Let me share some facts and information from the trenches that may help guide you as you make decisions for your real estate holdings:
The virus’ ultimate impact on Bay Area real estate has been to create a huge surge in demand for Country Property in wine country. People living throughout the more populated parts of northern California are coming here to find a country home where they can escape from the crowds, have some sort of protective isolation and work from home in a more beautiful, enjoyable and spacious setting than in SF or Silicon Valley. Some plan to sell their main residence and move up here permanently but many are putting a foot in the water with a second home, for the moment. Many see this as a future retirement home or investment property.
Key Elements These Buyers Are Looking For
good INTERNET access is key for them to work from home
ability to use for vacation rental; exclusion zones are undesirable for them
commute times and distance to major highways
quiet properties, generally not in subdivisions, on larger lots
easy care maintenance
out of the main ‘fire corridors’- and with second routes for exit if needed
Many local residents are also thinking of changing homes. Most of this is driven by the desire to have different amenities and many are buying more square footage. More people working from home. Kids are home more. Gyms and pools are closed. People who are part of a household generally want more separation of space. They may want 1-2 home offices, and room for a gym, pool or a playground.
Safety First: We take serious precautions in marketing and showing properties these days. No Open Houses. No Broker tours. All visitors must attest that they are symptom-free, not Covid positive or been around anyone who is, wear a mask and in addition, I ask all clients to wear gloves when viewing homes. This is the best way to ensure that we protect buyers and sellers from touring property. Everyone is happy to comply and we have to be diligent to keep everyone safe.
Many local residents are spooked by the frequency of recent fires and thinking of leaving our area. We hate to see this and past experience suggests that once things settle down a little, this will abate. Many aim to stay on the west coast and are looking at Washington & Oregon as well as Texas and Nevada. Boise, Asheville & Phoenix are also popular destinations.
Properties that have been in areas which have burned are seeing a dip in demand and we expect prices to reflect that in the coming year.
Insurance is a major issue in the market now. There are some properties that remain uninsurable or carry exorbitant premiums. This is delaying or causing cancellation of escrows and can also affect home pricing so it’s important to be able to offer an insurance estimate when you market your home.
Here’s a really good bit of news that few people are aware of. Having passed Prop 19, we now have a whole new situation for seniors who want to keep the tax basis of the homes they own. If you are over 55 years old you can now
transport your tax basis THREE time in your life, not just once!
Move anywhere in the state and keep you tax basis!
Buy a more expensive replacement property than the one you sell and only pay the tax uplift between the two
This is a huge change which will affect almost a quarter of our population. This enables seniors to move anywhere in the state and should be really good news for real estate. The additional tax income from property transfer taxes will largely benefit the schools.
There is a downside to this law that affects heirs who inherit properties- if it’s not your primary residence you may lose the tax basis that the family had previously. As always, ask a tax advisor for details but we wanted you to know about these important changes.
The Market as of November 2020
In February, when Covid-19 first reared its ugly head, we thought that would be the end of our real estate year. Nothing could prove further from the truth. As of now, we are on target and ahead of last year in the numbers of properties sold (units) and the median prices. In January, we’ll release our 2020 year end, detailed analysis of Country Property versus Homes in Town. For now, here are the overall Sonoma County real estate stats.
Next year we fully expect to see more inventory come on the market than we’ve had in the past few years. Given the huge amount of as yet-unsatisfied demand, we do not at this point project a drop in market prices. Overall, we are expecting a flat line on pricing next year. This obviously could change if the overall economy fails to recover as expected.
Should You Really SELL Right Now?
Prices remain at an all-time high so it’s not a bad time to sell if you think you’ll want to move in the next year or so. One thing we’ve all learned is that the future is uncertain. It’s not smart to try to time the market and wait for its zenith. A few things to bear in mind as you go forward:
Turnkey homes sell the best- Yes but not every home fits that criteria. Talk to us about Compass Concierge. We can invest the money to ‘fluff your home up’ and make it more appealing to the buyers out there. You’ll sell more quickly and for more money and it doesn’t cost you a penny!
Preparation is everything- don’t go to market until you have all your ducks in a row. Presenting the home in the best possible light is one thing, staging if necessary, but also have the most important inspections and disclosures, including insurance estimates all ready to share with buyers.
Negotiation makes all the difference- armed with all this good information pre-launch, you’ll have much less potential for ‘down-stream renegotiation’ which happens when buyers turf up undesirable info about a property while in escrow and then use all their bargaining power to get a price reduction or credit. We are highly skilled, professional negotiators and this puts more money in your pocket, to be sure.
Buyers aren’t stupid- it’s amazing how many sellers think that Silicon Valley millionaires with buckets of cash will come up and pay anything for their property. I literally hear this every week. These people didn’t get rich by being naïve and paying over market value. Get real. Get real quality advice and listen to it!
What About BUYING Right Now?
Everyone seems to want to ‘time the market’ right now. Buyers thinking that prices might fall are on the fence, waiting to see what will happen. This also happened in 2008 and 2009 after the foreclosure crisis. Property values fell to about 2/3 what they had been and buyers swarmed around waiting to see if it would go even lower. Those that waited, lost.
Interest rates are the most compelling argument for buying a home now. I bought my first home at the tender age of 23 and paid 13.5% interest. One of the best investments I ever made. I sold it 5 years later for an 80% profit. Remember, if rates go up, your buying power goes down so there really hasn’t been a better time to take the plunge.