The key word in this article is “median” home prices. This is not 32% equity growth….although, we are experiencing equity growthas well.. (Click on the headline above to see the PD article) In the lower (under $400,000 especially) price points, Mike and I are seeing multiple offers and overbidding. It’s really tough out there for first time buyers. There is no doubt that, in the lower price points especially, there is appreciation. The 32% this article is referring to is an increase in the median home price.
So, why such a jump in the median price? The median price is the middle, not an average, but the middle point between prices of recorded home sales. Half are higher, half are lower. In large part, this jump in the median is because the lower priced home inventory has dried up. There are much fewer foreclosed homes (REOs) on the market…the foreclosure market has been driving the low end of the market the last few years, and keeping the median price down. More homes selling in the lower end means a lower median price. Conversely, more homes selling in higher price points means a higher median price.
So, what’s fueling the increased median? In a good market, first time buyers become move up buyers, strengthening the mid- range market. When the real estate market crashed, this element of the equation all but disappeared.. Move up buyers are now coming back into the market….and a surge in relocating and/or retiring buyers and second home buyers are coming into town as well. Sonoma county, a ” destination county”, hasn’t been so affordable, or so desirable, in years. We are also seeing an influx of higher paid professionals ( Sutter, Medtronics, tech industry, etc.) which are all buoying the upper end.
What about an actual increase in equity? Well, the scarcity of product and increase in regular “equity” or non-distressed sellers (who tend to hold out for higher prices) in a particular price point are driving home prices up. It’s classic “supply and demand”. We are definitely getting closer to a more ” normal ” market….which is good for everyone.
Click on the headline above to see the PD article. As a local Realtor, I have seen Robert Digitale immerse himself in local real estate news over the last few years, as any good reporter should be involved and educated in the subject they choose to report about. He often attends the local Realtor meetings and makes calls to Realtors …he really makes an effort to get it right, and he does a great job. The bottom line is; Look beyond the “attention grabbing” headline and read the whole story, and ask a local Realtor for a more specialized look at the your market. Mike and I are always happy to help. ~ Allison