Napa County Real Estate Prices, Market Trends - Compass

Napa County Real Estate

Home Prices by City; Short-Term & Long-Term Appreciation; Migration In & Out of the County; Price Reductions; Supply & Demand

September 2019 Report

------------

Home Prices & Appreciation

Trends by City

Short-Term & Long-Term Trends in County

Median Home Values

People Moving In & Out of Napa County

Using new U.S. Census estimates released 8/29/19, this chart attempts to identify U.S. counties, states and international regions with the highest number of residents migrating to and from Napa County. In the Bay Area, there is a general trend outward from more expensive to more affordable places, while in-bound migration is deeply affected not only by exchanges between Bay Area counties, but people arriving from other parts of the state, country and world. Areas often have large two-way exchanges of residents.

Selected Market Statistics

The chart below compares supply, the number of active listings on the market, with demand, as measured by the number of sales. This is a seasonally adjusted graph that smooths out normal monthly fluctuations to provide clearer historical trend lines. As context, the data below begins in 2013, after the market recovery was already well underway. If the data went back to the 2009 – 2011 period, during the post-crash market recession, the divergence between the two lines would be much, much greater than at any time illustrated here.

Napa County Real Estate

Sales & Values by City, Price Segment & Lot Size; Luxury Home Sales; Market Seasonality; Market Indicators by City; Foreign Homebuyers

August 2019 Report

----------

A Breakdown of Sales by Price Segment

Sales, Prices & Home Sizes by Lot Size

In San Francisco, houses selling for $8 million and houses selling for $800,000 can both be found on lots under 1/8 of an acre. In Napa and Sonoma Counties, lot size is a major factor in home size and price.

Higher-Price Home Sales

Seasonality, Inventory & Buyer Demand

New listings coming on market, the total number of active listings, and the number of listings going into contract - these all ebb and flow very dramatically by season. Activity typically peaks in late spring or summer, then begins the decline that hits its annual low point in mid-winter.

Though year-over-year inventory levels have been higher than in the past two years, they are not particularly high by historical measures.

As measured by listings going into contract, it was a strong spring. (These numbers will adjust downward a bit if transactions subsequently fall out of contract before closing sale.)

Selected Market Indicators by City

Though there are many factors at play, it's not unusual for more expensive markets to have softer dynamics as measured by the 2 standard statistics below. The more expensive the home, the smaller the pool of potential buyers. It is also true that more expensive markets are often more prone to overpricing. These are generalities: Some high-end listings grab buyers' attention and sell quickly.

Market Dynamics by Price Segment

Around the Bay Area in recent years, the supply and demand dynamic has often been closely associated with price range. Generally speaking, buyer demand as compared to the supply of listings available to purchase has been weaker as homes get more expensive.

In the $2 million to $4 million segment, for every 10 homes that sold in Q2 2019, 8 were pulled off the market without selling.

Home Purchases by Foreign Nationals Tumble

According to a new report by the National Association of Realtors - based on a survey of its member agents - the purchase of U.S. homes by foreign nationals plunged in the 12 months through March 2019. California, and the Bay Area in particular, have been top destinations for international homebuyers.

Stock Markets Hit a New High

The last 12 months have been an extremely dramatic time for financial markets as illustrated below. The alternating confidence and fear generated by its swings have been considerable factors in real estate markets. A parallel dynamic has occurred with the large swings in interest rates.

Napa County Real Estate

Quantifying the Spring 2019 Market

July 2019 Q2 Report

Napa County Median Home Sales Prices

The county Q2 2019 median house sales price was a tad above that of Q2 2018, but remains below the peak reached last summer.

Home Sales by Property Type & Bedroom Count

Sales Volumes: General Market

& Higher Price Segments

For the overall county market, spring sales volume in 2019 was a little above spring of last year, but both were down from levels seen in previous years. In 2018, Napa home sales volume peaked for the year in Q3, the summer market.

