Sonoma biannual email summer 2018

Page 1

Sonoma Valley and Napa Valley Real Estate Market BI-ANNUAL REPORT | SUMMER-FALL 2018 SONOMA VALLEY


Sonoma Valley and Napa Valley Real Estate Market Report

What does Median Mean? The median is the middle, so in terms of sales price, it is the sales price that has an equal number of higher priced and lower priced sales on either side of it.

NAPA

SONOMA The Sonoma Valley saw solid increases in both median price and median price per square foot, both rising slightly under 20%. The number of transactions dipped 1% but the average amount of time on the market dipped 17%, both indicators of a low inventory market. Four condominiums sold for $335,000 or less in the period. The lowest recorded sale was a 512 square foot, 1-bedroom, 1-bath cottage in Sonoma that sold for $230,557. The highest recorded sale was $7,100,000 for a contemporary, 4,528 square foot home, with 5 bedrooms, 6 baths and views of San Pablo Bay and Sonoma Mountain on 12.7 acres in Sonoma near the Plaza.

ST. HELENA

While the number of sales has gradually decreased in Napa since its peak in late 2016, prices continue to rise at modest but steady levels. In the first half of 2018, the number of sales decreased by 9% yearover-year, but the median price of a home rose by 9% yearover-year. Time on the market decreased 27% compared to 2017. These statistics appear to confirm that lack of inventory is the biggest hurdle facing the Napa Valley real estate market. The median sales price in Napa reached $700,000, the highest on record. The highest price paid was $13,000,000 for a newly-constructed 9,600 square foot home on Orchard Avenue.

St. Helena, which consistently has been the most expensive market in the Napa Valley, took a breather in the first half of 2018. The number of sales dropped by 39% and the median sales price decreased from $1.35M to $1.28M, a drop of 5%. Even the median price per square foot showed a modest dip of 9%. The drop in the number of sales and the decrease in the number of days on the market (17%), suggest that there are still many buyers competing for the few properties that are available. The lowest priced sale was $650,000 for a 1 bedroom condo on Reed Court. Topping the list of sales was a 62-acre vineyard with a 100-year farmhouse and newer guest house/ studio that sold for $10,500,000.

MEDIAN SALES PRICE

17

$692,000

18

17

$829,000

$640,000

18

17

$1,350,000

$700,000

18

$386

17

$699

18

$631

$1,280,000

MEDIAN SALES PRICE PER SQUARE FOOT

17

$450

18

17

$528

18

$410

NUMBER OF SALES

17

244

17

18

249

18

498 452

17 18

57 35

DAYS ON MARKET

17 18

73 60

17 18

84 61

17 18

107 88

The statistics obtained from BAREIS Multiple Listing Service including defined criteria on 1/10/18. Information subject to change and may not include all sales.

BROKERS

SONOMA

SONOMA | PLAZA

NAPA | LINCOLN

VALLEY

800 BROADWAY

34 WEST SPAIN STREET

1775 LINCOLN AVENUE

(707) 996-3232

(707) 996-3232

(707) 258-5200

of the


A comparison of the first 6 months of 2017 and 2018

YOUNTVILLE Statistical analysis of sales in Yountville is always hampered by the small sample. For example, the number of sales in Yountville increased from 10 in the first half of 2017 to 15 in the first half of 2018, which equates to a dramatic rise of 50%. Similarly, the median price dropped 31%. Perhaps the more accurate measures of market strength were the median price per square foot, which dropped only 1%, and the days on the market, which dropped 24%. The least expensive home sold was a 1-bedroom, 1-bath home at $625,000. The most expensive home sold was a 7,300 square foot, 5-bedroom, 6-bath modern farmhouse and guest house that sold for $10,400,000.

CALISTOGA In the first half of 2018, there were 22 homes sold in Calistoga, a 12% decrease from the same period in 2017. While the number of days on the market saw a significant increase, the median sales price was only 1% lower than in the comparable period in 2017 and the median price per square foot increased by 58%. The Calistoga market continues to show strong interest. The most affordable single-family home, a 2-bedroom, 1-bath home on almost a quarter of an acre on Washington Street, sold for $530,000. The highest sale was $6,800,000 for a 6,160 square foot estate on 5 acres offering a 2 acre vineyard and views.

AMERICAN CANYON The market in the first half of 2018 was flat in the City of American Canyon, with both the number of sales and prices falling just 2%. Time on the market decreased by 15%, demonstrating that there is still strong demand for well-priced properties. Likewise, the median price per square foot continued its steady rise, exceeding $300 for the first time. The least expensive home was a 1955 “all original� 1,100 square foot, 3-bedroom, 2-bath home that sold for $316,000. At the other end of the spectrum, the most expensive home sold for $756,000 on Cantada Way offering 4,525 square feet of living space with 5-bedrooms, and 5-baths.

