The median price of a Napa County home in 2015 rose to its highest level in eight years, according to a new report from the State Board of Equalization.
Using data from the California Association of Realtors, the board reported that the median price for an area home was $606,494. Half of sales were higher, half were less.
According to data from Bay Area Real Estate Information Services, the last time the Napa County median home price rose higher than $600,000 was in 2007, when it was $630,000.
San Francisco had the highest county median price at $1,254,784. Napa County’s median is ranked as the ninth most expensive in the state. Six of the 10 most expensive counties are in the San Francisco Bay Area. The least expensive county is Siskiyou County, near the Oregon border, where the median price for a home in 2015 was $164,085.
“It’s great that housing prices have recovered and then some,” said Board of Equalization Chairwoman Fiona Ma. “However, it also highlights the critical need to assure affordable housing options are available for working families in the Bay Area.”
Napa County home prices rose 6.8 percent in 2015, said the state board report.
“I think that the data pretty much fits with what most folks would say is happening with the value of their homes,” said Napa Valley College economist Peter Allen.
The rise of home prices will continue to have positive “wealth effects” for homeowners in the county, said the economist.
“When people believe that their No. 1 household asset is appreciating, this tends to cause spending by locals to rise at all businesses in the county, including restaurants and on home improvement.”
Allen said he’s not sure how to compare the 2015 median with the pre-recession years of 2006 and 2007. Those home price levels “were inflated artificially by subprime and lax mortgage lending generally,” he said.
In Napa, home values are benefiting from new investments related to earthquake repairs and in hospitality and the wine industry, he said.
“The Napa economy is ‘restructuring’ in favor of wine and hospitality largely driven by anticipated future spending from tourism.”
While price increases have positive effects, price increases are well above the yearly growth of the average incomes in the county, noted Allen.
This means that homeownership for the average local resident, or potential resident, is becoming less and less affordable, he said.
“The fact that the prices continue to rise means that there are buyers out there who are willing to pay up. But the affordability of even entry level homes is moving away from young locals,” said Allen.
Napa Valley College professor Dr. Steven J. Balassi anticipates that home prices could reach an all-time high this year.
However, “this is a double-edge sword for Napa County residents. Those who own will see an increase in the value of their investments. But those who rent will face rent increases. These two items together could increase the income inequality in Napa County,” said Balassi.
Realtor Lee W. Miller, president of the North Bay Association of Realtors Napa chapter, said that in the past few months he’s seen low to mid-single-digit increases, which is beneficial.
“This slowing of home price increases is healthier for the Napa market, maintaining more of an affordability index for homebuyers. The trend toward leveling off, combined with no apparent signs of interest rate increases prior to the election, is very encouraging for the Napa real estate market,” he said.
Miller said he expects appreciation to remain slower through 2016.
“That will translate into robust sales volume, especially as we are entering the high selling season, as the affordability index for buyers is improved by the slowing appreciation,” he said.
While median home prices are an imperfect measure of the current value of any individual home, they do provide important information regarding the overall health of residential real estate markets, said the state report.