Market Conditions in Napa>Question Details

Susanne, Both Buyer and Seller in San Francisco, CA

Potential buyer of SFR in town of Napa, CA asks why list prices remain 'bubble high' while values plummet?

Asked by Susanne, San Francisco, CA Sat Jul 7, 2007

Bubble popped years ago; values & homes sold trending down; buyers scarce. Still, sellers offer homes at '04 prices & won't budge. I know list & sales prices are different & negot.s down from former may occur. Yet I made non-conting. offers (w/hi 7's credit & loan pre-app'd.) on 3 properties in Brwns Vlly since 5/07. Have found sellers obstinate re: offers as little as 3% below asking. Whassup!?!

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Here we are at the start of Q2 2008. Interesting to note that pressure from REO, short salesand few buyers in Napa has started to bring prices in line. I have several posts on my blog about the Napa market and the opportunity that now exists in Napa Valley. Read more at http://www.interocre.com/blog
Web Reference: http://www.MikeBolen.com
0 votes Thank Flag Link Tue Apr 1, 2008
Hi Susanne,
I grew up in Browns Valley, and it was/is lovely. As with any area, sellers in general are slower to accept price declines than the buyers who are embracing them. Put yourself in their position and I'm sure you can see the "human nature" aspect of this conundrum. Perhaps the properties you are making offers on are already at or near market price, which could be one reason you find them appealing. Maybe that is why the sellers are unwilling to budge too much. How long have these particular homes been on the market at this price? If they've been on the market for months with no price adjustment, then, yes, the sellers are probably unrealistic and/or unmotivated. However, if the homes are relatively new to the market, or the sellers have recently lowered their price, then they probably believe they can get their asking price, and they may be right! Best of luck to you.
0 votes Thank Flag Link Thu Dec 27, 2007
I just pulled some of the listings in Browns Valley. Two that are contingent sales right now had offers accepted in six and five days after listing. Another one came down 30K on the asking price and is now contingent after 85 days. With results like the first two listings with offers in less than a week the pricing by the local agents is probably right on target. If you start seeing 180 Days On Market numbers you can expect that smart sellers are going to get ahead of the pricing curve.

For some real numbers, I grabbed all the home sales since June of this year that are within a half mile of the contingent-in-five-days home I mentioned above. Here are the percentage price reductions, not from the listing price, but from the original price which often starts out unrealistically high and is then lowered to a listing price that brings offers:
91% 86% 99% 89% 91% 97% 94% 99% 96% 100% 90% 89% 94% 79%

Only one home went for 100%, but there were several at 99%. The lowest number at 79% was for a home with an unrealistically large original listing price in the $1.5 million range, so even at a 79% discount it was well over a million dollars. On that seller's behalf, the depth of the decline in prices was not yet apparent, so they were pricing based on recent trends.

That being said, now would be a good time for you to start aggressively pursuing the houses you want in the neighborhoods you want to be in. Work with your buyer's agent to start turning up people who aren't actively selling but who know the value of a live buyer. I never hesitate to send home owners letters on behalf of my buyers asking them if they would entertain an offer.

It's a numbers game. When you are persistent and embark on a campaign to find a home you will succeed.
Web Reference: http://www.sonoma.net/blog
0 votes Thank Flag Link Thu Dec 27, 2007
There are a lot of reasons why sellers keep their prices high -- some are unrealistic, some feel their home is "better" than the competition, and some aren't highly motivated to sell. Napa sellers know that Napa remains a desirable place to buy, and isn't as affected by the so-called bubble as some other places in California. Relatively speaking, buildable land is scarce in Napa, and it still attracts willing buyers.
0 votes Thank Flag Link Thu Dec 27, 2007
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