MEDIAN SALES PRICE

17

$1,247,500

18

$860,000

17

$735,000

18

$730,000

17

$530,000

18

$515,000

17

$245

What does Days on the Market Mean? Days on the Market can mean different things in different markets. BAREIS Multiple Listing Services, from which these statistics are derived, measures the number of days between the date the home is placed on the market and the date that it is reported as a pending sale, which is often weeks after an agreement is reached between a buyer and seller.

MEDIAN SALES PRICE PER SQUARE FOOT

17

$712

18

$724

17

$363

18

$572

18

$317

17

72

NUMBER OF SALES

17 10

17

18

18

15

25 22

18

70

DAYS ON MARKET

17 18

53 40

17 18

53

17 121

18

53 45

NAPA | DOWNTOWN

NAPA | COMMERCIAL

ST. HELENA

1040 MAIN STREET

1040 MAIN STREET

1200 MAIN STREET

(707) 258-5200

(707) 224-8454

(707) 963-1152

BROKERS of the

VALLEY


Million Dollar Plus Market Sonoma Valley and Napa Valley The demand for high end homes remains strong in the Sonoma Valley. The number of $1Million+ homes sold increased by 31% and the median price paid for those homes increased 11%. The median price for a $1M+ home in the Sonoma Valley is now about 1% higher than homes in the same category in Napa County. In this category, 68% of the homes sold for less than $2M and 12 homes sold for more than $3M. The most expensive home was a $7.1M home with views on 12.7 acres in Sonoma. The number of homes that sold for over $1Million in Napa increased by 8% over the same period in 2017. In contrast to most of the categories we watch, the median price of such homes decreased slightly, from $1.532M to $1.5M. The average price for the homes in this category exceeded $2M. Of the 145 homes in the sample, 105 sold for less than $2M, 22 sold in the $2M-$3M range and 16 sold for more than $3M. The least expensive, at $1.1M, was a 5,000+ square foot home in Angwin and the most expensive home was a $13M estate home on just under 5 acres on Orchard Avenue.

Country Property Sonoma Valley and Napa Valley The number of country properties sold in the Sonoma Valley increased 25% over the same period in 2017, while the median sales price jumped 20%. The highest recorded sale was $7,100,000 for a contemporary, 4,528 square foot view home on 12.7 acres in Sonoma. There were eight agricultural land sales, the highest of which was $2.7M for 20 acres in Glen Ellen, more than 15 acres of which are planted with multiple varietals. Another fully planted 5-acre parcel with a buildable homesite in Glen Ellen sold for $2.125M. A 3.6-acre lot on which the existing house burned in the October fires sold for $425,000. Residential properties consisting of one acre or more continue to be in demand. In the first half of 2018, 67 such properties sold in Napa, just two less than during the same period in 2017. Despite the slight decrease in the total number of sales, the price of the median property increased 20%, from $1.44M to $1.725M. Four properties sold for over $10,000,000, the most expensive of which sold for $13M. The $13M home is located on Orchard Avenue and consists of over 9,600 square feet, including a 1,600 square foot guest house. A modern home on 60 acres in Oakville sold for $12.2M. A 62-acre vineyard with an older home near St. Helena sold for $10.5M and a 7,342 square foot, modern estate home on 2 acres in Yountville sold for $10.4M. There were 14 land sales including 3 that sold over $3M that included building sites and vineyards. There were two lots in which existing homes burned in the October fires that sold for $349,000 and $800,000

Median Sales Price and Number of Sales $1M+ SONOMA VALLEY

17

83 $1,397,000

18

109 $1,550,000

Median Sales Price and Number of Sales $1M+ NAPA VALLEY

17

134 $1,532,000

18

145

$1,500,000

Median Sales Price and Number of Sales COUNTRY PROPERTY - SONOMA VALLEY

17 18

42

$1,506,000

53

$1,800,000

Median Sales Price and Number of Sales COUNTRY PROPERTY - NAPA VALLEY

17

69

18

67

$1,440,000 $1,725,000

BROKERS OF THE VALLEY


Commercial Property

FACT:

The City of Sonoma has 1,062 businesses. This figure scales as 93.1 businesses per 1,000 residents in the city, a rate which is second- highest among comparable cities and is double the countywide average of 43.3 businesses per 1,000 residents. The vacancy rate in Sonoma County for industrial space averaged 5%, office space 14% and retail space 4%. In Napa, The Archer Hotel rooftop bar, called Sky and Vine and operated by Charlie Palmer Steak Napa, is busy seven days a week. It is popular among both locals and tourists. The views are spectacular to the East viewing the Alta Heights neighborhood and North featuring mountains and trees. There are two bar areas and a full sit down covered area to enjoy. The Spa at the Archer is open as well as Napa Valley Jewelers, LUSH Cosmetics, Tommy Bahama, State and First, Overland Sheepskin Co, MECOX, Brown Estate, and Compline. The goal is 45 shops and restaurants, so there’s much more to come.

