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Wine Country Market 
Real Estate Trends November 2013

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By Gerrett Snedaker

Garret Snedaker

Garret Snedaker

There is an interesting article I read recently that deals with the impact of “Single Family Rental Properties” – those that have been bought up by investors over the past four or so years and are being used as rental investment properties.  In part, the article says:  “The fundamentals that gave birth to the single family rental business are now turning the other way… home prices are beginning to rise, credit will loosen for entry-level homebuyers and the economics justifying the entire trade continue to become less compelling.  It simply becomes too expensive to grow one’s portfolio when the economy is in recovery mode, much like investing in distressed debt.  While existing owner/operators that have already amassed portfolios will benefit from their rising value, I expect to see a decline in the overall business as these operators eventually choose to exit through individual asset sales,” said Bobby Lee who is President and COO of the Los Angeles-based JRK Property Holdings Company that manages hotels and apartments.  To read the whole article, visit: https://www.biggerpockets.com/renewsblog/2013/11/29/five-reality-checks-single-family-rentals/

Sonoma County: Sales dropped by 26% from last month and inventory of unsold homes dropped 19% from October in Sonoma County.  There were 702 homes and condominiums for sale at the end of November compared to 871 at the end of October.  Inventory is the same as the inventory of November 2012 (703).  New sales in November (427) were below the pace of last month (574) and 3% below the pace of November last year (440).  New listing activity fell to 282 units for the month compared to 458 last month and 356 in November of last year.  That’s a 21% decrease from last year.  There is a 1.6 months supply of inventory based on the existing sales pace – still a tight market.  Properties continue to sell at a quick pace with the closings last month being on the market an average of 73 days compared to 97 days on market a year ago.  The median price of homes closed in November in Sonoma County ($435,000) was 24% ahead of the median price of a year ago ($350,000). The low median price over recent years was $292,000 in February 2011.  The market has rebounded 49% since that low but remains 26% below the high median price of $589,000 in June 2005.

Distressed properties (foreclosures and short sales) currently make up just 7.5% of the inventory and 15% of the new sales – this is a bit higher than it has been in recent months.  One year ago, the distressed property inventory represented 15% of the overall inventory and distressed sales represented 32% of all new sales.  There is 0.8 months supply of inventory of distressed properties based on the current sales pace.

Sonoma County Luxury Homes: Sales of luxury homes (sales price in excess of $900,000) in the Sonoma County have enjoyed a strong growth in activity in the last twelve months.  There has been a 30% increase in the number of luxury homes closed (395) from 12/1/12 to 11/30/13 compared to 304
from 12/1/12 to 11/30/12.  There were 33 new luxury home sales in November 2013 compared to 14 in November 2012.

Sonoma Valley: Inventory (86) dropped 27% from last month in the Sonoma Valley (Sonoma, Glen Ellen and Kenwood).  The inventory is 14% below the inventory a year ago (100).  The new sales (38) in November are 37% below the pace in October (60) and about equal to the pace of last November (37). There is a 2.3 months supply of inventory based on the current sales pace.  The days on market dropped to just 52 days in November compared to 108 days a year ago.  There are only 3 distressed properties (bank-owned, short sale or foreclosure) available in Sonoma at the present time and one new distressed sale in November.

If you would like a monthly update of this information, or information on other market areas, please drop me an e-mail at gsned@winecountrygroup.com