NORTH BAY — While a shortage of entry-level housing stock remains a key concern in the North Bay, rising home values and a dwindling inventory of distressed properties has helped to restore greater normalcy to the region’s housing markets, according to leaders in residential real estate.
Trends for individual counties and cities differ, but the North Bay as a whole has seen housing prices improve markedly over the past year. It is a development with a number of implications, helping some current homeowners to refinance and potentially stave off foreclosure while giving others the motivation to pursue a sale.
“We think that’s going to continue — a more normal market,” said Bill Facendini, president of Terra Firma Global Partners. “2014 will be more traditional, more balanced.”
The San Francisco Bay Area as a whole has seen median home prices rise 31.7 percent in the 12-month period between August 2013 and 2012, according to San Diego-based DataQuick. Distressed sales — foreclosures and “short sales,” accounted for 15 percent of the resale market, down from 37.8 percent one year ago.
In places like Marin County, values in some central areas have nearly risen to levels seen before the recession, said Blaine Morris, president-elect of the Marin County Association of Realtors.
“Everybody who bought a house in 2010, 2011 feels pretty smart right now,” he said.
It is a trend that, along with an uptick in interest rates, has given pause to some prospective homeowners and caused a period of frantic bidding to quiet down significantly, Mr. Facendini said.
“I think the consumer is taking a step back,” he said. “Everyone is still wanting to make a good business decision, even if it’s their home.”
Those buyers have instead turned to rentals, helping to drive a steep climb in prices throughout the North Bay.
Median rental prices, including units ranging from studios to three-bedroom townhomes, have increased an average of 8.4 percent in Marin County and reached more than $2,000 in the 12-month period ended June 30, according information from Novato-based apartment data firm RealFacts. Rent is up an average of 6.9 percent in Sonoma County, at $1,335. Napa County rents are up 5.5 percent, averaging $1,446, and Solano County rents are up 1.3 percent, at $1,149.
Those prices have begun to rival the going rate for some monthly mortgage payments, further supporting the evidence of simmering demand for home purchases, Mr. Morris said.
“The rental market is absolutely horrendous. Well — it’s great if you’re a landlord,” he said.
The hike in rent has been an attractive trend to investors, who are able to purchase rentals at what are still historically lower values and generate hefty returns when selling the property after several years. Investors purchased 21 percent of Bay Area homes in August — up slightly from July, but down from nearly 23 percent one year ago.
With more than 2,000 jobs expected from Rohnert Park’s Graton Casino alone, Mr. Facendini said that he expected that rental demand to continue for some time.
The most significant project to add housing stock in the region is the nearly 1,000-unit Napa Pipe development outside the city of Napa, which received the zoning vote required for its construction in June. Yet the project as approved has less than one-third the housing units that were originally proposed, and the developer expects a period of 10-15 years before those homes are fully built.
It is a similar story to the so-called Hembree Village development in the town of Windsor, where a modified proposal that reduced housing units from 203 to between 80 and 90 units won approval in August.
While smaller than originally proposed, those projects still represent movement in a residential construction climate that “has been in the doldrums for about a dozen years,” said Keith Woods, chief executive of the North Coast Builders Exchange.
“The foreclosures had flooded the market. Now that is well on its way to being absorbed,” he said. “The classic home development — there are signs that it’s coming back.”
Individual municipalities have taken steps to allow that activity as well, with Mr. Woods identifying efforts to reduce the impact of developer fees in unincorporated Sonoma County, Petaluma and Santa Rosa.
He acknowledged the improving economy’s overall effect.
“Real estate prices — they can turn on a dime. We’re settling in on the true value of properties in this area,” he said.
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