Solano County’s housing market continued to grow at a solid pace this past year, as the county experienced an increase in home prices for the third straight year.
The market featured a relatively low inventory, but high demand, according to Dave Franzoni, a Realtor with Coldwell Banker Kappel Gateway Realty.
“When there’s lack of inventory, it creates a higher demand,” he said.
The result has been an active housing market.
“There are multiple offers on almost every house, if they’re priced at the median price range,” he said.
Median home prices in Solano County increased about 7 percent during the past year, up from $300,750 in May 2014 to $321,500 in May 2015. That compares to the $455,000 high mark the median price hit in May 2006.
Median home prices in Vacaville rose at a similar pace, Franzoni said. The median price there grew by nearly 6 percent from $340,000 to $360,000 between the end of the second quarter of 2014 and the end of the second quarter of 2015, he said.
The median price of a home in Fairfield rose at a steeper rate in that same time frame, influenced by a dip the local market had experienced just more than a year ago, according to figures provided by Franzoni. Fairfield’s median price climbed at a double-digit rate for the year from $325,000 to $380,000, he said.
Realtors anticipate home prices will continue to increase at a similar rate during the next year, Franzoni said.
The increase in home prices, meanwhile, has led to more inventory, he said.
“We have at least 50 percent more inventory now,” he said.
Homeowners are gaining equity in their homes and deciding to make a move while interest rates are good.
“Most of the people are moving up,” Franzoni said. “The majority are buying bigger houses.”
Not everybody is going big, however. As baby boomers age, there is an interest by some homeowners to move into something smaller that requires less maintenance.
“Maybe one in four are downsizing,” Franzoni said.
About half of the home listings include a contingency, he said. The sales are contingent on finding a replacement property.
Homeowners who want to get into something different are looking to make the move before interest rates go up, Franzoni said. Everything is tied to interest rates, he said.
“The housing market slows down when the interest rates rise,” he said. “When the interest rates climb, it’s going to slow down – but people will still buy.”
A downside in the increase of home prices is a decline in housing affordability. Affordability in Solano County peaked in 2012 at 77 percent. It declined to 56 percent in 2013 and 49 percent in 2014. Nonetheless, Solano County remains a bargain compared to surrounding areas.
“It’s still more affordable than any other county around,” Franzoni said.
Reach Kevin W. Green at 427-6974 or [email protected].
