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Boomer? Retiring to rent or should you buy?

@agingbabyboomers! Yes, I resemble that remark. RENT vs. OWNING? Perhaps you want to keep your home here in Sonoma County, rent it out and go exploring other areas to live. You could pull some cash out of your home here, rent it to cover the new debt service and then go rent in the south of France for a year? Spain? Way back east in the New England states or perhaps Oregon or even Texas! (remember, Austin is WEIRD!). A $250,000 1st at 5.5% is about $1,419 per month in debt service. You own a home in Rincon Valley, 3 bed, 2 bath, 2000sqft, rents going to be $2400 at least! Throw in social security, retirement and you’re GOOD to go (obviously speak to your accountant and retirement specialist for advice).

 

 

Benton Veterans Village housing veterans in need of housing

Santa Rosa Fire Fighters Local 1401 is partnering with Community Housing Sonoma County (CHSC) to create HOME for 7 veterans in the former 1950’s Santa Rosa firehouse on Benton Street. CHSC refurbished and re purposed the firehouse to become Benton Veterans Village housing veterans in need of housing. This former firehouse will be a unique veterans’ housing community due to the enormous commitment made by our Santa Rosa Firefighters to be involved in the veterans’ lives. Led by Santa Rosa Fire Fighters who are veterans, our local fire heroes are committed to creating a long-lasting partnership with our nation’s veteran heroes who will be living at the firehouse.

We are asking for your help. We need your help with cash donations or donations of new or gently used items to finish outfitting the building and each veteran apartment to create the feeling of HOME for our veterans moving into Benton Veterans Village in mid-October.

Santa Rosa Fire Fighters already secured donations for a pool table, dressers, tables and other items.  You can participate with cash donation or donate items needed for the apartments and the firehouse. Please visit our website donation page to make a cash donation or view household items that you can donate to help secure HOME for our veterans.   https://www.communityhousingsc.org/support-us.

Default Rates not the pin to burst this real estate bubble!

One of the main factors of a real estate “Bubble” is the appearance and increase of the mortgage  “default” rate. This usually goes hand in hand with years of issuing shady lending. We saw it in the 2008 real estate crash when default rates soared first at the “sub-prime” level but then  the “A+” paper. Those who saw the movie, “The Big Short”, recall the number which was being posted on a white board outside one of the main character’s office. It was the “default” rate and was quickly into the double digit numbers.  It kept soaring upward until the moment of implosion and government bail-out intervention.  Many today are calling this market a “bubble”. But the default rates are just NOT there. The graph below from Freddie Mac/Fannie Mae, show the gradual decline in default rates. We are at historic lows. NOTE the numbers during the “crash”.

I bring this up because shaky or very ez money was the basis of the great default of the 2008 real estate market crash. Speculation, another cause of the crash, was driven by the availability of this ez money in which to invest in real estate. But one of the first indicators was the alarming default rate of first “sub-prime” and then “prime” loans. We can eliminate default rates as the canary in the coal mine. NOT happening this time.

What WILL drive a bubble to burst or gradually deflate? In our area it is affordability. Currently in Sonoma County only 1 in 5 can afford our median home price of $670,000. It’s an old equation–buyers quit buying, Seller needs to sell, Seller drops price to bring buy to their property. The other Sellers follow suit and you’ve got a decreasing value market. Stay tuned!

Market Slow Down–Interest Rates or Affordability?

The current slowdown of the real estate market is being blamed on higher interest rates and/or affordability. Interest rates have moved over the past five years from lows in the 3.40% range to the current 4.94% range. You’d think 1% would not make a huge difference in qualifying but when you add in the lack of affordability in our area you find consumers right at their limits. And not only are they hitting their max for loan qualifying, many are saying NO to a life where the mortgage payment dominates their household monthly outlays.  What makes the market tick in the Sonoma County area is Affordability. Currently 1 in 5 can afford to purchase the median home price.  We are among the top counties with affordability issues. As you can see below, our affordability number is at 20% who can afford the median home price. But look at San Francisco, San Mateo and Santa Clara! The most affordable county in the Bay Area is Solano but that dropped 6 points over the past year. How do we increase affordability? #1 lower interest rates, #2 building more affordable housing, #3 the economic boom we’re in needs to generate higher wages.

Continue reading Market Slow Down–Interest Rates or Affordability?

$1Mil+ Market–coming back to earth!

