Napa Real Estate Report – Second Quarter 2014

The Moore Group July 21, 2014

Napa County: Q2 Results

After a slow first quarter, Napa real estate activity in Pacific Union’s Napa County region picked up noticeably in April, performed even better in May, and shot off the charts in June. The second quarter of 2014 saw a large increase in the supply of available homes, and buyers were waiting; as soon as a well-priced property came on the market, it sold.

All price points saw strong sales activity across the county, with exceptional demand for winery properties and vacant land suitable for development. Distressed properties – short sales and bank-owned homes – have virtually disappeared from the marketplace after accounting for half of all sales just a few years ago. Home prices have stabilized, and multiple offers, a staple of nearly all sales last year, have waned. In short, Napa’s real estate markets have largely returned to normalcy after a tumultuous seven years of boom, bust, and recovery.

Looking Forward: The third quarter looks to be an active time for home buying and selling, even though sales typically slow a bit after schools let out for the summer and families pursue vacations. Plenty of buyers will be watching – and bidding – in the months ahead.

Defining Napa County: Our Napa real estate market includes the cities of American Canyon, Angwin, Calistoga, Napa, Oakville, Rutherford, St. Helena, and Yountville. Sales data in the charts below includes all single-family homes in Napa County.

Median Sales Price

The median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price. The median price has hovered around $500,000 over the past 12 months indicating the Napa real estate market has reached an equilibrium point.28

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Months’ Supply of Inventory

The months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market. The First Quarter of 2014 averaged an MSI of over 4, but due to increased activity in the Second Quarter, the MSI dropped to 3.1 in June. We expect the MSI to go back over 4 in the Third Quarter of 2014, because of a recent influx of inventory.29

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Average Days on the Market

Average days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.30

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Percentage of Properties Under Contract

Percentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.31

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Sales Price as a Percentage of Original Price

Measuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.32

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A Closer Look at Napa County

Napa and St. Helena are showing the most explosive growth from the First Quarter with 22% and 61% increases in volume sold. The growth is coming mostly from higher sales prices, not from an increase in units sold.33

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Property sales of over $3 million saw a huge jump in volume and units sold in the Second Quarter, 99% and 200% respectively. This was somewhat expected considering the excellent performance of the stock and high end art market over the last year, Ultra Luxury Real Estate tends to lag 6-12 months behind.34

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