2011 NorthCountyFourth Quarter Real Estate Review
The first step in the recovery of any market is velocity….the number of transactions that are taking place. Sales have to materially increase before any price appreciation can take place. NorthCountyhome sales increased 33% in 2011 over 2010 sales. We are looking at the first step toward positive market movement.
Perhaps the most exciting statistic is residential single family homes topping the 1000 unit mark for 2011. Equally impressive is the stability of the average price throughout the year at $260,000. What makes this stable pricing more remarkable is the fact that over half of the home sales were foreclosures or short sales.
Homes on acreage sales fared equally as well. The 351 unit sales represented a 20% increase over 2010. Again the average sale price of $484,000 was identical to the average sale price at the end of 2010.
Lots and land sales were up over 30% but pricing dipped 9% on a year to year basis. With homes selling below replacement cost the demand for raw dirt remains weak and extremely price sensitive. A large component of the raw acreage buyers, the development community, remain on the sidelines. Raw Westside plantable acreage is heating up in demand as is the price of plantable eastside ground. Wine grape demand is in balance and there were some major acquisitions of large acreage by high quality wineries in 2011.
Speaking of the wine industry, there is no more important economic engine in NorthCountythan our wine industry and grape growers. High quality wines and high quality fruit continue to be in demand by consumers and wineries. Tourism and tasting room sales are better than expected. We also know that the grape buyers are all ready courting the grape growers for the 2012 crop which is great news for our local economy all around.
Commercial real estate is still soft but residential sales will drive commercial real estate improvement in the NorthCounty. Home buyers purchase many other goods and services when buying a home. Like anything else there are winners and losers in the commercial arena. Occupancy appears to have stabilized with landlords aggressively retaining tenants through rent concessions. There are still plenty of vacant spaces but the bleeding appears to have stopped.
There is a large enough body of work for most sellers to gauge the value of their real estate. Foreclosures and short sales will continue to dominate the inventory. The number of homes actively for sale is down 30% from 2010. This inventory number will mean firm pricing over the next few months. In fact it’s hard to make a case for any price deterioration in any category over the short term. How quickly will pricing recover? We cannot answer that question based on today’s market conditions.
Buyers and sellers are getting on with their lives. The lending market is still slow and difficult but as agents, we work hard at closing every sale. No matter how tough the loan process may be. But things will change. More and more people are getting on with their real estate decisions every day. And every sale we close brings us one step closer to a balanced market which IS in our future! We expect to see continued improvement in our market in 2012. Happy New Year!
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