Napa is a great place to live.
Napa is also expensive, and because of this, we have seen a lot of good people leave the valley. We all have felt the sting of family and friends leaving the area.
Good friends announcing they are moving seems like a monthly event in my life.
This exodus has a lot of people asking me about home prices in Napa. These questions typically come from people who have hopes of buying. Many people want to know if home prices will ever come down.
I don’t know what future home prices will be, and divining the future is a rabbit hole. But I do have fun trying.
History offers abundant evidence that areas economically dominated by a single industry don’t handle change well.
If wine ever falls out of favor with consumers or if other regions in the world increase production, Napa home prices could change.
While the scenarios are possible, they would likely be slow to happen. Napa has phenomenal weather, and our proximity to other bounding industries like the technology sector may also insulate Napa housing.
Last week, I traveled to Oregon to visit clients who used to live in Napa but have moved to enjoy cheaper housing.
Many of these people could afford to live in Napa but were enticed by the pile of home equity they accumulated. I now travel to several states to meet with ex-Napans.
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Despite the hardship expensive housing creates, there are also opportunities.
Napa is a potential sweat-equity pot of gold. Sweat equity is the increase of a home’s value created by the improvement or restoration of the property.
If you are willing to buy a house in need of TLC, then you may be able to create wealth more rapidly than buying a much cheaper home in North Dakota.
I can commiserate with people who struggle to make a living here. While home values and rents have jumped, the wages of many jobs have remained stagnant. If you can move to a cheaper area and still earn the same income, then that should be strongly considered.
This isn’t always the case.
Often, expensive areas are accompanied by better-paying jobs and more opportunities. That is not to say that every person should make the decision to stay in Napa or any other expensive market, but don’t assume that cheaper housing is the gold standard for a better life or wealth.
There are real reasons certain areas are more expensive than others. Residents don’t choose to live in costly areas because they are ignorant of the other regions.
If you are considering leaving Napa or any other expensive market, you need to evaluate what you may be losing by moving.
The question isn’t always straightforward.