Three weeks ago, RealtyTrac put out a rather alarming report that concluded that based on metrics of sale prices and unemployment figures, 65 percent of housing markets in the country are worse off than they were four years ago.
But if we consider other metric, we’ll see that Sonoma County is actually better off than it was in 2008, with rising home prices, greater affordability and increased confidence.
For Sonoma County, real estate hit bottom at the start of 2011, when the median home price was a mere $354,000 in Petaluma. Contrast that with this October, when the median home price in Petaluma was $423,000.
And what about affordability?
For the vast majority of homebuyers, homes are mortgaged, and therefore the actual monthly payment of a home can have as much do with interest rates as it does with price.
In 2008, the average mortgage rate for a 30-year fixed loan was 6.25 percent. For easy math, on a purchase price of $359K with a 20 percent down payment, that yielded a monthly mortgage payment of $1,768. That same mortgage today can be had for 3.7 percent, and that same hypothetical purchase yields a payment of $1,322.
That means that the same home today costs $446 less per month to own than it did in 2008. That’s a 33 percent increase in affordability!
Interest rates are also down, by almost 68 percent. If that alone isn’t enough to convince you that today is a far better market than 2008, there’s one more things to consider - confidence.
Quite literally, homes are selling like it’s 2007. Sellers are including “holding periods” with their listings, five and twelve offers are the norm for a single property, and appraisers are again having trouble substantiating rising sales prices.
Going back to the August of 2008, prices in Sonoma County had dropped 24% from the beginning of the year. In which market would you have more confidence, one with 6.25 percent interest rates where prices had fallen a massive $87,000 in 8 months, or our market, with 3.7 percent interest rates where prices have risen $59,000 over the same timeframe?
For someone who has worked in Real Estate the past eight years, it’s easy to diagnose the health of our current market against the uncertainty of past years.
In doing the statistics the conclusion is crystal clear - RealtyTrac’s findings of a dour housing market simply don’t apply to Petaluma. Not only have Sonoma County’s prices recovered, but so has affordability and buyer confidence. It’s a great market.
Owning a home still isn’t as immediately affordable as renting (sorry, that was 2011), but it’s still the best market we’ve seen in a long time.
Armand Ramirez is a Realtor and CDPE with Century 21 Bundesen. He can be reached at 707 771-0550 or Armandramirez.com