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There goes the neighborhood! Median Price Sonoma Cty breaks $400,000 barrier–Now at 2003 Pricing!

So when the market TOOK OFF one of the thresholds it first encountered was the fabled $400,000 median price barrier–that was BACK in 2003. So TEN years later here we are again at another threshold? Or peak? Our median kept thundering along hitting a record $630,000 at the height of the bubble market in 2007. A whole bunch of foreclosures, loan Mods and Short-Sales later we are crossing the Rubicon once again. What can hold us back?

  • The fed bumping interest rates into the 5% range?
  •  Lender tightening? Pricing frightening away investors?
  •  Europe exploding or more like collapsing under their economic woes?

What is the problem about exceeding the $400,000 Median? For many underwater households an increasing median price and price appreciation equate to a skin-diver snorkeling vs. a deep sea underwater vessel! Like when you look up while underwater and the closer to the surface you can start making out clearer object?  Those underwater are saying, “Go baby! Go!”  However, our crop of first time home buyers may be getting desperate as the median continues to climb. The higher it goes the less home one qualifies. FHA, VA buyers, low down folks, already snubbed for cash buyers, are seeing the dream slip through their fingers AGAIN!

At the height of the last big bubble market, 2007, our “Affordability Factor”, based on the median income of Sonoma County, was 6.5%. This meant  ONLY 6.5% of families earning the income could buy a home. Our “Affordability Factor” was that of Santa Barbara with a median home price of $1,100,000. But the scariest portion of the last bubble market was the DUMB money out there. Fog a mirror—YOU’RE QUALIFIED. That is gone from the system. My friends keep telling me look out, $630,000 here we come. But I think the last 3 years of our market was all fueled by EZ lending practices and EVERYONE up the real estate food chair looking the other way. It went all the way to Moody’s who rated loan packages as A paper when the package was mixed with junk from all over the state of California and beyond. The economic boys and girls started scratching their heads when default rates, historically in the single digit range, jumped to double digits just MONTHS after origination.

  But “Frank-Dodd Legislation” should make this an impossibility. Low inventory will drive the market to a point. WE shall see. Stay tuned!Below–Median Sales Price up 26% over last year and now sitting at $402,000 of TOTAL market (Condos, SFD’s and Country Property).

 

 

 

 

 

 

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