It’s been a favorable two years for sellers with real estate in prime locations like Napa and Marin counties, but evolving trends will bring further changes to this housing market. To increase one’s chance of success in a real estate transaction to maximize their investment, it’s critical to come in prepared with accurate forecasts.
Mortgage rates will continue rising
For the first time in decades, mortgage interest fell to historic lows as the pandemic had a profound effect on the housing market. Though we saw rates for thirty-year mortgages land under 3% in 2020 and 2021, they’re starting to pick up again the further we enter into this new year. Lower costs of borrowing meant potential buyers flooded the market. As rates continue to rise, experts predict the competition from buyers will fade slightly but likely not enough to create a significant change in the market activity we’ve seen so far.
Median housing prices will appreciate
Currently, the median price for Napa Valley homes for sale is sitting close to $715,500 – up nearly 12% from 2021. However, the forecast for 2023 shows the price climbing toward $740,000. In five years, it is predicted to rise further to $800,000+. This suggests investing in Napa, Sonoma, or Marin real estate could bring a strong ROI as a short-term investment.
Expect a continued seller’s market
Consistently high demand for houses and low borrowing rates since 2020 have placed the real estate market firmly in the hands of the sellers. In 2022, homeowners and buyers should expect it to remain that way, especially in highly sought-after areas like Napa and the surrounding counties. How do you know if the market in your area is a seller’s market? Keep an eye out to see how quickly homes sell after they’re listed. In a seller’s market, homes typically don’t stay on the market long because there are more buyers than there are available properties.
Buying will remain competitive
Speaking of competition between buyers, there’s a high likelihood bidding wars will continue in 2022. Many buyers have expressed their frustration with the current market, citing their difficulties with finding available properties, let alone standing out amidst multiple offers. It hasn’t been unusual to see houses sell for above their listing price as buyers hand over extra cash to secure the property they want.
A contributing factor to the competition between buyers is that there aren’t enough homes on the market. Some sellers are hesitant to add their homes to a listing, worried they won’t be able to find a new property to move into. Others may have invested time and money into a home office, living space, or back patio renovations as pandemic restrictions required them to work from home. Whether you’re moving by choice or out of necessity, with the right agent, you can still find a great property to call home in 2022.
Tips for buyers
If you are planning to buy a home this year, you’ll want to keep the following approaches in mind. First, assess your current equity. Because the market is strong for sellers, you’ll want to get the most value out of your property as possible. If you still owe outstanding debt on your mortgage, consider investing in a couple of renovations to increase your home’s overall value. Then, make sure you’re able to sell your house prior to your move so you can put a fair amount of what you earn toward your new home.
Ultimately, patience and resilience are going to be the name of the game for buyers in California wine country real estate this year.
Work with a top agent to find Napa Valley real estate
Working with a top agent has to be your first priority. They know the area inside and out and have a strong grasp of where you might be most competitive as a buyer. Make sure they’re aware of current listings and can find you properties at or under your budget and in the style and size you’re hoping for.