As illustrated in the next two charts, sales of higher priced homes peaked in the second half of last year. Year-over-year, Q2 2019 sales were well down from Q2 2018.

In the $2 million+ market, there were twice as many active listings in Q2 as sold in the last 12-month period. This price segment is deep in "buyer's market" territory, with supply currently out-pacing demand.

Selected Market Indicators

The market strengthened considerably in spring - as is typical - but, generally speaking, standard measurements of demand show an appreciably softer market year-over-year. This is a very common dynamic around the Bay Area.

Overpricing: Negative Effects for Sellers

& Opportunities for Buyers

We performed longer-term analyses of the effects of overpricing - as indicated by the need for price reductions before the property sold - on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also substantial differences in the average dollar per square value realized upon sale.

Overpricing lowers values for sellers, which also signifies opportunities for buyers who keep an eye out for price reductions and react accordingly.

Mortgage Interest Rate Trends

A sudden, steep drop in interest rates since late 2018 has reduced home ownership costs considerably for home buyers, thus helping to increase demand throughout the country.

Link to Bay Area Home Price Map

Napa County Real Estate

Sales & Prices Increase as the Spring 2019 Market Heats Up, But Inventory Up and Sales Volume Down Year-over-Year.

June 2019 Market Report

Median House Sales Price Trend

In 2018, the median house sales price peaked in August, which also saw the highest number of monthly sales during the year.

Sales Volume Trend

March-May Year-over-Year Comparisons

Comparing March-May of 2019 with the same period of 2018, median sales prices were up a little and average dollar per square foot values down a little. Both are mostly explained by the 3% increase in the median size of homes sold: Larger homes will typically sell for higher prices (of course), but lower dollar per square foot values.

The Napa market held up fairly well year over year, but saw some softening in most of the indicators of supply and demand.

Higher-Price Home Markets

Looking at the Napa markets for homes from $1,000,000 to $1,999,999, and for homes $2,000,000 and above: In May, both hit new highs in the number of active listings on the market. Though the number of listings priced $2m+ outnumbered active listings in the lower price segment (first chart below), the number of sales in the more expensive segment were far lower (second chart).

Median Home Price Changes -

Selected Napa & Sonoma County Cities

Comparing annual median home prices to partial year prices is not really an apples-to-apples comparison because of the effect of market seasonality on sales prices, and in Napa, the issue is further complicated by how few sales some of our communities had over the last 5 months.

Note that full-year 2019 median home prices may be significantly different than the year-to-date figures.

Median House Sales Prices by Bedroom Count -

Houses on Lots of 2 Acres or Less

Average Dollar per Square Foot Values -

Houses on Lots of 2 Acres or Less

Click on the button-link below to go to our updated map of Bay Area median house prices.

Bay Area Home Price Map

Selected Market Indicators

Besides providing context to market dynamics over recent years, these next 2 charts also are excellent illustrations of the extreme seasonality of the Napa County real estate market: Supply and demand usually climbing from February through mid-late summer, then quickly dropping to their mid-winter nadirs.

Selected Economic & Demographic Snapshots

This chart below illustrates historical trends in unemployment rates, using larger counties to the south as examples, but the trend lines are similar across the Bay Area.

In April 2019, the Napa County unemployment rate was 2.7% - very, very low by historical standards, as were the rates for all other Bay Area counties.

The 3 North Bay counties have the highest median ages in the Bay Area, and the lowest percentages of their populations made up of millennials - Marin County most of all. The counties most affected by the high-tech-hiring boom have seen a significant influx of younger workers - especially in San Francisco.

Napa County Real Estate

May 2019 Report

In Napa, the market typically begins to warm up in early spring, with both listing and sales volume steadily building through early-mid summer. With April’s end, we now have 2 months of spring season data unaffected by market activity at the end of 2018, when financial markets plunged. As of early May 2019, stock markets have recovered to hit new highs (though some subsequent volatility has developed) and interest rates are far lower than last year’s peak.

