Napa home sales slow, but above a year ago

By JENNIFER HUFFMAN Register Business Writer

Napa County's housing market seems to be slowing down, with fewer sales and a slight drop in the value of the median priced home, new statistics reveal.

The median sale price decreased 5 percent between March and April to $609,000, while the number of units sold plunged 39 percent, according to DataQuick Information Systems.

However, April's median price remains 6 percent above a year ago and the market managed to set a record high of $641,000 in March, making future predictions difficult, said DataQuick president Marshall Prentice.

"These are strange times for forecasters and analysts. Are we heading into a market lull? Or are we seeing the beginning of a significant downturn? Many of the fundamentals for housing are at a crossroads: inflation, interest rates, demand, household incomes, prices and whether homes are a good investment compared to other investments. Summer is going to be interesting to say the least," said Prentice.

Napa Valley Realtors and brokers have an informed perspective on what's happening in county real estate and the market's direction.

"My opinion is that the market is normalizing," said Jill Silvas of Morgan Lane.

"Yes, sales have slowed down; we're seeing less appreciation. It had to do that. It needs to find a leveling point," said Silvas.

"This is a good thing for the market."

ReMax Napa Valley's Lynda Jensen offered a similar assessment. "We in Napa Valley had come to expect a jet-stream market, properties coming on the market and flying off the shelves. Right now what we are seeing is a more normal market, with buyers and sellers taking the time to negotiate."

Coldwell Banker Realtor Robin Rose said, "One question everyone is looking at is how much the weather has affected our market. We're about to find out if the rain prolonged our seasonal slowdown."

Rose said she's seen an increase in multiple offers.

"Multiple offers show us there is demand for certain properties in certain areas. We think this is good for buyers," said Rose.

The Realtor said dueling bids range across all price points. "That's a little unusual."

Rose anticipates good choices for clients. "There is very strong demand for property in move-in condition, a good location, and priced reasonably. There are plenty of buyers out there."

Even with numbers on a steady, if varying, climb, the Realtor would not attempt to predict where the market would be a year from now. "We only look at past data," said Rose.

ReMax's Jensen noted the current market is "complicated." Whereas the last dip began with homes in the middle ranges, this market is softest in the lower reaches. Jensen said first-time home buyers who worked their way into the market with creative financing have been squeezed as interest rates have risen.

Overall, though, she says the shift is healthy. Buyers and sellers are no longer in "impulse" mode when it comes to transactions, and are making more rational economic decisions.

Doug Fowler of Coldwell Banker said, "It's our belief that appreciation rates have slowed, but they still exist."

"We've seen an explosion of activity over the past 60 days," said Mike Bolen of Intero Real Estate Services. "Inventory and sales are really taking off," he said.

DataQuick reports the "typical" Bay Area buyer has an eye popping $3,048 per month mortgage payment. That tops March's $2,948 figure and the $2,659 payment reported in April 2005.

Those figures don't unnecessarily alarm Bolen. "We're still at extremely low interest rates. I don't see any cause for panic."

"A slight increase in mortgage rates and housing prices means buyers are spending a little more money and becoming more careful about what they are buying," said Rose.

"Buyers are being more discriminating on every level -- price, amenities, and location. They have the luxury of time and availability of more product to make their decision," said Morgan Lane's Silvas.

Not only are homeowners taking on higher monthly payments, the days of hosting a "mortgage burning party" seem to be dwindling, said Silvas.

Different generations have different home ownership goals, she added. "I don't think most buyers today are looking at that as a goal," said Silvas.

Silvas doesn't believe the market is in a bubble. "Baby boomers remain in their peak earning years and stand to inherit a tremendous amount of wealth from their parents over the next decade or two," said Silvas.

Those boomers will be followed by "echo" boomers and their children who are just now buying their first piece of property, said Silvas.

While rising interest rates give some buyers pause, Silvas prefers to view the historical big picture. "(Consumers) think 6 percent interest rates are high. Interest rates were once 17 percent," she recalled.

Bolen said Napa Valley remains a draw.

"There's always going to be a demand here for housing that you won't see in other areas. It's one of those areas that has everything great for real estate: location, tight supply, pricing power and demand," Bolen said.

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