Leaving the Bay Area for Greener Pastures (Literally)
Last Sunday I held open a wonderful country property in Sebastopol, listed by my good friend and colleague Izetta Feeny. It is a great value, a four bedroom house on nearly two acres withing good commute range of San Francisco. The family that currently owns the house home schools their four children there and there is an assortment of goats, chickens, geese and two miniature donkeys and four big dogs that round out the family. The house is nicely situated on a knoll with 360 degree views of the surrounding countryside and hills. This morning I bet they can even see snow on some of those hills. As the house is set at the end of a series of country lanes, I was curious how people found me. It turns out that all of the eight parties or so who came by had found about the open house via our on-line ads. People had driven from as far as Fremont and Oakland with their children to see this one house, and one person came with her realtor. We had a great time chatting and comparing notes. In 1998 I was doing the same thing, driving up to look at properties on weekends from my home in the East Bay. Like me many of these people were looking for a different lifestyle, but concerned about what they might give up by being "so remote". I had to laugh because I certainly don't feel that way any longer. Seems like a lot of people want more room to roam, either for themselves, their children or their four legged friends....
A Tale of Two (or Three?) Markets in Sonoma County Real Estate
As we enter 2008, everyone is wondering what this year will bring for the real estate market.  Typically January sees relatively low inventory levels as sellers wait to bring their homes on the market for the conventionally busy spring buying season. Many properties that didn't sell in the previous year are withdrawn for the holiday season and brought back on in the new year.  According to Ann Scherbert's post, the situation is similar in parts of San Francisco. How to know what to expect as spring comes on?  In looking at this winter's inventory levels, it is interesting to see the disparity in three distinct Sonoma County real estate markets.  Market activity here varies greatly depending on location and price point but some cities on an aggregate level appear to be more hurt by the slowing market and morgage trends. For example, Santa Rosa inventory levels are down this January over the peak last summer and fall. However there are nearly 1100 single family homes for sale versus just over 700 at this time last January.  There remains a lot of undigested inventory from last year and some incredible bargains are to be had. In Healdsburg and Sebastopol, levels are very similar to last January's, and still showing a seasonal adjustment.  What do you think that bodes for each marketin terms of prices? You can see that in Sebastopol, inventory figures have trended down from a peak in August of 2006 and are actually over 10 percent lower than a year ago at this time.   Healdsburg inventory levels are just slightly (10%) higher than last January with a much smaller sample size than Santa Rosa, certainly within the same ballpark as a year ago. Both Sebastopol and Healdsburg are smaller communities than Santa Rosa, and real estate values there tend to trend higher and to attract a higher percentage of second home or lifestyle buyers than Santa Rosa as an overall percentage of sales, whereas Santa Rosa has a much larger chunk of entry level homes and larger scale housing tracts, which have been more impacted by the subprime mortgage crisis.   How will this glut at the lower end ultimately effect our higher end market?   Kevin Boer has an excellent post on this phenomenon in the mid-peninsula market of the San Francisco Bay Area. I'll comment in more detail on this topic and prices in another post....
How storms cause power outages
As I sit here in my office contemplating the extraordinarily heavy rains falling at the moment, the first of 3 expected to hit Northern California in the next few days, I am checking my supply of batteries and flashlights, firewood and dry hay and feed for the horses. They are safely blanketed with water-proof sheets and two are standing out in the open, the third intelligently under his shelter. Thought I'd take a look at PG and E's website to see what they suggest for storm preparation, and found this neat new animation about all the various ways our power can go out during a storm. I hope you are staying dry and warm, unless you are a horse!...
Entry level buyers gain success not realized 2 years ago
I heard a great story from one of my wonderful colleagues, Delia Nieto at Coldwell Banker yesterday.  I spotted her meeting with clients in the office so that they could remove all contingencies on the purchase of their first home, priced well under $500,000 in Santa Rosa.  They have rented the same tiny apartment for 6 years and are bursting at the seams with 3 children. Two years ago at the peak of the frenzied Sonoma County real estate market, the median home was priced around $600,000. Although this family worked closely two years ago with Burbank Housing , a Sonoma County non-profit that works with low-income residents to get them into affordable housing, their jobs as a special needs teacher and landscaper did not quite qualify them to buy at the peak prices.   But the downward spiral of entry level prices and their diligence over the last two years, as well as the Acorn Housing Loan program offered in this case in conjunction with Bank of America  are enabling them to buy their first home. Through the Acorn program they each took numerous classes in home ownership and responsible credit management.  Meanwhile, the house they would have paid $540,000 for two years ago, will now cost them $460,000!   Astonishingly, Bank of America's appraisal for this same house for their CURRENT loan, came in at a hefty $530,000. Delia and I are both puzzled but this occurence, but her very happy clients will take it.  Meanwhile, yesterday's Press Democrat newspaper's front page story, confirmed my little anecdote as a trend.  Buyers' market People priced out in recent years jump in as costs fall, supply rises  Nice to see the press making some lemonade (along with smart first time buyers) of the current market....
