Year over year statistical data for Solano County ending February , 2021
This report is generated around the 20th of each month once the previous months numbers have been posted. What we see here is a report generated for the Solano County Housing Market through February 2021. So we are always looking a month behind. Our statistics are derived from the Bay Area Real Estate Information Services (BAREIS) This is the Multiple Listing Service provider for all real estate brokerage in Solano County. If you have questions or wish to know a more specific account of your properties value and the timing of either selling or buying we are always happy to jump on a Zoom or meet with you at your property to evaluate and discuss a strategy. We can be reached via cell/text 707.580.3499 or email us at firstname.lastname@example.org
February always brings us agents joy. It is usually when our sellers start calling to get their homes ready for the spring selling season. Many of us are still waiting for the phone to start ringing as inventory levels are at an all time low. We listed 195 properties for sale in February this is down –1.5% from January 2021 and -55.7% from the same period a year ago. This means we are listing half as many homes for sale than we did a year ago. We Sold 282 homes in February 2021 which is also down -21.7% from January 2021 and -12.4% for the same period a year ago. A interesting number is our Pending sales which are at 397 which is up 10.6% from last month but ZERO% from a year ago. These number basically represent a full year of COVID-19 pandemic. Moving forward we will dive into March next month and start to see how we emerge from this pandemic. The real concern for everyone in the housing market remains inventory.
With inventory remaining the biggest concern you are undoubtedly going to see lots of postcards, mailers, social posts and basic advertising from the real estate industry begging you to sell. I continue to hear rumblings of how prices are getting so out of control the market has to crash. While I cannot argue with how home prices are going up faster than Tesla stock I can speak to the market crashing concerns. As of today there simply is no evidence of how this rise in prices is going to cause a crash. Consumers who have chsoen to purchase a home in the last 10 years have had the wherewithal to buy. They have the income to substantiate their payments, they are not locked into crazy adjustable ARM loans were their payment will double in couple of years. In fact this market is nothing like our housing crises from 2006-2009. Then everyone was lying to buy. Today that can’t happen. So unless unemployments its harder than it has across the more middle class tier their is not much more you can point to as cause for alarm. Hopefully we see more sellers in the coming months which could help balance things and lessen the demand.
The average price per square has flattened in February after 10 months of steady increases. At $303.00 per foot it’s a 13.5% increase year over year. March statistics should be more telling.
Our statistics tell us homes are selling in 35 days on market. However the real truth is the majority of home are selling within a couple of days with more offers than necessary. I feel sorry for first time homebuyers, buyers with little down payments and or buyers who are being pushed out from others with cash or stronger offers. It is really tough to buy in this market. I just got off the phone with a colleague who told me his most recent story of selling a home he purchased two years ago for $835,000. There was a brand new home development right above his home with spectacular views on over 1 acre and he and his wife kept walking by the new construction saying to themselves how much they wished they could buy one of these new homes. You already know where this is going right? One day they ran into the developer (This was a small development of 8 custom spec homes) who shared with the couple more info about the homes and gave them the full tour. They were sold. The quickly put the downpayment down to hold the property can scrambled to get their existing home built only two years ago on the market. Their new dream home was costing them $1,050,000. their existing home sold for $1,000,000 ($165,000 more than they paid) That’s a return on their initial investment of +20% in two years or $6,875 a month which by the way is more than most make a month working. This is truly a crazy market!
If we look at real number from February 2021 we can see that 60% of all properties sold in less than 30 days. (98 homes 1/3 sold in less than 10 days.) You can also see that if your home sold within 60 days you managed to get between 101.07% and 103.42% of the listed price. Sellers take a substantial hit in price when their home sits on the market for more than 60 days. This is why a good strong pricing strategy works best. Just because buyer demand is strong and homes are selling with multiple offers does not guarantee your home if not priced right will.
The bottom line is if you plan to sell anytime soon it is very important that you have a strategic pricing plan in place. If you are too aggressive and try and wait for the perfect buyer you may miss the opportunity to gain more. Personally we like to list home just under market value and allow at least 10 to 15 days of soldi market exposure after all the market is complete. I see a lot of homes listed as coming soon and selling before they even hit the market. You are leaving money on the table when this happens. With proper marketing in place, a strategic pricing plan your home will sell fast for above list and with a strong buyer.
