Napa Valley and Sonoma Valley Real Estate Market

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1 Napa Valley and Sonoma Valley Real Estate Market BI-ANNUAL REPORT

2 What does Median Mean? The median is the middle, so in terms of sales price, it is the sales price that has an Equal number of higher-priced and lower-priced sales on either side of it. The number of homes that sold in Napa in the first half of 20 was down 2% compared to this period last year but prices have continued to rise. The median sales price of a home in Napa rose about 10%. Although prices rose, properties stayed on the market 62% longer than in the first half of 20. Sales ranged from $130,000 for a 1,200 square foot home in Steele Canyon to $18,100,000 for the late Robin Williams 20,000 square foot home on 639 acres on Wall Road. MEDIAN SALES PRICE $539,000 $599,000 MEDIAN SALES PRICE PER SQUARE FOOT $335 $364 NUMBER OF SALES The American Canyon market was similar to the Napa market in that the volume of sales decreased slightly (3%) but prices continued to rise by a healthy 5%. Days on the market increased 91% to 86 days. The least expensive house to sell was a 1,248 square foot home on Creekside Circle which sold for $210,000. On the other end of the spectrum, a 49 acre parcel with a 1,895 square foot home on Jameson Canyon Road sold for $775,000. $410,299 $430,000 $227 $234 Statistics for a small market like Yountville can swing fairly dramatically because there are a limited number of transactions. The number of sales in Yountville dropped from 19 to 11, a decrease of 42%. Likewise, the median sale price fell some 26%, from just over $1 million to $745,000. Perhaps more telling is that the median price per square foot rose 9% and the number of days on the market decreased 41%. $1,010,000 $745,000 $526 $ DAYS ON THE MARKET The statistics provided were obtained from BAREIS Multiple Listing Service including defined areas, which may not include all sales. NAPA 1775 LINCOLN AVENUE (707) NAPA COMMERCIAL 1040 MAIN STREET (707)

3 What does Days on the Market Mean? The St. Helena residential market showed the strongest growth in the Valley during the first half of 20. The number of home sales was up 19% and the median sales price rose from $875,000 to $1,204,000. Likewise, the median sales price per square foot rose from $485 to $602. Average time on the market dropped slightly, from 99 to 96 days. Four homes sold for more than $7,000,000 during the period. Calistoga stayed steady on sales volume but saw a slight decrease in prices. The median sales price dropped from $690,000 to $630,000 and the average time on the market increased by 76%. Of the 32 properties that were sold, 2 sold for more than $6,000,000 and 10 sold for $500,000 or less, including several Calistoga Ranch condominiums. The 206 acre Bella Vista Vineyard property on Petrified Forest Road received the highest price paid at $8.5 million. The Sonoma Valley, like the Napa Valley, continues to have less inventory than buyers. The number of sales decreased by 13% from the same period last year but median sales price increased by 8%. The average days on the market increased by 60%. About 17% of the residences that changed hands sold for $500,000 or less while about 6% of the transactions were for $2M or more, the highest being a 3,855 square foot home on slightly more than 9 acres. MEDIAN SALES PRICE $875,000 $690,000 $470,000 $1,204,000 $630,000 MEDIAN SALES PRICE PER SQUARE FOOT $485 $129 $348 $602 $7 $309 $630,000 $373,000 $679,000 $410 $404 NUMBER OF SALES DAYS ON THE MARKET The statistics provided were obtained from BAREIS Multiple Listing Service including defined areas, which may not include all sales. ST. HELENA 1289 MAIN STREET (707) SONOMA 800 BROADWAY (707) SONOMA ~ PLAZA 34 WEST SPAIN STREET (707)

4 Country Property Napa Valley Sales of country property (homes on at least 1 acre) stayed steady in volume, but the median sales price rose 10% when compared to the same period in 20. These results mirror the results in Napa residential sales, which is not surprising considering that the vast majority of the sales were in Napa. St. Helena had 46% more sales inthis category than during the same period in 20. Country property sales by area broke down as follows: Napa 48, Calistoga 12, St. Helena, Angwin 5, and Deer Park 1. Sales ranged from $270,869 for a mobile home needing TLC on 110 acres in the hills near Berryessa Highlands, to $8,500,000 for the 206 acre Bella Vista Vineyards property on Petrified Forest Road, which included a 4072 square foot main house with a pool, a guest house, 37 acres of vineyards and a private lake. 82 $1,275, $1,400,000 There also were 12 sales of raw land sold through MLS during the first 6 months of 20 ranging from $420,000 for 5.1 acres on Foster Road, to $1,550,000 for 10 acres on Hagen Road. Country Property Sonoma Valley The median sales price for Sonoma Valley country property (homes on at least 1 acre) dipped 9%, from $1,517,813 in the first half of 20 to $1,397,500 in the first half of 20. The volume of sales also dropped about 8% year over year from 44 to 40 properties. Of the 40 properties that sold, 34 sold for $1,000,000 or more. The least expensive property in the category was a 2-acre property with a 2 bedroom, 1 bathroom home in Glen Ellen that sold for $678,000. The most expensive property that sold was a 4 bedroom, 4 bathroom home on a 9.6 acre lot in Sonoma. That property sold for $4,200, $1,517,813 $1,397,500