For the past few months the $1Mil+ price segment has been very robust. While the overall market languished in mediocrity, except for a record high median home price which quickly fell the following month, the $1Mil+ range was surging. June sales, off -20% in the overall market was UP +20% in the $1Mil+ market. Huge spread. The market, driven by fire victims replacing homes lost in the fires of October 017, are buying and rehabbing homes. If you look at the NE area and examine Lot sales you’ll find many NOT rebuilding. Currently we have approx 174 lots for sale with 33 in escrow and a whopping 247 that have sold.

The big question? Where have all of these homeowners gone? Have they moved away, moved down, moved within their price range relative to the value of the lost home? Here’s some charts on the latest activity:

July Sales in Sonoma County, California–The BIG Cool Off.

The buying season has been thoroughly mejdiocre in 2018. Year Over Year (YOY) reporting shows a market with anemic sales overall.  Inventory beginning to accumulate due to weak sales and a median home price, countywide, faltering from a record high posted in June of $705,000 and an increase of 13% to $653,000 in July and an increase of a mere 3%. 

 

 

 

Sunday, July 15th Show–$1,000,000 Real Estate Marketplace Reviewed!

Sunday’s show we’ll be discussing the surging $1Million+ Real Estate marketplace! It dragged the median home price over the $700,000 level for the first time ever–in history!  The only hesitation in the marketplace in this exclusive price range is the total inventory is not increasing in any big numbers. 

New Median Home Price Record set for Sonoma Cty: $707,000!

This Sunday on the Real Estate Hour, I’ll be discussing the surging Median Home price for Sonoma County. Now at a new record of $707,000. Wow. Attached our graphs on the current state of the real estate market compared to last year at this time. Sales are DOWN 20% over last year. No doubt the surging prices taking its toll. Though many are beginning to see a “shift” in the market, homes are still gaining multiple offers but not with the velocity we had experienced, “Post October 9th Fires”.  The graphs below show our “Days on the Market” dropping still further! We will see if this carries forward into July with more listings coming on. And to keep our $707,000 median home price in context look at Marin County, just a 45 minute south, median home price of  $1,435,000 and up 13%. However, the “Under Contracts”, a leading indicator of sales to come, is dragging. -9% over last year. Hmmmm? Sales off -20% and Contracts -9%.

 

Continue reading New Median Home Price Record set for Sonoma Cty: $707,000!

Median Home prices SOARING in Sonoma County!

Fire victims bidding up home prices evident here in the city of Sonoma

We are seeing some pretty dramatic increases in Median home pricing due to the purchases made by not only fire victims but also those seeking to live in our gorgeous “Destination” county. Graph above shows the City of Sonoma and how the median home price has soared over last year at this time. Areas in Sonoma County where the “Active” listings median home price tops $1,000,000: Sea Ranch ($1,174,500), Sonoma ($1,587,500), Petaluma West ($1,087,000), Sebastopol ($1,150,000), Healdsburg ($1,395,000.

However, inventory continues to be weak but is surging. The amount of “Active” or “Showable” listings for the entire county  jumped over 800 this week but this is still a weak number. The only area of Sonoma County with some double digit price segments is in the NorthWest area of Santa Rosa. So still skinny. Ironic that the 2nd hardest area hit by the October fires has the most inventory.

Remember, our inventory reflects the following areas of Sonoma County, a population over 500,000:  Santa Rosa NW,NE,SE,SW, Petaluma E and W, Healdsburg, Cotati, Rohnert Park, Windsor, Sebastopol, Russian River, Sonoma (city of), Coastal Sonoma, Penngrove, Cloverdale, Oakmont,Annapolis, Sea Ranch

Pricing your Home to sell in a post-firestorm world? Appraiser Bruce Ford gives insight this Sunday!

Bruce Ford, Appraiser

I’m pleased to welcome back Bruce J. Ford
Chief Appraiser / Nor Cal Quality Appraisals to the new shiny studios of KSRO THIS Sunday, June 3rd! He’ll be on once again discussing the value world of real estate. Questions I’ll have for Bruce? Appraisals–are they still coming in at contract prices? Effects of the fires 8 months later. Pricing of homes being offered to the marketplace. This and a whole lot more Sunday, 9 to 10am, pst, KSRO, 1350AM or 103.5 and 94.5FM.

Bruce J. Ford,  Chief Appraiser / Nor Cal Quality Appraisals

www.NorCal-Quality.com 

NOW – our 26th year serving Sonoma, Marin and Napa counties (CA.)  “Value Driven by Excellence”