Zillow advertisement, May 24, 2016.
image available at http://tinyurl.com/zae624d
I'd speculated that this market could continue for another summer, and perhaps even two. Today is just a small update; I was browsing Zillow for unrelated reasons and saw the image at the right. 348 Patten, which had sold for $725,000 in November of 2013, is now at $2.8 million; Zillow estimates the house is for sale for about $994 per square foot. To put that in perspective, the most expensive zip code in the USA (10007, also know as Tribeca, New York) has prices per square foot of about $2,829 (yes, the source is Business Insider, but bear with me). Atherton, at #2, is $1,669 per square foot, and there are four more above $1,000 (33109, Fisher Island in Miami, $1,586; 92662, Balboa Island in Orange County, $1,443; 90401, Downtown Santa Monica, $1,304; and 02108, Beacon Hill in Boston, $1,290). The next on the list is actually below 348 Patten, and that 92118, Coronado, in San Diego, at a mere $866 per square foot.
|Board of Governors of the Federal Reserve System (US)|
retrieved from Federal Reserve Bank of St. Louis [FRED]
May 23, 2016, available at http://tinyurl.com/p4cmzyv
The one thing that all those locations have in common is access to an extraordinary job market; whether it's downtown Manhattan, Palo Alto, Miami Metro, The OC, LA's Westside, or Greater Boston, there is a nexus of price and productivity evident in each instance. Sonoma, though, is much different; the economy is orders of magnitude less intense. Perhaps the most striking contrast is the property Zillow listed immediately below; a George Ranch home, 4,500 square feet, on 8 acres, with 5 bathrooms, for (only?) $2.3 million.
I've turned from time to time to the graph on the right as an illustration of where markets have been moving since June of 2009. Since I first posted this graph, the situation has actually gotten more extreme. I continue to think that prices may hold up through the summer, but expecting real estate to continue to appreciate along this trend line increasingly strains credulity.