed is that if you understand what the market is doing, you will be making smart offers in line with current trends. Reading this blog post has hopefully made you a smarter buyer. Putting that brain power to use on your next offer will hopefully make you a more successful one.

Blu Homes Land in Sonoma County

Blu Homes is a pioneer of sustainable, high quality prefab homes. From their manufacturing facility in Vallejo they truck home modules to building sites where a crane loads the sections onto site-built foundations. Contractors then finish the homes in a much shortened time compared to traditional construction. It’s a process that combines the speed and efficiency of factory-built components with the flexibility of traditional stick building for foundations and other components on-site.

Blu Homes is an active presence in Sonoma County with many homes already completed and others in process. Most of the conditions required on a lot or raw land to build a traditional home or a Blu Home are the same. The main additional consideration for a Blu Home is that the roads have to be suitable for trucking the long modules and capable of handling the load of a heavy crane. Watch this great video of a Blu Home being installed in Healdsburg.

Potential Sonoma County sites for Blu Homes. These properties have not been checked for road accessibility or suitability for a home, but are simply listings of land for sale over one acre. For a more specific search or details on any property you find here, please call (707) 869-1884 or email Dave Roberts.

Blu Homes in Healdsburg

Blu Homes in Healdsburg. It’s a match made in heaven. Blu Homes are a great example of smart, green construction and Healdsburg in the heart of Sonoma County’s wine country is a fantastic place to live…and eat. Sunset’s 2012 Idea House has been attracting large numbers of visitors every weekend during August. Sunset is keeping the house open to the public until September 9, so you still have two weekends to see this wonderful example of a green, precision-built home. The Idea House is a finished product, but you also have a chance to see (from a distance) the house next door, a Blu Home in the making.

Many of the people who have looked at Sunset’s Breezewood model Blu Home are now looking for land in Healdsburg and Sonoma County to place their own Blu Home. There are always lovely parcels available for buyers who want to build their own wine country dream, but it may take some persistence to find just what you are looking for. I think one would fit just perfectly on my listing at 1240 Emerald Ranch Road, for instance. That’s a site that already has underground power and water, paved roads, and an approved septic design.

If someone is dreaming bigger, the 201 acres at 11450 Los Amigos Road has enough room for five Blu Homes and all the associated granny units, guest houses, and other outbuildings that can accompany each one. You could also plant more than 50 of the acres to grapes on the beautiful, oak-studded meadows. The land is in both the Russian River and Chalk Hill Appellations.

From a real estate perspective, the construction of any house is the last in a long series of steps necessary to find a lot, make certain it is well suited to your goals, create plans, get permission from the local authorities to build, hire a wide variety of sub-contractors to prepare the site, bring in power, find water, create a septic system or hook to the sewer, etc. It can easily take one or two years from locating your ideal site until you can actually build unless you buy a lot that already has the infrastructure in place.

If you have any questions about how to get started with building your own country getaway with a Blu Home or just want to find out more about real estate in Healdsburg in Sonoma County, please give me a call at 707-869-1884 or send an email.

2 Acre and larger property for sale in and around Healdsburg.

11450 Los Amigos Road below

Russian River Valley Appellation Land — 201 Acres in Healdsburg