Why shouldn't consumers have access to sales data?
Some local MLS's (multiple listings services) are now starting to enable consumers to search "sold" listings as well as actives and pendings. This has been a controversial move for the old guard in real estate, stemming from the days when the licensed realtor high priests held data to themselves and were able to pronounce as from the Oracle of Delphi, what property values might be for a given potential listing or buyer purchase. Not hard to hold that data tight to your chest when the only access was the printed MLS book updated weekly. A little impossible to defend in the days of Zillow, etc.  Personally, I want my clients to have as much information as possible so they can make informed decisions, and we work as a more powerful team that way....
I knew the deal was in trouble when…
... we noticed that the claw foot tub in the guest bathroom was supported by foam blocks and the home inspector had not noticed. My contractor husband came by to inspect the property informally with me as I performed my agent's visual examination.  This was a new home in the country outside NW Santa Rosa, with fantastic style and my clients fell in love with it on-line and we wrote an offer after they flew in from San Diego to see it in person. It stood up at first glance and matched their on line infatuation.  Kind of like a successful first encounter after meeting on Match.com! Anyway, the home had been built on spec by an architect and built by himself and his buddies, we later found out.  Something didn't seem right somehow--it had never been occupied and had been finalled by the county inspectors earlier in the year.   When Bruce (my husband) came by to look at the property (unofficially--i.e. not retained by my clients) he was able to point out a large number of items that had either been done improperly or were never finished. For the most part, they were minor but added up to a huge punch list. Given that the property had been "finished" nearly a year earlier, that was cause for concern. The most egregious item was the aforementioned claw-footed tub. Bruce was able to easily tap the foam supports away and said, "Can you imagine what would happen the first time the tub was filled with water?" Apparently the only thing supporting it was the exposed drain pipe running down to the subway tiles!   While we called for an official plumbing inspection to further investigate, my clients tossed and turned and lost a lot of sleep until we decided that the best course was to cancel the escrow due to the results of their investigations.  That was in August of 2007. The house is still on the market, but on November 30, my clients closed escrow on a FANTASTIC new home in Healdsburg built by a very successful and conscientious builder. There was a happy ending after all.  My husband, the contractor, said that oftentimes in new construction, it takes a large cast of inspectors to really evaluate a property.  I am not so sure, and have changed home inspection companies....
Sonoma– the brand–tea kettles to purses
As a relatively recent (1999) transplant to Sonoma County, I don't need to be sold on the Sonoma County lifestyle. I do spend a lot of time with out of town country property buyers showing them what makes Sonoma County special to me: the stunning views, fabulous food and wine, the gardening paradise and fabulous places to ride and a very active equestrian community. According to yesterday's Press Democrat, much of the US is taking it's appreciation of the Sonoma lifestyle national. "The name Sonoma can now be found on everything from field glasses by Tasco to a lounge chair at Ace Hardware, tableware by Thomson to tea kettles by Farberware. Coach, the ultimate name in aspirational handbags, featured a Sonoma line of natural grain leather purses that sold in the three figures. Men can order a pair of H.S. Trask "Sonoma" loafers for $170. "Sonoma" is one of the leading house brands for Kohl's Department Stores, putting Sonoma on blue jeans and bath towels. Montgomery Ward is peddling a Sonoma line of furniture. The even more well-heeled homeowner can capture a bit of Wine Country glamour by logging on to PoshLiving.com and ordering up the "Sonoma" wicker and mahogany outdoor bar set for $3,263." "Co-opting cachet Sonoma carries what marketing experts call "geographic equity." Manufacturers, restaurants and retailers can gain an immediate response from consumers, even without marketing, by co-opting the cachet of a place, even if the product was made in China and has no connection to the area at all, said Damon Aiken, a professor of marketing at Western Washington University, who has studied the phenomenon." Apparently Napa doesn't carry quite the same cachet with marketers, being a measly two syllable word, which aside from the obvious wine connotations (an area in which it pre-dates Sonoma in fame--remember the old Sonapanoma Mendocino ads? That will really date you if you do--Italian Swiss Colony ads from the 60's cashed in on Northern California cachet.) Napa apparently resonates with branding experts and marketers in terms of car parts too--less appetizing if you are planning to open a trendy eatery in Washington DC, Dallas or New Zealand.  What do locals think of this exalted marketing status?  Considering the fact that tourism brings over a billion dollars into Sonoma county businesses, more than doubling from $500 million in 2000, and one of the top 3 industries in the county, along with wine and technology, it can't be all bad. More on this later. "...
