Napa housing market sours
For many residents of this storied valley, life is still a vat of grapes. But beyond the picturesque vineyards and stonewalled estates, times are shaky, the future unclear.
Tourists sipping their way up the 30-mile valley from the city of Napa to Calistoga may never see this other Napa Valley. But it’s proof that there are few places in the nation unscathed by the housing crisis. Beautiful Napa is experiencing foreclosures, plunging housing prices, drops in home sales and nervous foreboding that has spread across the country like a flu.
“I don’t recall anything like this, and the end is not in sight,” said John Tuteur, the Napa County assessor-recorder-clerk, who has witnessed several recessions in the three decades he has served the county.
In the nine-county San Francisco Bay Area, where home sales tumbled in January to their lowest levels in 20 years, Napa County suffered the sharpest drop of all -- more than 55% from a year earlier, according to DataQuick Information Systems, a real estate research firm. In the same period, houses at any stage of foreclosure jumped by 152.9%.
What has happened in Napa mirrors what has happened all over, said Andrew LePage, an analyst at DataQuick. For prospective first-time buyers, houses sprang up to accommodate their desire to own, he said, and mortgage brokers found ways to secure the buyers’ loans. “It’s the same story playing out everywhere,” said LePage.
Not that little Napa County (population 134,000), which has some of California’s highest home values, is ready for bankruptcy. For now, the wine towns of Calistoga, Yountville, St. Helena and Rutherford, where homes start at more than $1 million, remain relatively unscathed. The worry in those towns is that the broader economic downturn will depress tourism.
But the city of Napa, which is both the county seat and the largest population center, with 75,000 residents, and its lesser-known neighbor American Canyon are where the Napa Valley’s working people live, and they are bearing the brunt of the housing crisis, not to mention its collateral damage.
American Canyon, known for the visitors center that is the usual first stop on the Route 29 wine trail, is a new town. It incorporated in 1992 and grew from 9,800 people in 2000 to almost 16,000 residents in 2007. But excitement over fast-sprouting single-family-home developments has given way to concern over unsold houses and languishing businesses.
“Everybody knows somebody whose house is in trouble,” said Larry Kudrna, a 40-year resident of American Canyon and former president of the city’s Chamber of Commerce. He has owned his business, Larry’s Custom Truck Toppers, which outfits pickup trucks with roofs and other amenities, for 30 years and has never experienced a worse slump in sales.
“Something has affected my business,” Kudrna said. “It makes me think that maybe I’m doing something wrong.”
Houses in new developments are already for sale -- because of foreclosure or the threat of it -- even as developers are still building the rest of the planned sites.
Richard Ramirez, the city manager, said American Canyon was looking on the bright side. “Obviously,” he said, “any community that had a very large spurt in housing starts between 2001 and 2006 would have a disproportionate amount of stress in this environment.”
Perhaps the best bellwether of the times is the city of Napa, which has spent the last seven or so years playing catch-up with Yountville, St. Helena and its other neighbors. Within seven years, median housing prices in Napa rose 99%, to $550,000 last June ($532,500 now), according to DataQuick. But the people who flocked to the city seeking refuge from the million-dollar houses in San Francisco, Marin and other parts of Napa County are now seeing the same flurry of “for sale” signs that are hitting so many other once-booming cities across the country.
Downtown Napa is still a maze of construction as developers proceed apace with plans for more than $300 million in new stores, offices and condominiums.
But tourists, at least during the off-season, are few and far between, and Main Street has a forlorn, empty feel.
Mary Rocca and her husband, who own two vineyards on the outskirts of town, opened a tasting room on Main Street 2 1/2 years ago.
It is too soon to tell whether the nation’s incipient recession will mean fewer tourists coming to buy Napa wines, county leaders said, although reports from luxury retailers like Tiffany’s indicate that people are spending less.
But Rocca said she was not worried about Napa’s promise dissolving in the slow economy.
Even if she and her husband have to wait a few years for the economy to recover, Rocca said, she is not concerned.
“I think people will still want their wine,” she said. “At least I hope so.”