Monthly Median House Sales Price - 2 Years

Because the county doesn't have that many sales in any given month, its monthly median sales prices can sometimes jump around without great meaningfulness. Right now, we are not seeing any significant increase compared to the beginning of last spring, but the next few months will provide more data. In 2018, the Napa County median house price ended up peaking, on a monthly basis, in August, and on a quarterly basis in the 3rd quarter (July through September).

Around the Bay Area, the general trend has been year-over-year stability in median sales prices or small percentage declines. The large y-o-y jumps in appreciation that have been common in recent years have so far not occurred in 2019.

This table compares the March-April market statistics of 2018 and 2019. Generally speaking, the Napa County market has cooled somewhat year over year, with the number of active listings, of average days on market, and of price reductions increasing, and the number of sales declining. But the median house sales price - based on a relatively low number of sales during the 2-month period - ticked up a little.

Home Sales by Price Segment & Bedroom Count

The most common home sale in Napa County over the past 12 months was a 3-bedroom, 2-bath house selling between $500,000 and $750,000.

Sales Volumes, Median Prices & Median Sizes -

Napa & Sonoma Counties

The next chart breaks out the number of house sales over the past 12 months by city, with median house sales prices and median square footage. (Median means half the sales were for more, or larger size, and half for less, or smaller size.) This analysis focuses on the sale of homes with lots of 2 acres or less - to help keep the median sales price comparisons relatively apples to apples.

St. Helena had the highest median home price in the 2 counties - as it commonly does - and the largest median home size.

Higher-Price Home Sales

in Napa & Sonoma Counties

Q1 2019 Luxury & Ultra-Luxury Homes Markets

in Napa County

The more expensive the home, the smaller the pool of potential buyers, and generally, these properties take much longer to sell. Napa County has a substantial market of very expensive homes - including estates with significant acreage - but in the highest price segment, $5 million+, the supply of listings in Q1 far exceeded demand. Considering the competition for qualified buyers, correct pricing is critical to effecting a sale.

As a proportion of total active home listings, Napa has far more $5m+ listings than any county in the Bay Area: approximately 8.3% of listings in Napa vs. 2.4% in Sonoma, 5.7% in Marin, and 4.5% in San Francisco.

Home Size & Era of Construction

Many factors influence home construction size during any particular period: Affluence, economic conditions, household size, land costs, population growth, highway construction, natural disasters, etc. Generally speaking, the median sizes of houses built in the Victorian and Edwardian eras - before 1920 - were larger, and then declined into the mid-century period. Home sizes began to climb again with the large population and housing-construction increases in Napa and Sonoma Counties that occurred in the decades following. Recently built houses are larger than ever.

It is common that older homes destroyed by natural disasters - such as during the recent fires in Sonoma and Napa, or in the 1991 Oakland hills fire - are replaced by larger homes.

Throughout the Bay Area, buyers looking for smaller homes often purchase condos or co-ops, but these only constitute about 10% of the market in Napa County.

Selected Demographic & Economic Factors

Population Change

After years of large population increases around the Bay Area, in the last 2 years through July 1, 2018, growth slowed considerably in most counties, declined slightly in Marin, and dropped more significantly in Sonoma and Napa Counties. In the last year measured by the census, the destruction of thousands of homes by fire in the wine country certainly played a role in this decline, and is presumably a short-term effect as rebuilding proceeds.

The enormous jumps in population occurred further south in counties most affected by the high-tech boom and its accompanying social, economic, quality of life and housing-market effects.

Commuting

Napa County has the lowest average 1-way commute time in the Bay Area, one advantage of living further away from the traffic-clogged hubbub further south. (However, not much use of public transport in Napa.)

Venture Capital Investment

In recent years, the Bay Area has been the biggest destination of venture capital investment dollars in the country. These tens of billions of dollars have constituted a massive factor in supercharging the creation of new companies, hiring, and, eventually, IPOs. Though the biggest effects are concentrated in SF and Silicon Valley, the creation of new wealth certainly affects Napa County as well, especially its second-home market.

It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.