5 Million Dollar Plus Market Napa Valley The Million Dollar Plus Market continued to grow in the first half of 20. Sales units were up by 27%, from 97 to 123, and the median sales price was up moderately (4%) when compared to the same period in 20. The City of Napa led the way with 65 million-dollar-plus sales during the period, followed by St. Helena with 42, twice as many as during the same period last year, Yountville with 3, Angwin with 5, Calistoga with 7 and Oakville and Deer Park with 1 each. Of the 124 sales, 60 closed between $1 million and $2 million, 12 between $2 and $3 million, 6 between $3 and $4 million, and 14 closed in excess of $4 million, the category with the biggest percentage increase. 11 properties sold for over $6 million, the highest being the Wall Road estate of the late Robin Williams which sold for $18,100, $1,500, $1,562,500 Million Dollar Plus Market Sonoma Valley Sales of high end properties in the Sonoma Valley slowed slightly compared to the same period in 20. The number of sales dropped slightly from 66 to 63. Likewise, the median price of the properties that sold dropped from $1,457,500 to $1,295,000, making this the third year in a row that the median price has dropped during the first half of the year. Of the 63 properties in this category, 49 properties sold between $1 million and $2 million, 8 properties sold between $2 million and $3 million, and 6 properties sold between $3 million and $4 million. There were 2 properties sold for over $4 million $1,457,000 $1,295,000

6 Commercial Property Generally, the local commercial real estate market is characterized by scarce inventory in all sectors, for lease and for sale, with prices up due to demand exceeding supply. The Napa County industrial vacancy rate is the lowest in 30 years, with the exception of a new 600,000 sq. ft. building near the airport, rumored to be on the shortlist of a non-wine user that could bring 200+/- new jobs to the Valley. For wineries, there s plenty of demand and little or no supply of temperature-controlled industrial space with docks. There s nearly no vacant office space downtown and a few 4,000 to 20,000 sq. ft. options available in the business parks. Housing is a much needed element for continued successful development of downtown Napa to balance retail, office and hotel growth. In the planning stage is a block-long project, replacing the former Napa Valley Register building, which was severely damaged by the August 2014 earthquake. The new development will provide 51 townhomes and 6,000 sq. ft. of commercial space. Another project, a 171 unit housing complex, within three miles of downtown Napa has been approved. In its first 10 years, this project will operate as residential rentals, 101 one bedroom units and 70 with two bedrooms. Then, the properties will be refurbished and sold as condominiums. In Napa and Sonoma Counties, demand for multi-unit residential property is strong as investors continue to net very low rates of return from banks. Also, exchangers are reluctant to pay substantial capital gains. Rents keep rising due to demand and residential rental inventory can t meet the needs of consumers who are unable or unwilling to buy homes. Along with traditional real estate investment trusts (REITs), a new vehicle for raising capital has appeared, equity crowd funding. As with any investment decision, these opportunities should be carefully vetted by legal and tax advisors. Up Valley, strong demand has pushed retail lease rates above $4 per sq. ft. in St. Helena and over $2 per sq. ft. in Calistoga. Overall, the hospitality industry is strong with new rooms coming available and existing properties selling for record prices. Multi-family transactions have been tipping the scale at about $240,000 per door with cap rates about 5, depending on product quality. Office space is limited and rents generally have remained stable at $2.50 to $3.75 per sq. ft. gross. Spaces for lease are on market for an average of two months or less. INDUSTRIAL $14.00 to $18.00 RETAIL $43.00 to $58.00 OFFICE $33.00 to $46.00 INDUSTRIAL $ 9.00 to $9.60 RETAIL $14.00 to $53.00 OFFICE $21.00 to $39.00 The City of American Canyon approved the proposed water supply for Montalcino resort, a long-unrealized project in unincorporated south Napa County that has been on the drawing board for years. Getting water from American Canyon necessitates compliance with the city s Zero Water Footprint Policy. Montalcino, with hotel, spa and golf course, is expected to use 68 acre-feet of potable water per year or more than 61,000 gallons per day. In Sonoma Valley, values on non-residential building permits have continued to grow along with increased construction activity. New construction and extensive remodeling of existing commercial buildings can be seen on Broadway, near the Plaza, and on Sonoma Highway, especially in the Springs. Commercial property update and data for annualized lease rates were based on information obtained from Coldwell Banker Commercial Brokers of the Valley, CoStar, and BAREIS.

7 Real Estate Money Report As a result of the Brexit decision, the 10-year US Treasury fell below 1.50% for the first time since July 2012, while the Freddie Mac 30-year fixed mortgage fell to 3.41% which is the lowest rate since May Freddie Mac believes that due to the Brexit vote and slowing growth in China, mortgage rates should remain at historic lows for an extended period of time. As a result of the recent global pressures, Freddie Mac revised the 30-year fixed rate mortgage forecast down by 30 basis points for 20 and by 50 basis points for Mortgage interest rates ended lower in the first half of 20, compared to the end of 20. According to Freddie Mac, the average interest rate for a conforming 30-year fixed mortgage ($417,000 and below) was 3.57% in June 20, compared to 3.85% in December 20. Real Estate Money Report provided by Gene Ciabattari, Mortgage Solutions, Inc., he can be contacted at