Grace Properties Real Estate News
April 19 2012
Sonoma County Real Estate Market at a Glance
Financial experts from Warren Buffet, Moody’s Analytics, Barons and many others are calling for 2012 to be improved housing on the verge of a recovery. Here are some of their comments and others I have added:
• “I think it’s a leveraged way of owning a very cheap asset now and I think that’s probably as an attractive an investment as you can make now.” Warren Buffett
• “The improved tone of housing data buoys hopes that the market may be on the verge of its long-awaited recovery.” Moody’s Analytic
• “Our outlook anticipates gradual, but steady, improvement in the economy and the housing market supported by low interest rates and brightening job market prospects.” Freddie Mac
• Recent Press Democrat headlines indicated sales are up over last year but the average price is basically unchanged from 2011. There are a number of reasons for this but consider the following:
1.) There were 547 sales from$200,000 to $299,999 in 2012 and 359 in 2011
2.) There were 373 sales from $300,000 to $399,999 in 2012 and 294 in 2011
3.) In 2012 there were only 518 sales from $400,000 to $4, 00,000. The investor money is going into the $200,000 to $325,000 range because these homes pencil out. Everywhere you look there are articles on owning rental housing as a good long-term investment and a good hedge against the equities market. There will come a day when inventory will dry up and prices will move up but at present the investor market is hot.
4.) Short sales will continue to surpass foreclosures. Last year in September of 2011 short sales matched REO’s and in March of 2012 there are close to twice as many short sales under contract as REO’s. The short sale process it still a difficult one for a myriad of reasons but it is bound to improve as lenders see the short sale as a more economically viable alternative to a foreclosure sale. For the next few years this will put pressure on the rental market as the short sale owners turn to renting. How the lending marketplace deals with lending to these “displaced owners” is yet to be determined. I suspect it will be 2-3 years and we will have loans available to all creditworthy buyers.
So 2012 will be an improvement and we will see multiple offers on properties from $200,000 to $325,000. We should see some gain in the step-up range by mid-year.
As always, call me if you have a question or a referral.
Mike Grace, Broker
1258 Parsons Dry
Santa Rosa, CA 95404