Napa County home price hits all-time median high
The COVID-19 pandemic continues to impact every aspect of life in Napa County, Calif., including housing prices, with many buyers wanting to flee the big city.
The median sold price — half sold for more, half for less — of an area home hit a 30-year high in August, going from $699,000 a year ago to $867,000 this past month. That's a 24% increase, said the California Association of Realtors.
At the same time, the number of Napa County homes sold rose 52%, from 122 homes a year ago to 185 this August, according to Bay Area Real Estate Information Services.
A combination of low interest rates, a state-wide home shortage and an increased number of people now working from home means that more and more buyers are setting their sights on Napa Valley.
"People want to get out of the cities," said Realtor Suzy Anderson of Coldwell Banker Brokers of the Valley. In terms of COVID infection rates, "We're doing so much better than the cities," she said. For those looking for a "safer area," Napa fits the bill, she said.
Realtor Rachel Mau of Remax Gold.Mau said she worked with an employee from Google who recently moved to Napa County. Now telecommuting, "she can work anywhere," said Mau.
Before the move, "she was in a $5,000 a month apartment in the city," spending hours taking the daily Google shuttle back and forth to the South Bay, Mau said.
"Now she's got a home in Napa, paying $4,500 a month for her mortgage and she bought almost a million dollar property," said Mau.
"It's kind of incredible how the market has shifted," continued Mau. "Six to eight months ago, it was a seller and a buyer's market. Now we have so many buyers (combined with low interest rates) that we're seeing this craziness."
Even with Napa County's unemployment rate at historic highs, there are still many people working full time who are qualified to buy a home, she noted.
"We've created a beautiful monster here," she said.
For some listings in Napa County, especially those in the $800,000 and up range, 12 to 14 offers aren't uncommon, said Mau.
At the beginning of COVID-19, some buyers wanted more isolated properties and locations, but after the fires, "they are thinking twice about moving so far off the grid." Even something like the increased cost of fire insurance can be a deterrent, she noted.
Mau has a home listed for $888,888 at 1592 Milton Road that is quite close to the median price. To address the water problems in that area, the homeowner is having a new water tank system installed.
Mau said that her buyers from out of the area are looking for "a lifestyle that people have when they think of Napa County." Napa Valley "just has a persona of its own that is different from any other county."
Who are these new Napans? Many are younger families, younger people and those without children at home, said Anderson of Coldwell Banker Brokers of the Valley. At the same time, people are also leaving the area.
"I also had several listings which were older people moving from Napa to Arizona and Colorado," she said. Those sellers anticipate getting more for their money in other states, "so it's easier to retire."
Anderson said that the recent wildfires slowed down the market a bit, but September and October "have historically been a really good months around here."
"I don't think there will be any change until the usual holiday slowdown," which usually starts around early November, she said.
Where are these buyers looking? "All over the valley," said Anderson. "Many without kids aren't concerned about the school districts. I had one client that (wanted) an updated nice home in the million dollar range." She showed that buyer a home on Maximillian Court in north Napa. "We looked at it for 20 minutes and they made an offer, full price." That sale has since closed.
Another property on South Montgomery Street had six offers. "My buyer made an offer $25,000 higher and the house sold for $100,000 over." Looking back on it now, "We didn't have a chance," Anderson said.
"I'm waiting to hear on another" house with 12 offers, she said this past week.
The most likely buyer in such cases is usually an all-cash offer with no contingencies. "What I've been having my clients do is get preapproved with their loan so they can go in with a very clean offer," and hopefully prevail, Anderson said.
Burt Polson of ACRES Real Estate Services, Inc. primarily sells commercial real estate, but currently has a residential listing at 3541 Woodbrook Drive in Napa priced at $890,000.
The house has four bedrooms and is in the 2,000-square-foot range, which is an advantage, he said. "It's a tight market for those four bedroom homes," especially those priced under $1 million, said Polson.
As always, the challenge remains for first-time home buyers. "It's tough to find inventory, especially workforce housing. It's tough to find an entry level home in Napa," he said.
"We're not getting into the ridiculously overinflated realm," said Ted Stumpf, a Realtor with Windermere Real Estate and current chair of the Napa Valley chapter of the North Bay Association of Realtors.
Stumpf said low interest rates means that "there are more first-time homebuyers than in a long time. That's a big segment of the market now that hasn't always been present" in Napa County, he said.
Even with a new record-high selling price, Stumpf isn't worried about a housing "bubble."
"It's not the same kind of environment we were in" leading up to the Great Recession, he said. "That bubble was about questionable lending practices. Folks didn't have the equity in their homes. That's not the case now. People have equity."
This price increase "is a natural result of the law of supply and demand," he said.
Regionally, the median sold price of a Bay Area home reached a new high of $1.068 million, said the California Association of Realtors. A year ago, the median was $900,000.