Setting: the Wild Card in Country Property Values
Pricing residential country property is very challenging-there are so many variables to consider beyond beds and baths, square footage and age, location and condition. The size and condition of the septic system, the condition of the well and its capacity and water quality, zoning, expansion possibilities and more. (If you would have told me back at Swarthmore that I would become reasonably expert in any of these issues --especially septic--I would have doubted your sanity. Since a good 70 percent of the properties in Sonoma County are on well and septic, one of the most valuable services I can offer my clients is my ability to work with them, along with a team of experts  to carefully ensure that a property will be suitable for their needs, now and the foreseeable future. There are many great resources and people available to assist in the process, and an agent knowledgeable in country property can streamline the search and buying process for their clients, and help them to avoid pitfalls. But the true wildcard in valuation of country property is the setting. An exceptionally private, serene setting with pastoral or dramatic views, in a tranquil location of (name your pick) wild hills and orchards, vineyards, horse farms, quaint farmhouses, redwoods or oak-studded hills, or various combinations of these, have a perceived value to the buyer that is very difficult to value. It seems that many out of town buyers coming to a wonderful destination such as the wine country of Northern California, all want the proto-typical vintage farmhouse with wrap-around porch in a scenic setting. They dont't want to see or hear neighbors close by, and they'd probably like to see (or own) a vineyard or two.  Is the setting wild card factor worth $20,000 per acre, or more? Will a property be so gorgeous or secluded that someone will "overpay" by six figures? Is it really over-paying if a willing buyer puts the money on the table? A client and I  viewed a property priced at $1.1 million the other day that perfectly met my buyers' needs for a weekend home in Sonoma county. By all rights, and based upon extensive touring, the property, in my opinion and the opinion of many agents I know, should have been priced under $1m, possibly closer to $950Kor $925K, even if in perfect condition. However, it was exactly a kind of property that would be a perfect weekend retreat...
Factual versus Actual: The Bay Area Real Estate Tide floats Sonoma County's Real Estate Boat
Have you ever visited the US Army San Francisco Bay Model? It is really great to see when the model is running and you can view the really complex tidal patterns that circulate through San Francisco Bay--I had the chance once when I attended a sailboat racing lecture there--tides being really critical to your success racing on SF Bay. With Homescopes, I hope that we can use our informal network of agents on the ground, to help us as a region get a feel for the ebbs and flows of our inter-related Northern California marketplaces. Many of us in the real estate market in the North Bay are fairly convinced that our market in Sonoma and Napa is very influenced by the strengths and variations of the Bay Area real estate market whether in terms of general trends (Hot, Cold or Indifferent) as well as localized effects such as the tides of Palo Alto and the Peninsula, San Francisco and the East Bay Insterstate 80 corridor. I spoke to my friend Izetta Feeny yesterday, a long time Coldwell Banker agent in Sonoma County and shared with her the 3 Ocean's Real Estate recent post about rapid median price apprection in Palo Alto and other selected markets in the Bay Area. "Oh! That's good," she said, "That means we'll see the effect up here in 18 months." As if the rising tide of the heart of the Bay Area's market would eventually ripple north to Sonoma and Napa counties and lift our boat. When our boat is eventually lifted by the Bay Area high tide, we attract at least 2 types of buyers from out of town: entry level buyers who can't afford to live where they work in Marin or San Francisco, and upper-tier buyers with equity in strong, competitive Bay markets that want a lifestyle change and move here full time, or who are looking for a weekend getaway or wine country estate. As the most desireable markets in the Bay Area are strong, then we see a more immediate impact on the markets that will serve the budding country squire (and squire-ess). Virtually all the buyers I have worked with this year fall into this category of new "lifestyle" immigrants to the wine country. As you view the upper quartile median price points for many of Sonoma County's cities (well, towns), the cities with the most cachet for out of town...