Saturday, April 18, 2015
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 [email protected] Follow him on Twitter at www.twitter.com/bradstanhope.

Brad Stanhope

Brad Stanhope

Brad Stanhope is a former Daily Republic editor. He began his career at the DR in the last millennium. He spent 24 years as a sports editor, associate editor and news editor before leaving the Daily Republic in 2014. 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

 
 
Child care program helps teen parents, students

By Susan Winlow | From Page: A1, 1 Comment | Gallery

 
Wood students entertain guests at Epcot

By Susan Hiland And Susan Winlow | From Page: A2

 
 
 
Solano County Science Fair continues to grow

By Bill Hicks | From Page: A4 | Gallery

 
Take stock of where you are now, and act

By Murray Bass | From Page: B8

 
Fairfield police log: April 16, 2015

By Susan Hiland | From Page: A9

Suisun City police log: April 16, 2015

By Susan Hiland | From Page: A9

 
Weather for Saturday, April 18, 2015

By Daily Republic staff | From Page: B10

.

US / World

Family awarded rights to rare coins

By The Associated Press | From Page: A2

 
Dog flu outbreak sweeps across the Midwest

By The Associated Press | From Page: A5, 2 Comments

AG announces anti-bias training program

By The Associated Press | From Page: A5

 
Investigators say identity-theft suspect had 74 aliases

By The Associated Press | From Page: A5

 
Gas-line blast closes Highway 99, injures at least 11

By The Associated Press | From Page: A9

 
Iraqi officials believe Saddam’s top deputy killed

By The Associated Press | From Page: A9

Germany mourns citizens lost in plane crash

By The Associated Press | From Page: A10

 
Following Alps crash, debate over pilotless planes heats up

By The Associated Press | From Page: A10

.

Opinion

 
Time for meaningful financial reform

By Paul A. Volcker | From Page: A8, 1 Comment

 
.

Living

Today in history: Saturday, April 18, 2015

By The Associated Press | From Page: A2

 
Community Calendar: April 18, 2015

By Susan Hiland | From Page: A2

Horoscopes: April 18, 2015

By Holiday Mathis | From Page: A7

 
My daughter is upset that I didn’t attend my former in-law’s funeral

By Kathy Mitchell and Marcy Sugar | From Page: A7

Idea from Adam Sandler film used to soothe dementia patients

By The Associated Press | From Page: B8

 
.

Entertainment

.

Sports

Athletics fall to Royals 6-4 in rematch of AL wild-card game

By The Associated Press | From Page: B1 | Gallery

 
Warriors, Pelicans enter series with different pedigrees

By The Associated Press | From Page: B1

Prep softball: Seldon powers Rodriguez to victory over Armijo

By Daily Republic staff | From Page: B1

 
JC baseball: Falcons win as Pavlovsky, Evans homer

By Daily Republic staff | From Page: B1

Prep badminton: Mustangs roll to 15-0 win over Wolves

By Daily Republic staff | From Page: B1

 
Prep baseball: Haney hurls Vanden to 3-2 win over Benicia

By Daily Republic staff | From Page: B1

Armijo nears girls soccer title with 2-0 MEL win

By Daily Republic staff | From Page: B1

 
SCAC girls roll past MEL 55-28 in All-Star hoops game

By Marcus Lomtong | From Page: B1 | Gallery

SCAC boys slip past MEL in entertaining All-Star game

By Marcus Lomtong | From Page: B1 | Gallery

 
Brazil eyes historic medal haul in 2016 Rio Olympics

By The Associated Press | From Page: B2

2 weeks before Mayweather-Pacquiao, not a ticket to be seen

By The Associated Press | From Page: B2

 
Big Ten’s Delany lays out plan for freshman ineligibility

By The Associated Press | From Page: B2

Collmenter shuts down Giants, gets three hits in D-backs win

By The Associated Press | From Page: B2

 
In Aaron Hernandez murder case, question lingers: Why?

By The Associated Press | From Page: B2

Merritt’s 61 trumps Masters champion Spieth’s 62

By The Associated Press | From Page: B2 | Gallery

 
2 minor league baseball teams to test game with 5-pitch rule

By The Associated Press | From Page: B2

NBA could alter schedule, but no change to playoffs, lottery

By The Associated Press | From Page: B2

 
Coonan stepping down as Santa Clara’s athletic director

By The Associated Press | From Page: B2

Browns quarterback Johnny Manziel says he “let down” fans

By The Associated Press | From Page: B2

 
49ers fullback Miller at home in Georgia after March arrest

By The Associated Press | From Page: B2

 
Rockhold hopes win over Machida launches him into contention

By The Associated Press | From Page: B2

Martina Hingis to make singles comeback in Fed Cup match

By The Associated Press | From Page: B2

 
Injured Giants fan throws out first ball in San Jose

By The Associated Press | From Page: B2

Flyers fire head coach Craig Berube after 2 seasons

By The Associated Press | From Page: B2

 
Hornets GM Cho: Stephenson ‘didn’t work like we expected’

By The Associated Press | From Page: B2

Before ruling out an upset in NBA East, listen to these guys

By The Associated Press | From Page: B3 | Gallery

 
Western Conference teams face perilous path to NBA Finals

By The Associated Press | From Page: B3

 
This date in sports history for April 18

By The Associated Press | From Page: B4

Back on the USA Network: Sports return with NHL playoffs

By The Associated Press | From Page: B10

 
.

Business

California home prices hit new 7-year high, sales rebound

By The Associated Press | From Page: B5

 
Secrecy shrouds decade-old oil spill in Gulf of Mexico

By The Associated Press | From Page: B5 | Gallery

Frederick’s of Hollywood reveals closing of retail stores

By The Associated Press | From Page: B5

 
Don’t plan to line up for Apple Watch next week

By The Associated Press | From Page: B5

Google shaking up search recommendations on smartphones

By The Associated Press | From Page: B5

 
Glaxo recalls flu vaccine due to potency problem

By The Associated Press | From Page: B5, 1 Comment

.

Obituaries

Douglas Craig Sparks

By Nancy Green | From Page: A4

 
Carole Anspach

By Nancy Green | From Page: A4

Dennis Burkhart von Ting

By Nancy Green | From Page: A4

 
.

Comics

Beetle Bailey

By Daily Republic Syndicated Content | From Page: A6

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: A6

Rose is Rose

By Daily Republic Syndicated Content | From Page: A6

 
Pickles

By Daily Republic Syndicated Content | From Page: A6

Peanuts

By Daily Republic Syndicated Content | From Page: A6

 
Dilbert

By Daily Republic Syndicated Content | From Page: A6

For Better or Worse

By Daily Republic Syndicated Content | From Page: A6

 
Baldo

By Daily Republic Syndicated Content | From Page: A6

Garfield

By Daily Republic Syndicated Content | From Page: A6

 
Sally Forth

By Daily Republic Syndicated Content | From Page: A6

Baby Blues

By Daily Republic Syndicated Content | From Page: A6

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: A6

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A6

 
Blondie

By Daily Republic Syndicated Content | From Page: A6

B.C.

By Daily Republic Syndicated Content | From Page: A6

 
Zits

By Daily Republic Syndicated Content | From Page: A6

Crossword

By Daily Republic Syndicated Content | From Page: A7

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: A7

Sudoku

By Daily Republic Syndicated Content | From Page: A7

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: A7

Bridge

By Daily Republic Syndicated Content | From Page: A7