"The Local Real Estate Market" by Chet Boddy, Mendocino, CA, licensed realtor and appraiser


	The Local Real Estate Market by Chet Boddy This article was written for my monthly real estate column, "Back to the Land," which has appeared in the Mendocino Coast Real Estate Magazine since January, 1995. Complete list of articles Back to home page
	After the national recession of 1990-91, California real estate experienced a five-year downturn from 1992 through 1996. The depressed real estate market lasted through 1997 in Mendocino County, roughly a year longer than in the state as a whole. In 1998, the Mendocino County real estate market rebounded, surpassing previous sales records established in 1989. A seller’s market has continued through 2001, supported by a declining inventory and demand for rural property by vacationers, retirees and telecommuters who do not necessarily rely on the local economy for employment or income. Local Real Estate Trends I’ve put together a chart which summarizes real estate activity on the Mendocino Coast from 1988 through 2001. This data was compiled by the Coastal Mendocino Association of Realtors (CMAR), which serves an area roughly from Westport to Elk and inland to Comptche and the Anderson Valley. These figures don’t include private sales (unassisted by licensed real estate agents), estimated by national surveys to be about 20 percent of the total number of sales. Also, these figures don’t include sales reported by the two other other real estate associations in Mendocino County. There are three multiple listing services which serve Mendocino County – the Coastal Mendocino Association of Realtors (CMAR) in Fort Bragg, the Brokers Co-op which serves Gualala, Sea Ranch and the South Coast; and the Bay Area Real Estate Information Service (BAREIS) which serves Eastern Mendocino County (along with Sonoma, Solano, Napa, Marin and San Francisco counties). According to CMAR, the total real estate sold volume in 2001 was $99,478,319 – a 32 percent decline from the record high of $147,192,765 set in 2000. The total number of sales transactions dropped from 516 to 366. The drop in sales volume was due partly to the lack of inventory caused by four years of record sales. The chart shows the trends for the three major real estate categories – residential sales, land sales and commercial sales. Three smaller real estate categories are included in total sales but are not shown on the chart. These are residential income properties ($3,047,000 sold in 2001), manufactured homes in parks ($1,925,000) and business sales ($143,300). Residential Improved residential sales dropped 39 percent from $101,765,715 in 2000 to $62,457,310 in 2001. The number of residential sales declined from 324 to 204 while the median residential sale price rose substantially from $245,000 to $456,755. Average days on market declined from 176 to 138 and the ratio of selling price to list price rose from 94 to 96 percent. Continued demand and a declining inventory of residential listings has contributed to rising home values. In hot urban markets exposure times (the number of days on market) are typically 30 days or less. However, it still takes an average of about 4 1/2 months to sell a house on the Mendocino Coast. Different types of buyers and sellers, uncertainty about values and the complexity of rural real estate keep homes on the market longer than in urban areas. The higher median sale price is due partly to rising home values, but also means that buyers are purchasing more expensive homes. Declining exposure times and the rising ratio of selling price to list price indicate a continuing sellers market (low inventory and continuing demand). Land Unimproved land sales dropped 37 percent from $37,129,500 in 2000 to $23,312,709 in 2001. The number of land sales declined from 164 to 119 while the median land sale price rose substantially from $144,500 to $367,948. Average days on market declined from 551 to 441. The trend in land sales has closely followed residential sales. In recent years a large inventory of unsold land has kept land values from rising significantly, with the exception of ocean view and ocean front lots. However, the declining land inventory continues to put upward pressure on land values. Some buyers are buying land and building due to the shortage of houses for sale. Other buyers may be securing retirement property for future use in anticipation of rising land prices. Commercial Commercial and investment property sales rose 26 percent from $6,830,750 in 2000 to $8,593,000 in 2001. The number of commercial sales remained the same at 13 while the median commercial sales price rose substantially from $325,000 to $961,594. Average days on market declined from 328 to 285. Many commercial sales are conducted privately or are exchanged and don’t appear on the MLS. These private sales and the relatively small volume of commercial activity on the Mendocino Coast makes this market difficult to analyze. In general, the supply of both commercial buildings and commercial land has exceeded demand, keeping commercial property prices from rising significantly. Also, there is sufficient vacant commercial space to keep downward pressure on rents. Rising commercial sales reflect increased commercial building and renovation on the Coast. Residential Income There were too few sales of residential income properties to analyze. There is a strong local demand for affordable housing, as evidenced by very low residential vacancy rates. However, the prevailing wages from the expanding tourist and service industries have not been sufficiently high to support higher rents and make residential income properties attractive to investors. Support from government and nonprofit agencies remains an important incentive for creating more affordable housing. Manufactured Homes in Parks There’s not much data in this category to analyze either. However, it’s important to note that The Woods, a 109-space manufactured home park in Little River, achieved build-out in 2001.
	Chet Boddy, Real Estate Appraisal, Sales and Consulting 43300 LR Airport Road, #59, Little River, CA 95456 707-937-4011, office 707-937-4818, fax chet@chetboddy.com Back to home page Copyright © 2002 Chet Boddy, All Rights Reserved Chet Boddy is a Certified General Real Estate Appraiser, Realtor“ and real estate consultant who has lived on the Mendocino Coast since 1976. Look for this and other real estate columns on Chet’s web site at www.chetboddy.com