By all accounts, 2013 was an amazing year. There were 264 single-family homes sold in Benicia as of writing this article. The median home selling price was $455,000, a full 1% over asking price on average. The result is a 20% increase in equity over the previous year, outpacing the 10.9% increase the nation as a whole enjoyed. Inventory was low for most of the year—anyone looking to purchase a home in 2013 found their choices limited and the competition from other offers plentiful. This created a new paradigm in real estate as sellers were unable to find and purchase a new home before their current home closed. These folks were forced to rent property while they looked for another home to purchase. Many did eventually find a suitable home, many are still looking, and some are finding that renting is not all that bad after all. Those who regularly rent homes found it difficult to find available units due to the competition created by sellers looking for temporary housing, and due to the lending industry tightening their criteria for the purchase of investment property, there was very little “new” rental inventory created. This means the sold homes that I reference above are, for the most part, owner occupied and this is a good sign of recovery.
Can we expect this kind of performance in 2014? My short answer is no, but I will qualify that statement. We should see a more modest growth in 2014; Kiplinger estimates that the national average will be 3 to 4 percent. Benicia’s micro economy lends itself to a few promising realities.
First, there is no new residential construction planned in the city limits. This forces those who want to buy in this amazing community to buy an existing home; however, there are a few buildable lots still available in Benicia, a lending opportunity for those looking for a custom or semi-custom home.
Second, Benicia is still one of the safest places to live in California (please see 50 Safest Cities in California published by SafeWise Security Company), with fantastic public schools, a vibrant downtown and beautifully maintained parks. This makes for a very attractive community for those looking for a place to live on, or near, the water in the San Francisco Bay Area.
This brings me to my final reason for the upward housing price trend. Benicia is one of the last places in the Bay Area where one can still buy a waterfront home for under $1 million dollars. The law of supply and demand alone will force home prices to continue to increase.
Benicia should outpace the national average, but we should not expect a repeat of 2013. A 20% gain year over year is unrealistic and unhealthy, but there are factors that tend to make me think that while we will see growth slowed, we will also realize tremendous gains in 2014.
What’s the reader’s take away from this article? Here is an insider, “not so secret” tip: Buy in the winter when the weather is bad and people don’t want to move. You will likely get a better price from the seller who, for whatever reason, is forced to sell at this time, and you can have the satisfaction of seeing a comparable home selling for thousands more just a few months later.