Every year, the California Association of Realtors does a year-end review of the housing market’s ups and downs. It’s always interesting to see how Mendocino County compares. This year, we’re mostly in line with broader trends, but there are a few interesting departures.
Overall, the housing market has become more competitive as demand outstripped supply and interest rates remained at not just historic, but incredible lows. Locally and statewide, the percentage of sales with multiple offers were up, as was the average number of offers. Also, more properties were sold above asking price compared to last year.
One indicator of a hot housing market is how fast properties sell as measured by days on the market. In the Ukiah Valley, the average days on the market in 2019 for residential properties was 91; in 2020, it was 75—and that was during a pandemic. Typically, the competition is most fierce for mid-range homes. In California, those are priced at $500,000 – $1 million. In Ukiah, the range is more like $350,000 – $500,000. Mid-range homes are more likely to get multiple offers, receive an offer with a price at or above the asking price, and sell the fastest.
Another indicator of a hot market is housing prices, and they were definitely on the rise in 2020. The median price for houses in the Ukiah Valley in 2019 was about $380,000. In 2020, it was closer to $415,000. In Mendocino County, as in California as a whole, a shortage of residential properties continues to push up home prices. It’s basic supply and demand: when there aren’t enough houses to go around, the ones we have are more valuable.
So, although interest rates are low and that helps buyers, the lack of supply makes this a seller’s market. Statewide, sellers who lived in their house for fewer than five years earned a 16.5 percent profit from their home sales. Sellers who lived in their house for more than eight years earned a 100 percent profit—doubling their money, and that’s if they paid cash. If they leveraged their purchase by getting a loan, their return was significantly higher.
Most of those sellers turned around and became buyers. Either they were upscaling or downscaling, or they moved out of the area. Interestingly, in 2020 more people moved out of California than in. The Associated Press reported that 135,600 more people left the state than moved here between July 2019 and July 2020, which is only the 12th time since 1900 the state has had a net migration loss. This is in line with a California Association of Realtors’ study, which showed 36 percent of sellers stayed in county, 18 percent moved another California county, and 30 percent relocated outside California—that’s a lot of folks moving out of state. Of course, California’s population continues to grow overall because of those born here.
When moving out of state, people are often seeking a lower cost of living, and with people’s newly increased mobility made possible by remote work in the wake of the pandemic, I can see this trend continuing. A friend of mine said his daughter sold her small California tract home and bought what he called “a mansion” in North Carolina with the proceeds. It’s all relative, of course. People moving up here from the Bay Area feel like they’re getting a great deal on real estate.
In 2021, I think the housing market will remain tight, especially locally. Until we get significantly more market-rate housing, the market won’t change much unless there’s a big shift in interest rates, and I just don’t see that happening for a while.
If you have questions about property management or real estate, please contact me at email@example.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years.