Real Estate markets could be considered chaotic

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

According to Greek mythology, chaos is the origin of everything. From chaos came both darkness and night, though the Greek definition of the word itself means a 'gap' or 'yawning'. Some may describe our real estate markets as such when encountering the multiple offer scenarios and sometimes statistically unexplainable leap in prices. The attentive and observant minds will rely upon facts within the never ending pools of data that rest within our grasps these days.

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 $374 for a single family home – a significant seven percent increase from July 2014. Buried within the statistics you will also see an eight percent climb in the median property value to $545,000 (see graph inset) - echoing concerns that we will see further pressure on prices to rise as supply has failed to come into the markets.

Within the borders of Sonoma County, the Sonoma Coastline felt its price-per-square foot soar to $485 for a single family home – 34 percent more than the prior July as it nudged out Sebastopol for the top spot as this submarket turned in a 23 percent spike to close out the month at $430psf. The Russian River reported a 21 percent gain to $370psf while Healdsburg experienced a 17 percent bump to wrap up July at $576psf – the county's most expensive place to live. The intertwined cities of Rohnert Park & Cotati boasted a hearty 14 percent rise as this submarket tipped the scale at $298psf. Petaluma's Westside and Eastside both exhibited 12 percent jumps to settle at $425psf and $329psf, respectively. Windsor added 11 percent to finish the month at $305psf while Oakmont slotted in right behind it with a 10 percent increase to $344psf. The region of Northeast Santa Rosa was boosted by an eight percent gain to settle the month at $345psf while, unique to the balance of these reports, Northwest Santa Rosa actually gave back seven percent as it concluded July at $298psf.

'Would you believe' you could contain chaos? Could it really be – 'I asked you not to tell me that' - that our markets are in chaos? 'Sorry about that Chief' - there remains explainable events that account for the feelings that some liken to chaos, especially when viewed from a wider perspective – 'missed it by that much'. Maybe we should not allow our feelings to betray us and we should think of chaos differently, much like Maxwell Smart's nemesis - KAOS. After all, from this we found light, order and even laughter – 'the old (such-and-such) trick'.