We see a dip in both our average listed price at $658k (which is always higher than our sold price) as well as our sold pricing which at $525k is our first downward trend we have seen in more than 12 months.
I like our inventory chart below because it is showing that our inventory is increasing. Albeit at a very slow pace. We could actually see this number take off in the coming spring months. At .07 months we are sitting with 3 weeks of supply. This means if no other home got listed for sale we would run out of properties to sell in 3 weeks. Talk about no job security…
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Rent Vs. Buy Scenario
Interest rates remain in the high 2.6+ range and word came today that there are plans to increase these rates. In Solano much of the demand comes from two factors. One is affordability not just from low interest rates but higher housing costs across all our surrounding neighbors. We have personally sold dozens of homes in the last month to east bay couples who are ditching their condo/home rental unit for homeownership because in their words “We are paying $4,800 a month to rent in the East Bay and we can buy here for less.
East Bay Duplex
Rent one half of this duplex for $4,600 a month. 3 bedrooms, 1.5 bath and 1,300 sq ft.
Home For Sale in Fairfield, CA
Buy this 5 bedroom, 4 bath home with 2,850 sq. ft. for about the same rent you are paying.
Which home do you prefer? With commute not being a factor for most would be homebuyers now the idea of owning a home, with a yard, maybe raise a family is a welcoming realty. This scenario is contributing to the values going up. If you are a buyer in this situation you are not concerned about the price as much as you are affording the monthly payment. If you are renting for $4,600 a month that is like pouring money down the drain. If you are buying for $4,600 a month you are earning equity, you are saving on taxes. Nearly 2/3rds of the payment is a tax write off. The benefits of homeownership outweigh the benefits of renting.
Just released today is the next New COVID-19 Relief Package Unveiled: What the ‘American Rescue Plan’ Proposes
If we look into the future the biggest concern I have today is what the market will look like in 3 to 5 years when interest rates could be back up to the mid 4% or 5% range. It will be extremely difficult for a homeowner to sell and buy when they will be facing a payment twice the amount because interest rates have doubled. There is no crystal ball to look at and I am only guessing here but I don’t see how we can continue down this path with continued success. Something is going to give. If the government keeps rates low indefinitely then we will get through this but they start to climb significantly then I would worry. It’s simple math. Interest rates go up home values go down, interest rates go down and home values go up. Let’s hope the rates stay low…
Another option I see coming back is “Assumable Loans” remember those? I purchased my first home with an assumable loan. 12.8%. One way to overcome higher interest rates when lenders offering the loan to be assumable so a buyer can actually qualify and purchase the home at a lower interest rate.
The opinions expressed in this report are those of Don McDonald, Founding partner, and REALTOR with RE/MAX Elite Partners brokered through RE/MAX Gold. They are not in any way intended to express what RE/MAX, RE/MAX Gold or any other agent or brokerage may think. It is my honest analysis backed but some market data. Check back each month around the 25th or so for an update as we continue down this path.
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Each month we look at our most recent past months’ activity and compare it to a year ago and devise an overview of how the housing market is moving. During what all of us will remember as the COVID-19 Pandemic year has actually produced some extraordinary housing statistics. You probably know a REALTOR or two who are crazy busy. This is true for most agents who have been in business for 7+ years. The flip side is there are many REALTORS not having such a great year. The reason behind the 7+ year assessment is those agents who have been in business for longer than 7 years have a tremendous amount of past clients to pull from. We live in a world of distrust. It seems everyone is skeptical about everything. Our elections are questioned, the pandemic we are in is questioned and it seems as though trust has become a very big issue. Newer agents rely heavily on open houses, lead generation, and gaining trust from new prospects. Today that is challenging because consumers have such distrust they are tuning to referrals and recommendations more than ever. As one of the largest and most successful real estate teams in the county, we see our fair share of the market. RE/MAX Gold in Solano County has a near 15% market share which is about twice as much as our closest competitor.