Friday, October 24, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Small inventory pushes home-price increase in region

home_prices_7_18_12

According to San Diego-based real estate service DataQuick, the median price of the 523 homes sold in the county in January was $219,000, the highest since May 2010. (Robinson Kuntz/Daily Republic)

By
From page B7 | February 17, 2013 |

FAIRFIELD — It’s a buyer’s market for price and a seller’s market for terms.

That’s how Don McDonald, managing partner of Re/Max Gold Elite in Fairfield, describes Solano County’s real estate market. And it’s not changing, because the inventory of homes in the county is at a historically low level and prices – while increasing – are still dramatically below those of a half-decade ago.

According to San Diego-based real estate service DataQuick, the median price of the 523 homes sold in the county in January was $219,000, the highest since May 2010, but still well below the market peak of $490,000 in November 2005. According to the Bareis Multiple Listing Service, which uses slightly different criteria, the January numbers were 437 and $224,750.

Regardless of the source, prices are up, inventory is low.

“We were the first into the (mortgage crisis) problem and we’re coming out of it quicker and more aggressively than other areas,” McDonald said.

As prices increase – January was the eighth straight month in Solano County of month-over-month increases compared to a year earlier – the number of available homes stays low. For example, just 377 homes were available countywide in January, compared to 636 a year earlier. And the 2012 number wasn’t high, according to McDonald.

“There’s no light at the end of the tunnel with inventory,” he said. “People ask if there will be a double-dip if the market comes back, but never in 100 years of history have there been (inventory) numbers like this. We’ve gone from six months ago, when there was two and a half month’s supply (of homes for sale), to where it’s about a week’s supply now. There’s literally 30 potential buyers for every house that’s available.”

John Wilkerson, a Realtor with Gateway Realty in Vacaville, agreed.

“There’s absolutely no inventory,” he said. “There’s less than seven days’ inventory on the market, so if I’m a buyer, I realize I’m going to have to pay over the asking price and I’m not getting any closing costs. If you’re a seller now, you get 10 to 15 offers right away if you have a nice home that’s priced right.”

The result of the small inventory, according to McDonald, is a continued trend of homes being purchased by investors who turn them into rentals.

“The market is saturated with investors,” he said. “People say, ‘Send me a house and I’ll buy it.’ ”

Wilkerson said that trend has slowed somewhat in recent months due to increasing prices, but continues.

The dearth of available homes is consistent across the region. According to the MLS, Fairfield inventory was down 27 percent in January compared to a year ago, while Suisun City took at 48 percent drop and Vacaville was down 33 percent. Rio Vista was up slightly, but the numbers are small enough that they aren’t statistically relevant.

McDonald said that the pattern of few available houses and plenty of investors, which makes it difficult for first-time buyers or even people looking to sell their house and move up, will continue.

“That will stay until the rental market is saturated and rents come down,” he said. “If you buy a home at $285,000 at 3 percent, your payment will be significant less than you can rent it for.”

Prices will have to increase and interest rates would need to increase to change that formula, McDonald said.

“This is the typical cycle of real estate, but it’s more extreme,” he said. “You have buyer’s markets, then seller’s markets, but now we’re seeing bigger peaks and valleys. We’re probably looking at three years of crazy appreciation with values up, which will bring a whole new set of problems.”

McDonald said he expects the Solano County market to finally find balance at a median price of $280,000 to $300,000 – but thinks it might be three to five years before that finally happens.

Wilkerson said that the idea of a “shadow inventory” – a large number of homes owned by banks that could be dumped on the market – is still a popular topic, but that real estate professionals have to deal with what they know.

“Our activity says there are X amount of homes that are there to sell,” he said.

Across the nine-county Bay Area region, it was the strongest January sales in six years and the 10th straight month of year-over-year increases.

Solano’s median price is the lowest in the Bay Area by a good margin – the next-lowest median price in January was $301,500 in neighboring Contra Costa County. However, the 523 homes sold ranked behind only Alameda, Contra Costa and Santa Clara among the nine counties, indicating a regionwide housing shortage.

The market continues to be affected by distressed sales – short-sales or foreclosures. In December, the most recent month for which data from the California Association of Realtors is available, 58 percent of Solano County sales were distressed sales. That was down from 70 percent a year ago, but up from 55 percent in November. Statewide, 36 percent of home sales were of distressed properties.

“That’s the number in Solano County for a few factors,” McDonald said. “There was a surge of growth, building and homeownership from about 1998 to 2005 at the same time prices inflated, so we have a high distress rate. Values lost about 60 percent and a lot of people are still in a situation where they can’t sell their home for what they owe.”

The result is banks becoming more aggressive in encouraging short sales, where the homeowner and seller agree on a price that’s below what’s owed, according to McDonald.

So with this market, what should a prospective homebuyer do?

“You obviously need to know how much you’re comfortable to pay,” Wilkerson said. “Know that you’re going to pay over the asking price and all closing costs. It’s important not to get too emotional about it, but to be patient.”

McDonald agreed.

“The best scenario is to pick a good agency and broker with a lot of homes,” he said. “The buyer needs to understand that the price will be good, but you have to sacrifice some of it. If you’re pre-approved at a certain level, bid on something for less because you’ll have to pay over the asking price.”

Reach Brad Stanhope at 427-6958 or bstanhope@dailyrepublic.net. Follow him on Twitter at www.twitter.com/bradstanhope.

