Remember from my July 18th post “Napa Valley Real Estate, a Tale of Two Times Two Markets“ was the number of distressed sales (in foreclosure, a short sale or a bank owned property, REO) increasing for homes priced $800,000 to $2,000,000, especially up valley. By up valley I mean the Cities of St. Helena, Calistoga, Angwin, Deer Park, Oakville, Rutherford and the Town of Yountville. Today, there are 5 distressed sales of 80 active listings in this price range, compared to 5 of 80 on March 1st. Keep tuning in for this as a new monthly stat I will regularly tract from now own. Next look May 1st.
I have been tracking this for six months now. The motivation for my doing so started by the constant rumor I would listen to when talking to many others in the real estate business, my fellow agents, loan brokers, escrow people, heck even an occasional office manager would warn us about this happening. Even the press got into the act. The local paper, The Napa Register, running two articles on February 23, 2010, “Million-dollar bargains?” and “Distressed real estate market creeping into larger properties“; and the Los Angles Times article on February 19, 2010, “High-end home sellers lower their sights“. With this type of hype, buzz no wonder it was easy to feel the “sky was falling”.
The only thing I can say, the facts are proving this wrong. Since I have been reporting on the facts, November 2009, the numbers have been 3/89, 2/76, 3/79, 5/80 & 4/81. Yes I realize I said six months and there are only five numbers. I missed December of last year, sorry!
The only conclusion I can draw, the inventory is down and this is consistent throughout the Napa Valley, and yes there are a few more distressed sales but the world is not falling apart here in paradise. I even checked the number of solds for the last six months for the same dollar range of distressed homes and there was only one.
Tune in next month and see if this trend, or should I say lack of one, continues.
Arn Cenedella says
April 1, 2010 at 7:08 pmCurtis
Yes, some folks and most of the media like to claim “the sky is falling”.
I have been selling real estate on the SF Peninsula since 1978 and so have seen many markets.
The “collapse” of the real estate market in recent years has been in areas and communties where the majority of purchases were at prices around $700,000 and below where sub-prime financing was the norm.
The no money down no asset or income verification loans – you get a loan if you can fog a mirror – typically maxed out at about $650,000 or $700,000. Above that loan amount, typically you needed to verify income and make a down payment.
So the loans that have gone to foreclosure or short sale are NOT on properties that cost $800,000 or more.
So the areas that have been hit with the highest rates of foreclosures and short sales are the areas where homes AT THE PEAK of the market could be bought at $700,000 or so and below.
On the SF Peninsula, most communities have average sales prices above $1,000,000. In these communities, foreclosures and short sales are very rare – maybe 4 or 5 a year at most. In these communties, prices have dropped maybe 10% to 15% at MOST.
In the more affordable or lower priced areas of the SF Peninsula – East Palo Alto, east Menlo Park, east Redwood City, and east San Mateo – where prices at the peak approached $600,000 to $700,000 – these areas have been hard hit by foreclosures and short sales. In these communities, prices have dropped almost 50%.
The other area you find lots of foreclosures and short sales are areas where there was LOTS of new construction and again prices below $700,000 – some areas of East Bay – Central Valley.
As the saying goes Location Location Location.
So while certain segements of the market have been hit hard, most have not.
Keep tracking Curtis – the sky is NOT falling.
Actually, we are starting to see MANY multiple offers on the Peninsula. Market has probably hit bottom.