January Napa Real Estate Market Update

January 2023 Market Report

With all of the news surrounding the real estate market I thought it especially important to interpret the data rather than just throw a bunch of graphs and charts at you. There is a lot of information out there and there are countless predictions speculating as to what will happen with real estate in 2023. Now that we have a few months of data behind us, since the market has been dealing with higher interest rates and inflation, we can now see how our local market has reacted. Activity should only improve going forward with most experts predicting that inflation and interest rates will continue to come down in 2023.

While sales activity was notably slower across the Bay Area in the 4^th quarter of 2022, the Napa County market held up better than any other Bay Area County. And, even in spite of reduced sales activity, tens of thousands of Bay Area homes continued to sell in the 2^nd half of the year with a considerable, but declining, percentage still selling quickly at over their asking price.

Sales volume in Napa for Q4 2022 was down 47% from Q4 of 2021 but the median sales price ended up being 1.5% higher year over year. Twenty seven percent of homes still sold over the list price in Q4 of 2022 (27%!!) which is down from 45% in Q4 of 2021, but still a very healthy amount. In addition, the average sales price to original list price held strong at 95%, a 5% average price reduction, as compared with 98%, in Q4 of 2021. Average days on market was also only slightly higher in Q4 of 2022 at 57 DOM versus 50 DOM in Q4 of 2021.

The absorption rate, which is the percentage of listings accepting offers within a given period, reflects buyer demand vs. the supply of homes available to buy. That percentage was at 56% in Q4 of 2021 whereas in Q4 of 2022 it had slowed to 38%. It is interesting to note, however, that the average absorption rate through the pre-pandemic years of 2018 & 2019 was 39.5% versus 38% in Q4 of 2022 which seems to indicate more of a return to normalcy vs. a housing recession, at least in our local market.

With all of the media hype over how the real estate market has all but crashed amidst rising interest rates and inflation, these numbers in our market tell a very different story. Yes, sales volume is notably lower, but homes sold still sold in roughly the same amount of time and at only 3% lower, on average, than their original asking price. What this data goes to show is how real estate data is hyper-local and what is happening in our market can be, and is, very different than what is happening in Phoenix, Texas or even Marin.

Many experts predict that inflation and interest rates will continue to go down in 2023 which will only bolster the market further. While some buyers are waiting on the sideline to see if interest rates and prices will go down, many buyers are taking advantage of the reduced competition and ability to negotiate prices for homes that are seeing longer days on market. For sellers, pricing, preparation and marketing are critical. Sellers that are still expecting to sell at the top of the market will see longer days on market and likely be forced to make price cuts or offer concessions to buyers when they finally do receive an offer.  It is critical to work with an agent who know the market and has a firm handle on the data in order to make smart pricing decisions and catch the attention of savvy buyers.

For the full Napa Valley market report and all of the fun stuff, i.e. graphs, charts, etc. Click Here 

To view market reports throughout the bay area Click Here

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