Napa County Real Estate Prices & Market Conditions

Though Covid-19 upended many normal seasonal trends this year, and then the fires added their impacts, the market did begin its typical “holiday season” slowdown in November - however activity remained well above levels of last year. It is unknown how the latest pandemic circumstances may affect the market in December, which is usually by far the slowest month of the year. 

Despite the fires, Napa County ranked second in the Bay Area for the largest year-over-year percentage increase in dollar volume sales since the pandemic struck. 

As pandemic and fires hit, the number of new listings coming on market saw sharp declines, but then spiked back up each time. Market activity usually begins its big holiday season drop in November, with activity hitting its annual low point in December. 

A major factor in the market has been the relatively low levels of inventory this year. 

Market activity, as measured by the number of listings going into contract, peaked in summer. Then the fires had an impact. Though dropping in October and November - as is the normal seasonal trend - the number in November was 38% higher than in November 2019. 

The below chart measures demand as compared to the supply of listings available to buy, i.e. the percentage of active listings going into contract during the month. The percentages in summer and fall 2020 ran far above the same periods of last year.  

Strong buyer demand and low inventory brought about a considerable year-over-year decline in the number of price reductions. 

Luxury home sales soared in the Wine Country to new heights, but was then severely affected by the fires. Still, Napa County luxury home sales were up 43% since the pandemic hit as compared to the same period of 2019.  (By total number of annual home sales, Napa County is the smallest real estate market in the Bay Area.)

Highest priced listings on the market in early November, and the highest priced MLS home sales occurring May through October 2020, by Bay Area County. 

And interest rates hit another all-time low in early December. 

The long-term median sales price chart below is similar to those for counties around the Bay Area - a significant spike in median house prices since the pandemic struck in early spring.

The county market has been deeply affected by multiple disasters this year. In normal years, activity typically begins a big slowdown in late-October/early-November, running through the mid-winter period, then waking up in early spring. We suspect Q4 will continue to slow down, but remain more active than in past years. 

Home sales breakdown by price segment and bedroom count: Napa County has a substantial market for luxury homes and estates, but the majority of homes sell for under $1,000,000. 

Along with Monterey County (+56%) and Santa Cruz County (+51%), Napa (+49%) has seen the largest year-over-year increase in buyer demand in the Bay Area: Buyers looking for lower population density, better quality of life, and/or more affordable home prices. As measured by the percentage of listings accepting offers, San Francisco was the only county to see a year-over-year decline, fueled mostly by a dramatic softening in its large condo market. 

Following is a series of analyses that look at city median house sales prices, sales volumes, luxury home sales, listings for sale, and a few standard measurements of supply and demand. Note that markets with substantial luxury home and estate segments often see softer dynamics - the pool of buyers is much smaller, and overpricing more common for these very special properties - but this is not always the case. 

Regarding the next chart: Percentages of 50% or more would typically be considered to reflect a high-demand market. Over 60% signifies very high demand, or as it climbs, extremely high demand. As mentioned before, markets with very substantial luxury home segments as a percentage of listings - such as St. Helena - often see softer supply and demand indicators. 

Our hearts go out to so many of our friends and neighbors grievously affected by these terrible fires, and our gratitude is too deep for words to those fighting the fires and assisting those needing help. We continue to issue market reports during these times of such difficulty simply because there are still people who have to make decisions regarding the purchase and sale of homes. 

The table below compares Q3 statistics across 5 years.

Median sales prices can rise because of increases in fair market value – i.e. buyers are paying more money for the same home (supply and demand) – and/or because buyers are purchasing larger, more expensive houses, often in more expensive communities. Both dynamics are currently at play, but it is certain that affluent and very affluent buyers have made up a dramatically increasing percentage of the demand in Napa County and most other Bay Area markets. 

Annual percentage changes in median house sales price: The 2020 YTD percentage will almost certainly change, one way or another, by the time full-year sales data is in. 

In September, we also updated our semi-annual Survey of Bay Area Markets. 

In the context of the terrible fires we've seen in recent weeks, a real estate report may seem trivial, but we have clients still trying to make buying and selling decisions, and we feel it remains our job to try to deliver straightforward data on the market. 

Market indicator: Percentage of listings accepting offers within the month - a clear illustration of a very high demand market. 

Median house sales prices around the Bay Area in summer 2020: 

Long-term median house sales price trends: 

A breakdown of home sales by era of construction: 

A snapshot measure of how many listings were typically active on any given day of the specified month: The number of listings on the market remains low by historical standards. 

Active listings on the market in late August broken out by price segment: As illustrated, Napa has an outsized inventory of very, very expensive homes and estates. These numbers change constantly with new market activity. 

Active luxury home listings in late August, broken out by city: As compared to the size of its overall market, St. Helena has one of the biggest percentages of luxury and ultra-luxury home listings in the Bay Area. 

Bay Area luxury home markets: Year-over-year summer sales volumes and percentage changes. Napa County saw a substantial 67% increase in sales over the number in summer 2019. 

Market indicator: Price reductions are low, another illustration of high buyer demand. 

The lower the Months Supply of Inventory (MSI), the stronger the demand as compared to the supply of listings. Most of the market remains firmly in "seller's market" territory by this measure: Demand for homes under $1,500,000 is particularly strong. Though higher price homes have significantly higher MSI figures, the readings are actually quite low by historical standards. 

Because the county does not have that many sales in any given month and its range of sales prices is so wide, Napa's monthly median sales price is prone to anomalous fluctuations. Which is why we prefer the 6-month rolling average used in the chart below. However, for what it is worth, the Napa County median house sales price in July was $782,000, just the slightest tad lower than its all-time monthly high of $785,000 in September 2019. 

This table ranks each county by the percentage of active listings going into contract in June/July 2020 - a standard statistic of market heat - compares it to the same period of last year, and then rates the scale of the year-over-year change.