Today’s housing market predictions for the Napa Valley real estate market, broken down and digestible, by Rutherford Napa Homes
Welcome to the second monthly edition of Inside Housing Market Predictions! This month we focus on the million dollar question: when is the best time to buy a house in wine country?
Single Family Homes:
- Year-to-year, the 3-month rolling average median sales price, $733,333, is up 3.8%
- Year-to-year, the 3-month average inventory is up 27
- Year-to-date, new listings are down 3.2%
- Year-to-date, sales are up 2.5%
- The median percent of list price received was 98% in July
Condos and Townhomes:
- Year-to-year, the 3-month rolling average median sales price, $501,000, is up 16%
- Year-to-year, the 2.5-month average inventory is up 67%
- Year-to-date, new listings are down 2.5%
- Year-to-date, sales are down 3%
- The median percent of list price received was 96% in August
Our Opinion: Best Time to Buy a House?
Best time to buy a house? For many, this is the million dollar question, and the real estate market is nothing if not unpredictable. Nothing is guaranteed. That being said, buying a home can be done in a fashion that mitigates risk. Jumping to the point, we’ll come right out and suggest that most readers asking said question about buying real estate in wine country should look with the intent to buy now. Last month, we detailed a potential buying strategy for today’s market, as well as a few reasons that remain largely relevant today. We will expand upon our position this month, so continue on if you’re ready for a deeper dive.
Winter months are considered slow movers; will you get a great deal then? Not necessarily. Conversely, summer months are expected to pick up, but after a hot spring, we saw a significant downtick in wine country this year. The same homes selling immediately upon listing in April or May might not have moved in August; a condo of ours sold for 4% over asking prior to it even listing, but similar condos have been sitting on the market all summer. The real estate market is ever unpredictable, and a curve can take a turn for better or worse based upon unforeseeable factors; days on the market can give way to a bidding war. Everyone’s guilty; losing sight of the big picture, we once even got into a bidding war over a silly rain coat on E-bay, only to find an identical one for half the price (we’re rarely thankful to lose, but will happily take an “L” there). Homes selling below list today might spark a bidding war tomorrow, and that’s life, but we can still make solid decisions that will almost certainly pan out over time, regardless of what markets do. We’re going to point a few things out that ought to help provide understanding and guidance in today’s wine country real estate market.
Let’s look at rates. Even though interest rates recently went up yet again, indications are that rates will keep rising for the foreseeable future; you’d be wise to look for another bump later this year. To see where that puts us historically, we referenced 30-year fixed rate tables going back to 1971 on a FreddieMac webpage. At the bottom of their page, you can click to see 15-year or 5-year tables. Prior to the debacle that was 2008, you could go all the way back to pre-Woodstock (1969 for those that aren’t familiar) years and still not see today’s rates; we checked clear back to 1964 to be sure, although we were already awfully confident!
What does this mean for those of us that don’t have calculators in our heads? Well, if you took a $500,000 loan out at last August’s going rate, 3.88%, you’d have been looking at forking out $2,353 per month. This past August, 4.55% would run you $2,548. The difference amounts to $2,340 per year, and your total mortgage cost would have gone from $846,942 to $917,389. While rates may not rise as much in the next year as they did the previous, it is not unreasonable to think that they may; in August 2016, they were at 3.44%, for reference, so the increase rate has accelerated.
Sellers, we didn’t forget about you. In a recent interview that Trish McCall with the McCall Team was kind enough to sit down with us for, Trish did a great job of showing viewers where we are at in the buyer’s/seller’s market cycle, complete with a bell curve illustration. In sum, we agree with Trish in that the wine country real estate market is correcting a bit right now; in layman’s terms, prices are going down. We also agree that this is unlikely to be an extreme correction, such as we’ve seen in the past. We see this correction being largely offset by limited housing options and an increasing population. Our strong local economy certainly doesn’t hurt. It’s rarely both a good time to buy and sell, but if you are looking to sell with the intent to buy up, we think it is likely a great time for you, on account of the rates and current housing prices. If you are looking to sell with the intent to downsize, you likely have quite a few things to consider that might influence your ROI (return on investment) when making this decision.
On that note, and until next month, have a wonderful time. Life’s truly big decisions (we’re obviously talking about frozen yogurt options, whether or not to cut the cable television cord, and soup versus salad) are never easy, but hopefully we can help to inform our audience and take some of the anxiety out of some those that pertain to property purchases here in beautiful wine country. As always, we are glad to have you here! The Rutherford Napa Homes team sincerely wishes that whatever you do, you do it well.
Stay Tuned to Inside Housing Market Predictions
Each month we will bring you a new report that breaks down the Napa Valley Real Estate housing market. Is there a certain aspect of the market that you would like us to take a deeper dive into? If so, please leave your suggestion in the comments below. Thank you in advance from everyone at Rutherford Napa Homes for helping us provide you with the real estate news you want to read!
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The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.