The question at the top of Napa Valley homebuyers and Napa sellers is familiar: where are home prices heading? Realistically, the truth this 1st quarter of 2012 is the same as always: it is no less r
isky to predict the real estate market than it is to predict the stock market.
Nonetheless, keeping up with national trends and the media chatter means staying abreast of the factors that ultimately affect Napa home prices. And a few smiles are appearing on the faces of those who have waited a very long time to read any good news.
The backdrop was not pretty. No one could miss the majority of last month’s End Of Year headlines. Last year finished with reports of a steeper-than-expected drop in home prices in November despite a steady rise in consumer confidence. In fact, Reuters reported that prices in 20 metro areas dropped 0.7 percent for the second month in row, which was 0.2 percent greater for November than economists had predicted.
But increasingly, spots of optimism are appearing in the national press. The Wall Street Journal recently quoted Capital Economics’ economist Paul Dale’s comments on the 5% month-over-month gain in December. To Dale, “it is clear that a housing recovery is now well underway.” Then, by the start of February 2012, Nielsen reported that consumer confidence had jumped six points to 83.
Another measure that seems to argue for a strengthening future is the inventory of previously owned homes. At the end of the year, 2.38 million homes were listed. That is the equivalent of a 6.2 months’ supply — within hailing distance of the 6 months that is considered a healthy level.
Adding to that view is The National Association of Home Builders/First American Market Index which shows that the number of improving local markets doubled from December 2011 to January 2012. Even keeping in mind where these markets had started from, the direction is the right one.
The National Association of Realtors is not alone in pointing out the special opportunities that now exist for both buyers and sellers. First-time buyers know that today they stand to benefit by purchasing at record lows. Move-up buyers are more able to take a price hit on the homes they are selling because of the low prices and substantial interest rate savings at the other end of the transaction.
Of course, home prices are only one factor in a sale, as are the compensating intangibles like comfort and lifestyle. If you are thinking of buying or selling a Napa real estate property, call me today for a complimentary consultation.
About Karen Magliocco