By Brandon Cornett | Housing Market News
August 5, 2013 | © 2013, All rights reserved
By Brandon Cornett | August 5, 2013 | 2013, All rights reserved
If Zillow’s Home Value Index (ZHVI) is any indication, the Santa Rosa real estate market is undergoing a major transformation right now. The ZHVI for Santa Rosa increased by 24.6% over the last year or so.
Granted, the ZHVI is not an exact science. But it does give us some insight into which way the market is moving. And the Santa Rosa housing market is clearly headed north, where home prices are concerned. The same could be said for the entire San Francisco Bay Area.
The median sale price is arguably a better indicator, because it’s based on actual sales prices. Here again, the trend is undeniable. According to Zillow, the median price paid for homes in Santa Rosa has risen by more than 27% in the last year or so. The median list price climbed by 21.7% during the same period.
Data from Trulia, another real estate information website, confirms this trend. Trulia’s numbers show a 28% increase in Santa Rosa’s median sale price over the last year, closely matching Zillow’s figures.
These are tremendous gains, and they mirror the broader trends we are seeing across the San Francisco Bay Area housing market. All across the nine-county Bay Area, home prices are surging in response to inventory shortage and growing demand. It’s good news for homeowners. But it presents certain challenges for home buyers.
Bay Area Housing Market En Fuego
The entire Bay Area real estate market is on fire right now – for better or worse. Consider the evidence. According to DataQuick, a San Diego-based company that tracks housing trends in key cities across the country, the region’s median sale price rose at its fastest pace ever in June 2013.
The largest gain occurred in Alameda County, where the median rose by a whopping 44% over the last year. Sonoma County’s median sale price rose by 29.8% during the same 12-month period.
Granted, home prices in the Santa Rosa real estate market (and elsewhere across the Bay Area) are still well below their pre-crisis peaks. This is partly why we are seeing such big gains right now.
According to DataQuick president John Walsh: “It’s easier for a market to regain lost ground than to push into new territory. We’re still bouncing off the bottom.”
Santa Rosa Real Estate Trends Good for Sellers
This is all good news for Santa Rosa area homeowners, particularly those who lost a significant amount of equity during the housing downturn. While home prices are still well below their pre-crisis peaks, they are gaining ground quickly.
This could be a game changer for homeowners who were unable to sell or refinance their homes in the past, due to their negative or low-equity situations. Property values in the area will likely continue to rise for some time, further empowering homeowners by restoring lost equity.
But the news is not so good for home buyers. The real estate market in Santa Rosa, California has become increasingly competitive. Housing demand has increased on the heels of economic improvement, but inventory levels have fallen over the last year. This means there are more buyers competing for fewer properties. This is what we’re seeing across the entire Bay Area housing market right now.
“There’s a slew of buyers, and there’s nothing for them out there,” said Santa Rosa real estate agent Mike Kelly, when speaking to the Press Democrat recently.
At the same time, rising prices will create affordability issues for many would-be buyers.
The Santa Rosa housing market is emblematic of what is happening across the entire San Francisco Bay Area. Declining inventories, along with the release of pent-up demand, are driving prices north with surprising speed. It’s not a question of if home prices will continue rising through the end of 2013. The question is, by how much.
Disclaimer: This story contains forward-looking statements about the Bay Area real estate market in general, and Santa Rosa in particular. These statements represent an educated guess made by the author. They should not be viewed as facts or financial advice. We make no guarantees about the future of home prices or other housing trends.
Filed under Housing Market News