Per Freddie Mac, The average interest rate for conforming 30-year fixed mortgages in June 2018 was 4.57%, compared to 3.90% for the year earlier.

There are opportunities to open or move office users to downtown Napa. Sizes range from 1,000 SF to 7,000 SF. There is new construction for offices available and second-generation spaces that can be customized. Retail opportunities exist in all sizes and price points for rental rates although they’re getting higher every year forcing many to the outskirts of Napa versus staying downtown. Next to wine it seems a new beverage called Custom Brewed Beer is all the rage. Stone Brewing, a two-story Sonoma Valley establishment in the old Borreo building at Soscol and Third Streets, is a great example of Annualized Rates $/sq.ft../year the trend with over 4,000 SF of inside and outdoor seating. Trade Brewing, which is only New Leases | First Half of 2018 one block away, is a fun small pub set up on the way to the Oxbow. Fieldwork Brewing in the Oxbow and the Palisades Saloon on Main Street are also popular.

INDUSTRIAL

$11.00 to $24.00

RETAIL

$15.00 to $71.00

The commercial real estate market in St. Helena is experiencing a revitalization with two local, major players putting significant money into the market. Ted Hall of Farmstead has leased +/-18,000 SF at the former Constellation Brands Building and has grand designs for its future. Joel Gott has purchased Cindy’s Backstreet Kitchen from iconic chef, Cyndi Pawlcyn. Gott will use the building for several purposes including a kitchen space to help serve his new “corner gas station” concept (at the NVP site on Main and Spring Streets) and thriving Gott’s Roadside. New retail leases have been completed in the $4/SF range on Main Street. Office rates are steady around $3.50-$4.00/SF and industrial has one vacancy at $1.70/SF.

OFFICE

$22.50 to $36.00

INDUSTRIAL

$ 7.80 to $16.20

The Gallery Building on Lincoln Avenue in Calistoga sold for about $550/SF. The Bosko’s building sold to a Japanese investment team who is trying to roll out a classic Japanese culinary travel experience for their visitors. Inventory remains tight with several iconic buildings still empty (Bank of America, Amici’s & the restaurant next to Bank of America). Office leasing rates are in the $2-$3/SF range and retail on Lincoln continues to be strong at $2.50-$3.25/SF. The continued development of the Four Seasons Napa Valley and Enchanted Hills bodes well for Calistoga’s commercial real estate market.

RETAIL

$43.00 to $58.00

OFFICE

$33.00 to $46.00

The vacancy rate for Industrial is about 2% with a number of new projects planned for larger buildings. Small Industrial space (< 5,000 SF) is scarce and pricey, averaging. $12.00-$16.20/sf/year, NNN.

Napa Valley Annualized Rates $/sq.ft../year New Leases | First Half of 2018

Commercial Property update and data for annualized lease rates were based on information obtained from Coldwell Banker Commercial Brokers of the Valley, CoStar, and BAREIS.

Real Estate Money Report Mortgage interest rates increased in the first half of 2018. According to Freddie Mac, the average interest rate for a conforming 30 year mortgage ($453,100 and below) was 4.57% in June 2018, compared to 3.95% in December 2017. The Federal Reserve has increased the Federal Funds Rate (benchmark interest rate) twice in the first six months of 2018 and expects to increase the rate two more times during the balance of the year. Including the two increases this year, the Federal Reserve has increased the rate seven times since the Great Recession and brings the Fed’s benchmark rate to a range of 1.75% to 2 percent. The last time the rate topped 2 percent was in the third quarter of 2008. The subject Fed increases are part of a gradual series of steps to return rates to normal levels and they reflect the Fed’s confidence in the economy and its commitment to bring the inflation rate to its target of 2 percent. Real Estate Money Report was provided by Gene Ciabattari of Mortgage Solutions, Inc.

FACT:

The prime rate increased to 5.00% in June 2018, compared to 4.25% in June 2017