Home prices are up in Vallejo and homes are selling faster than last year, though the market faces challenges including high interest rates and the state’s ongoing insurance crisis, real estate data firms and local real estate agents said.
The median price of a Vallejo home was $537,000 in February, up 5.6 percent over February 2024, and it took fewer days to sell a home, according to online real estate firm Redfin.
“Buying in Vallejo continues to be more of a seller’s market, but it’s a more balanced market,” said Jenny Castaneda, president of the Solano Association of Realtors.
The agent said her numbers aligned with those of Redfin, with the median price at $537,000.
“Demand is still there and my data shows me that homes are selling in 32 days. That’s the median days on the market and is down from last year.”
If the number of days on the market goes down, that means homes are selling faster.
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The Bay Area real estate market has had a wild ride starting in 2020, when mortgage interest rates plummeted to historic lows.
Dramatic interest rate hikes in 2022 took the wind out of the market’s sales, because when interest rates go up, monthly mortgage payments go up as well. Rates went from around 3 percent to as much as 7 percent in 10 months. The interest rate on a mortgage for a 30-year fixed loan now hovers above 6 percent.
Higher interest rates add to the monthly amount homeowners must pay, so often they act as a deterrent to home buying, slowing the market down.
For example, if someone buys a home at the current median price, $537,000, if they make a 20 percent down payment, they would likely pay around $2575 in principal and interest per month, according to Castaneda’s figures. That’s a jump that might put that home out of their price range.
“Add in property taxes and insurance and now it’s $3301,” Castaneda said.
Another cost burden: Anyone buying (or owning) a house in the state likely will have to pay more for home insurance.
California’s home insurance industry hasn’t been in great shape for some time, but the Los Angeles wildfires caused billions of dollars in new insurance claims, exacerbating the problem. Premiums for Vallejo homeowners could go up as much as 30 percent, according to Tom Atwood and Jeanne Kilkenny-Turk of Vallejo Insurance Associates.
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So it’s a good sign that despite these challenges, prices are up, Castaneda said.
The real estate agent noted, “Presently, we’re in the middle of the spring, and spring is a busy season for home sales.”
This is due to a combination of factors, including increased buyer activity as people emerge from winter and seek to move before summer, and spring weather and longer days make house hunting and moving easier.
“This is the prime time of year to sell a house,” Castaneda said. “And Vallejo is a great place to live.”