Realty Outlook in the Napa Valley
By Kathleen Reynolds
The last year has been chaotic for workers. Entire offices of people are working from home. Retail stores closed, then opened, only to close again, sometimes permanently.
One profession that had a tumultuous time during the pandemic is realty.
We asked Napa realtors for their thoughts on the past year and the prospects for their industry.
“One of the biggest changes we have seen is the way we interact with buyers and sellers due to COVID,” says Lisa Bertolucci of Vintage Sothebys Realty. “There has been a huge uptick in the use of FaceTime, Skype, etc. to have virtual showings with clients. Reasons are both from being on lockdown during the height of COVID, as well as having a lot of out-of-area buyers not being available for in-person showings. The prevalence of 3D home tours also allows clients to view a home from anywhere in the world as if they are standing in it.”
Karen Cherniss, of Coldwell Banker Brokers of the Valley, has been a licensed realtor for 35 years and talks about the changes in the past year.
“2020 caused pent-up demand from buyers, and the inventory is at the lowest point ever. Inventory is judged by how many months’ worth is available, and it is at only two months-worth now. Low inventory means it is a seller’s market, and homes that come on the market are receiving multiple offers. The term ‘irrational exuberance’ is how we describe the current buying market.”
Realtor Ellen Politz, of Corcoran Global Living, agrees.
“We’re seeing a super-limited inventory. People check whatever the last sale price was in the area, regardless of condition, and think that’s the price they should pay. It happens a lot with out-of-area agents and buyers. We must explain to our clients if it’s overvalued based on parameters.”
“Clients may think they’re better off overpaying and locking in the rate and the home. The questions should be whether now is the right time for their family and does this make sense? Every buyer has to make that decision.”
Logan Songer of Coldwell Banker Brokers of the Valley explains the change in rates. “The California Association of Realtors (CAR) is forecasting that the median price across the state will increase 8% from $659,400 in 2020 to $712,100 in 2021. CAR is also expecting the number of sales to increase 11.2% in 2021 compared to 2020. The good news is that the Feds shared that they expect interest rates to stay low through 2023 which is positive news for buyers.”
While none of the realtors have a crystal ball, they concur there will be a somewhat normalizing of the market, but it will continue to lean toward a seller’s market.
“We’re still facing a shortage of housing supply, continued low interest rates and high buyer demand,” says Christina Winegar, with Golden Gate Sotheby’s International Realty. “The majority of the industry analysis predict a slight cooling of the market in terms of price appreciation. I also think we will see a slight cooling down of home appreciation values here in Napa. Homes will still appreciate but not at the unsustainable levels we’ve been experiencing. I don’t think we’ll see the extreme increase year over year we’ve been seeing. The dance isn’t going to stop but the tempo will begin to slow down.”
Whether you’re a buyer or a seller, what should a person look for in a realtor? All the realtors believe an in-depth knowledge of the local market is paramount.
“Look for someone who matches your own personality and way of doing business,” says Cherniss. “Most of all, look for someone who listens and who will work with your needs in mind, not their own.”
Winegar adds, “There are so many important things to look for when choosing an agent, but I’d say the most important things are honesty and integrity, contract strategy and negotiating skills. These come through years of experience and on-the-job training.”
The bottom line, says Cherniss, is listening to your Realtor.
Cherniss also says that COVID-19 has influenced buyer “wants.” “People are working from home and we’re seeing buyers coming to our area to get more space. Homes here have enough room for a home office or workspace and kids’ play areas inside and out. We’re seeing a resurgence of people wanting pools.”
Winegar has a similar opinion and mentions, “Property close to downtown Napa is hot right now. Buyers also want a more updated house. With the price of lumber and shortage of labor, they don’t want the expense or the hassle of a remodel.”
Between pricing strategy, interest rates, low supply and high demand, are first-time home buyers simply out of luck in this market?
The realtors think not.
“I tell them all to put their best foot forward and they will prevail,” says Politz. “Don’t feel pressured and only write an offer if you love the property and want to be there. Even if a buyer must write 10 or 12 offers, it’s all part of their education process. Some sellers actually want to sell to first-time buyers rather than getting a higher price.”
Cherniss emphasizes that first-time buyers must be prepared to compete. “Have a lender pre-approval letter ready, preferably from a local lender, and be patient. Know how high you can go and look at properties that are on the market well below that number as they will most likely go over. Keep your credit scores up—don’t buy a new car or boat while searching for a home.”
Winegar says keeping first time buyers from being discouraged is a tough obstacle to overcome.
“I know house hunting and buying a new home is a supposed to be fun and exciting but in today’s market, it can also be brutal and emotionally exhausting. Try not to get too emotionally attached to a house until after your offer is accepted.”
“Allow yourself to feel rejected and then press on. Just keep looking and offering. I know it sounds cliché, but the home you’re meant to have is out there and you’ll get it.”