Healdsburg Market Opportunities

2014 has been a mixed year for real estate in Healdsburg and Sonoma County. There are fewer sales overall, but the market has thrown off the distressed property hangover. REO listings are almost gone completely, and short sales are much less common than last year. High demand continues in several categories. Modern design homes including California farmhouse style are selling almost immediately with multiple offers in many cases. Downtown Healdsburg homes with an easy walk to the plaza are also finding buyers although in one case on Plaza St, an otherwise acceptable fixer is hampered by a too-small lot. It’s in a great location, though, and will sell to buyers with design skills. It’s a great dead-end street very close to the plaza.

Recent sales of lots in Glen Ellen at much higher than anticipated prices show a Sonoma County market hungry for quality, the same principle driving sales of contemporary homes. There is money available for premium location or premium architecture and construction. Properties with both features are setting new price standards in the area.

The implications of the recent trends include premium prices for location (more than we have been assuming) and a willingness to consider higher price point properties as tear-downs. In one recent example a home that sold 18 months ago for $850,000 just sold for $3,300,000 with multiple offers. The sellers did a great job on the remodel and the views are superb, but those numbers will tempt investors to start spending $1.5 million or more on a tear down with views that might sell for $4 to $6 million when finished. That jump in value at the high end will fundamentally segment the market. There will be a location and view-dominated higher end at $1.5 million (for fixers) and up. On the other side will be an average location and non-view market for second home/retirement buyers interested in the $1 to $1.5 million market. The biggest difference for buyers will be increased competition and higher prices for anything with the potential to be a great property. The potential to have a premium vacation rental is also an important factor.

A couple of properties I think are worth considering along with my reasoning:

609 Grant Ave in Healdsburg. This is not the downtown Grant St, but a small lane south of Healdsburg Avenue just after the first Healdsburg exit off 101 northbound. This is a flat, 9.72 acre parcel surrounded by vineyard. It has been fallow for decades and is currently growing a crop of blackberries, bermuda grass, and other volunteers. Clearing it will be a major chore, but the resulting blank slate will allow the creation of the most flexible possible outcomes. You could build a beautiful wedding facility here. A vast multi-wing farmhouse for shared family adventures or vacation rental purposes. There’s room for every kind of garden or orchard or vineyard. Room for tennis court(s), swimming pool(s), bocce ball courts, volleyball, croquet, horseshoes…or a horse arena. Room for an amazing outdoor kitchen. Room for art studios, wood shops, car collection display, dance hall for weddings, or a great rec room for the kids. I think you get my drift. 9.7 acres lets you do a lot. Because it’s flat, it’s relatively simple. There’s water, but a new well should be drilled. There is undoubtedly good septic. There’s great soil. There’s a paved, public road with easy frontage for a driveway.  Price is $1.1 million. None of the other acreage available near Healdsburg has this combination of excellent close-in location with the ease of building a major compound that a large, flat site provides.

On the north end of Healdsburg are two adjacent properties that total a little over 2.2 acres. One has a mobile home that has to be removed. The other has a very nice granny unit of 840 square feet along with a main house that is either a tear-down or fixer, depending on budget and vision. The properties are in separate ownership, but it makes sense to try to develop them at the same time to get some cost savings from better use of crews. They could probably be purchased for $1.1 million, not a bad price for two acres with a decent home and the potential to build two very nice homes in a million dollar neighborhood. The value story on these properties is that these are the two “worst houses” in the neighborhood. The bigger parcel had over 4 construction dumpsters worth of junk hauled away. You can still see the debris on this image. In any case, the neighborhood has improved around them and these ugly ducklings can be turned into swans. Swans the market will covet. 15908 Healdsburg Ave with the granny at the 15906 Healdsburg Ave address. 15904 Healdsburg Ave is an expired listing, so I can’t link to it. The last price before it expired was $425K.

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