The Napa County real estate market bounced back in 2012 from the recession, new data indicates. The number of homes sold in the county in 2012 topped pre-recession levels with home prices rising along with those sales. Low inventory and increasing values have even lead new home builders to take a second look at Napa, something that’s been sorely missing from the market for years, experts said. The average price of a Napa County home rose 14.8 percent to $542,111 in 2012, according to new statistics released by Bay Area Real Estate Information Services.
In 2011, the average home price was $472,278, a slight dip from an average price of $475,614 in 2010, statistics show.
At the same time, the number of units sold also increased — from 1,440 in 2011 to 1,648 in 2012. The last time more than 1,600 homes were sold in Napa County was in 2005, when 1,697 units were sold, Bay Area Real Estate Information Services data shows.
Renters also faced higher prices in 2012. In another report, RealFacts data service noted that the average asking rent in the fourth quarter of 2012 for a Napa County home or apartment was $1,371. That’s an increase of 0.6 percent, year over year. The highest increase in rental price was for a three-bedroom, two-bath home, with rents increasing 5.1 percent year over year, from $1,706 to $1,793.
The local real estate economy in 2012 was like a springboard, said Randy Gularte, broker/owner of Heritage Sotheby’s International Realty in Napa. Home prices peaked in 2007, only to decline rapidly over the next four years before starting upward again last year, he said.
Depending on the real estate niche, prices increased from 5 to 12 percent in 2012, “and that got people excited” about reentering the real estate market, Gularte said.
In addition, there are fewer distressed homes on the market, which has encouraged potential traditional sellers to consider listing their homes for sale, he said.
Mike Bolen with Re/Max Gold said the biggest impact on real estate in 2012 was the lack of inventory. Bolen noted approximately 150 homes in the city of Napa listed for sale on Monday, “which is extraordinarily low. That’s really driving prices up,” he said. “It’s making it very, very tight for buyers.”
“Prices have popped up in the past eight weeks significantly,” Bolen said. “I’m seeing some real price escalation in Bel Aire,” in particular. Bolen said more than 100 people visited a recent open house in the north Napa neighborhood.
“I think people are seeing a turn in the market, and now is the time to jump in,” he said.
Bolen noted that the credit scores of homeowners who completed a “short sale” or foreclosure two to three years ago are now recovering. With those scores improving, those former owners are starting to reenter the market, he said.
With inventory tight and prices on the rise, Bolen said more new homes could come on the market. “Builders will realize they can ramp up production. That might increase inventory,” he said.
One of those builders is Re/Max Gold Realtor and developer Brad Simpkins. Last year, Simpkins, his father, architect Cliff Simpkins, and another partner, Brandon Sax of Sax & Roscoe Construction, invested in a two-home infill project on Central Avenue.
Buying the already permitted lots, the team was able to build two new spec homes they sold later for $465,000 each. The buyers are from out of the area, one Silicon Valley and another from Texas, he said.
At first, Simpkins and partners had planned to list the homes for $430,000, but as the market improved, they were able to increase the asking prices. “We bumped it a little more. But we were at the top of what we could,” Brad Simpkins said. Priced too high, the homes might not have appraised, he said.
While the project was a success, Simpkins didn’t want to make it sound easy. He said he had the advantage of buying a lot that had been foreclosed on from another builder, and doing the work without loans.
“It still takes a unique situation and unique players” to build and sell a new home in today’s market, he said. “We were able to capitalize on the market and our timing was basically perfect.”
Gularte noted that new home builders are a key ingredient in a healthy real estate market.
“We’re starting to see the home builder and developer looking at land. We may see more approvals for subdivisions,” he said.
“The home builder has to look one to two years out,” Gularte said. “He has to feel that he can invest in some properties” successfully, before making the investment.
Napa North Bay Association of Realtors (NORBAR) chapter president Nadia Valenzuela of Terra Firma Global Partners said that local inventory is so low that multiple offers are common. “As soon as a property comes on the market, people are writing offers because there isn’t anything available,” she said.
Additionally, “We’re seeing more homes come on the market that are not short sales or foreclosures, which is great for our market,” Valenzuela said. A short sale or foreclosed home listing brings values down for not just that one home itself, but also the other homes around it, she noted.
Valenzuela said that 2013 will bring a steady increase in prices, but nothing drastic.
“We’ve already been informed that interest rates are going to go up slightly. But those interest rates are still record lows,” she said.
According to Robin Rose of Coldwell Banker Brokers of the Valley, 2013 “will continue to have strong buyer demand in the low end, due to high affordability rates,” she said.
Due to a lack of equity in their homes, a lot of sellers have put off moves in the past several years, noted Rose. As those homes regain or grow in equity, “move-up buyers will be in the position to be back in the market,” she said.
Bay Area-wide, the median price paid for a home in the nine-county region was $442,750 in December —up 1.1 percent from $438,000 in November and up 32 percent from $335,500 in December a year ago.
Last month’s median was the highest since August 2008 when it was $447,000, according to San Diego-based DataQuick.
According to the U.S. Census, the median mortgage payment for a Napa County homeowner was $2,308 in 2011.