Brad Stanhope

Brad Stanhope

Brad Stanhope is the Daily Republic's news editor. He began his career at the DR in the last millennium. He spent 17 years as a sports editor and three years as the associate editor before spending three years away from the newspaper (though continuing as a columnist). He returned in December 2010 as news editor. Brad lives in Suisun City with his wife, Mrs. Brad, and two sons. He enjoys cheese.
LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

For sale: Solano home with Nike missile bunkers

By Ian Thompson | From Page: A1 | Gallery

 
 
Salvation Army debuts giant kettle for holidays campaign

By Robinson Kuntz | From Page: A3 | Gallery

Industrial space hot, office not in Fairfield

By Ryan McCarthy | From Page: A3

 
Suisun City police log: Oct. 22, 2014

By Susan Hiland | From Page: A12

 
Fairfield police log: Oct. 22, 2014

By Susan Hiland | From Page: A12

.

US / World

New survey details vast scope of teen dating abuse

By The Associated Press | From Page: A1

 
Boosters seek to keep Bay Bridge light display

By The Associated Press | From Page: A3 | Gallery

Video shows bikers taunting California officer

By The Associated Press | From Page: A4

 
California man guilty in wife’s stabbing death

By The Associated Press | From Page: A4

Brown opens up spending in campaign’s final month

By The Associated Press | From Page: A4

 
Driver attacked after ice cream truck kills boy

By The Associated Press | From Page: A4 | Gallery

$50,000 reward to find killer of Anaheim girl, 9

By The Associated Press | From Page: A4

 
Suspect in girl’s 1984 killing was police employee

By The Associated Press | From Page: A5

PTSD argued in case of Marine jailed in Mexico

By The Associated Press | From Page: A5 | Gallery

 
US tech firm fined for underpaying Indian workers

By The Associated Press | From Page: A5

Paintings in national parks spark probe, furor

By The Associated Press | From Page: A6

 
Prisoner in Afghanistan to be tried in US

By The Associated Press | From Page: A7

US, SKorea agree to delay wartime control transfer

By The Associated Press | From Page: A7

 
US officials: Iraqi army regrouping slowly

By The Associated Press | From Page: A7

Gary killings put spotlight on abandoned buildings

By The Associated Press | From Page: A7

 
Lawmakers seek to end benefits to former Nazis

By The Associated Press | From Page: A7

For teen with passport, Syria trip can be seamless

By The Associated Press | From Page: A7

 
Border deaths drop to 15-year low

By The Associated Press | From Page: A7

Canada gunman wanted a passport to go to Mideast

By The Associated Press | From Page: A10

 
NYC mayor: Don’t be alarmed by doctor’s Ebola

By The Associated Press | From Page: A10

NK experts: US must apologize to free detainees

By The Associated Press | From Page: A10

 
Ebola: A crash course in fear and how it hurts us

By The Associated Press | From Page: A10

Cremation fears leave empty Ebola beds in Liberia

By The Associated Press | From Page: A10 | Gallery

 
Ex-Mountie hero of shooting at Canada’s Parliament

By The Associated Press | From Page: A10

NY doctor back from Guinea has Ebola, 1st in city

By The Associated Press | From Page: A12

 
.

Opinion

Not sure I trust government on Ebola

By Letter to the Editor | From Page: A11

 
Planning Commission not listening to the people

By Letter to the Editor | From Page: A11

.

Living

.

Entertainment

Review: ‘John Wick’ delivers non-stop action

By The Associated Press | From Page: B2

 
.

Sports

At 1-all, World Series moves to quirky Giants park

By The Associated Press | From Page: B7

 
Giants’ Hudson to face Royals’ Guthrie in Game 3

By The Associated Press | From Page: B7 | Gallery

College notebook: Cordes chosen to try out for USA national team

By Paul Farmer | From Page: B7 | Gallery

 
Realign the Bulldogs? Not a good a idea

By Paul Farmer | From Page: B7

Judge questions $75M NCAA concussion settlement

By The Associated Press | From Page: B8

 
Arizona men near-unanimous pick by media to win Pac-12

By The Associated Press | From Page: B8

Raiders may lose Woodley to biceps injury

By The Associated Press | From Page: B8 | Gallery

 
No. 6 Oregon looks to extend streak against Cal

By The Associated Press | From Page: B8

The Write Way: KC coach’s lineup cards are artful

By The Associated Press | From Page: B8 | Gallery

 
Homecoming still on but no game for VCS

By Daily Republic staff | From Page: B8

Compton among PGA leaders at Sea Island

By The Associated Press | From Page: B8

 
Steve Nash ruled out for season with back injury

By The Associated Press | From Page: B8

Manning, Sanders lead Broncos past Chargers, 35-21

By The Associated Press | From Page: B9 | Gallery

 
Prep football capsules: Week 8

By Paul Farmer | From Page: B9

Sports on TV/Local sports for Friday, Oct. 24, 2014

By Paul Farmer | From Page: B10

 
This date in sports history for Friday, Oct. 24, 2014

By The Associated Press | From Page: B10

.

Business

Honda Fit becomes even more intriguing small car

By Ann M. Job | From Page: C1 | Gallery

 
Letting your car find a spot and park itself

By The Associated Press | From Page: C2 | Gallery

Zuckerberg speaks Chinese, Beijing students cheer

By The Associated Press | From Page: B11 | Gallery

 
Cloud business lifts Microsoft’s quarterly results

By The Associated Press | From Page: B11

A blue Christmas for Amazon?

By The Associated Press | From Page: B11

 
.

Obituaries

Mark Dean Lindsay

By Nancy Green | From Page: A4

 
.

Comics

Dilbert

By Daily Republic Syndicated Content | From Page: A8

 
Blondie

By Daily Republic Syndicated Content | From Page: A8

Crossword

By Daily Republic Syndicated Content | From Page: A9

 
Bridge

By Daily Republic Syndicated Content | From Page: A9

Word Sleuth

By Daily Republic Syndicated Content | From Page: A9