Controlling the North Bay real estate market

This article is reprinted from Wine Country Real Estate, a special advertising section of The Press Democrat.

Our world is complicated. How do we make sense of what is going on around us? As sellers continue to hold the edge in the North Bay marketplace, buyers have to sharpen their analytics. Both parties are experiencing challenges with keeping pace with market valuation metrics that they each need to understand in order to make the savvy play.

One of the most common components of measure in value is price-per-square foot, a calculation based upon recent averages of perceived similar homes in a perceived similar market area. This metric is routinely applied to appraisals to justify valuation for what a market buyer and seller have come to terms with in fostering an agreement and thereby supporting the new lender's position in the property as secured.

According to data collected by BAREIS MLS, a current overview of Sonoma County indicates an average price-per-square foot (psf) of $365 for a single family home – a significant eight percent increase from June 2014. Buried within the statistics you will also see an 11 percent climb in the median property value to $550,000 (see graph above) - further indicating that buyers that misfired on offers a year ago are now looking at an even bigger price tag now.

Within the borders of Sonoma County, the east side of Petaluma felt its price-per-square foot soar to $330 for a single family home – 16 percent more than the prior June barely nudging out southeast Santa Rosa for the top spot as this submarket turned in a 13 percent spike to close out the month at $332psf. Petaluma's west side reported a 12 percent gain to $395psf while Oakmont and Sebastopol both experienced nine percent bumps to wrap up June at $349psf and $444psf, respectively. Healdsburg boasted a hearty eight percent rise as this submarket tipped the scale at $686psf – the highest in Sonoma County. Sonoma exhibited a seven percent jump to settle at $506psf. Northwest Santa Rosa added five percent to finish the month at $309psf while northeast Santa Rosa slotted in right behind it with a four percent increase to $317psf. The blended submarkets of Rohnert Park and Cotati actually gave back a pinch as they concluded June at $289psf. As these markets have fallen in sync with each other some buyers are feeling squeezed while others are feeling vindicated by the extra steps they took to secure their new home already.

While the home selling market functions at a frenzied level, the rental markets are experiencing an 'echo effect.' Sonoma County's housing supply has not been able to keep up with demands, thus prices for homes have risen rapidly along with the cost of rents being required within our marketplace. The pressure of each can create stressful situations as the free market system of constructing has been hindered by fees, regulations and the hangover effect of the 'Great Recession,' thus thwarting this endeavor to provide much new housing - which could most effectively control the costs currently being born within our communities. Let's build something together!