Napa County Assessor John Tuteur’s recent reconfiguring of local property values will save homeowners thousands of dollars in taxes and cost local government millions in revenue, but will have no effect on the buyers and sellers in the real estate market.

That’s the word from local Realtors who are seeing what Pacific Union GMAC Real Estate Vice President Heidi Rickerd-Rizzo calls a “recovery market” in Napa County.

While prices are substantially lower than they were a few years ago, modestly-priced homes are moving quickly, with multiple offers on so-called “distressed” homes — those that are in foreclosure or where mortgage holders are on the verge of default.

In American Canyon, the Napa County community hardest hit by the bursting of the real estate bubble, homes are moving swiftly, though at prices unthinkable just a few years ago. In Napa, homes in the under-$500,000 range are seeing multiple offers.

Upvalley, traditionally the most desirable place to buy in Napa County, the market is slowed by relatively high prices and limited access to large amounts of credit.

Overall, however, Napa County home prices are higher than they were a year ago and Realtors say Napa County may absorb any further foreclosures without hurting home values.

“The activity in the $500,000 and under price point is extremely aggressive,” said Rickerd-Rizzo. “At $250,000 and under, it is astronomical.”

Up from the bottom

How do real estate professionals view the assessor’s downgrade of the value of so many local homes?

“I don’t think the assessor’s actions ... will affect existing sales or existing listings,” said Garrett Snedaker, CEO and broker with Frank Howard Allen Realtors Wine Country Group.

Realtors note that the combined $2 billion drop in value from the reassessment of thousands of homes is more or less an equal reaction to the run-up in value during the go-go years, from 2000 or 2002 to 2007.

Today, their eye is on the quickening pace of sales at the lower end, the slowdown in the release of distressed homes into the market and a perceptible rise in values from what appears to have been the bottom of the market last year.

“We are seeing substantial movement in the $200,000-to-$400,000 range in Napa County,” said Robin Rose, general manager of Coldwell Banker Brokers of the Valley. “We’re seeing multiple offers, tremendous demand.”

According to figures culled from the Multiple Listings Service, which carries the listing of every home on the market in the area, Snedaker says both the average price of a home sold and the median price — the point at which half the sales are higher, and half lower — have risen this year.

“As far as I can see the market — excluding Upvalley — seemed to bottom out price-wise in February of 2009,” said Snedaker.

Snedaker said the median price of a home sold in Napa County in February was $310,000, and that figure rose to $380,000 in June.

The average price of a home sold in Napa County in February was $330,000, and in June that figure was $479,000.

Part of the reason is that the number of distressed homes coming on the market has slowed. The federal government has exerted pressure on banks and lenders not to flood the market with foreclosed homes, and has offered mortgage-holders various programs to help stave off foreclosures.

Meanwhile, Rickerd-Rizzo and others say banks are seeking alternatives to foreclosure — which takes a long time and creates the risk of property damage and a drop in values — such as approving short sales. In a short sale, banks sell a home for less than the amount of money they are owed on it. While they do not recoup the full value of the defaulted loan, they still get a substantial return while shedding a non-performing asset.

“Lenders are not just dumping homes,” said Rickerd-Rizzo. “They’ve gotten smarter on that.”

As for more foreclosures, banks still own the notes on a potential avalanche of distressed homes. But, she said, “The feds don’t want to see it happen. Lenders are finally getting it that it costs a lot more money to go to foreclosure than to go with a short sale.”

Move-up market

The slowdown in foreclosed homes hitting the market and other changes mean distressed properties are moving more quickly and are exerting less of a drag on prices.

For example, Snedaker said that in American Canyon in June, 46 homes were listed for sale, and 35 sold. That is the brisk pace of a seller’s market, though the prices were mostly in the $200,000s.

Snedaker said that if the number of distressed homes listed for sale continues to decline, he would expect that prices will rise in Napa County, but the pace of sales would slow.

Rose said activity has increased steadily since the winter doldrums. “One change we are seeing is a move-up market happening in Napa County,” she said. “Buyers right now staring to take advantage of price reductions to upgrade.”

Further, she said, “Investors are charging into the market right now.”

Meanwhile, Upvalley homes — unlike those in American Canyon and parts of Napa — have largely held their value through this volatile period. But the number of sales has slowed to a trickle.

“The $1 million-plus market is challenged,” said Rose, “because there are so many properties on the market in that price range.”

Rickerd-Rizzo said that only 16 homes listed at $1.5 million or more on the Multiple Listings Service have sold since January.

What does Rickerd-Rizzo tell potential buyers and sellers?

“I would be telling sellers this is not a time to test the market,” she said. “You don’t put a property on the market today unless you are prepared to sell it or you need to sell it. But if I had disposable income, I’d be buying everything I could get my hands on.”