We have been keeping track of vineyard values and sales of the last 60 years.   On our web site we have a graph showing the average price per vineyard acre or each decade since 1950. The sales data and graph shows that vineyards have appreciated from 100% to 300% every ten years in both Napa and Sonoma Counties, solid evidence that vineyards are great investments in one of the most premium wine grape growing regions in the world. One thing we’ve learned is that even the best investments can take a hit when the entire economy gets turned upside down.

 

 

Now that we have completed the first 10 years of the new millennium, it’s time to see just how we have done through 2009. The last 10-year update that we published on our website was in 2000. In 2000 all vineyard values had increased considerably over the previous decade and the average price per vineyard acre in Napa County was $92,500 per acre. Sonoma County ended its 10-year run at $80,000 per vineyard acre. At that time we made a projection that by the end of 2010, the per acre vineyard values would be $185,000 for Napa County and $160,000 for Sonoma County, which represented a conservative 100% appreciation for both counties.

 

 

 

What a ride it has been! From 2000 to 2009 there has been more ups and downs, ins and outs, easy money, difficult realities and many other gyrations than any other time in recent history. The year 2000 entered with a boom, the dot comers were at their height with twenty something people driving new Ferrari’s and a trunk load of cash ready to buy anything that they had a fancy for at the time. By the end of 2000 the wheels started falling off the dot com bandwagon.

 

In 2001 the tragic attack on the World Trade Center was a direct hit on an already fragile economy. This coincided with an over abundance of grapes, the result of new vineyards coming online. The combination of 9/11 and a glut in grapes caused a softening in vineyard values as grape prices fell and fewer people were spending money, the U.S. embarked on a defensive stance and everything stopped dead in its tracks.

 

The market continued to offer opportunities for buyers and headaches for sellers as inventory backed up and the gigantic harvest of 2005 was the bookend to this period. Then a sexy little thing called “exotic” financing took off and the residential real estate market began to skyrocket. 2006 through the third quarter of 2008 were great years as another bubble was in full bloom. Wine sales broke all records in 2008, the first time in history California sold more than 1 billion dollars worth of wine, and vineyard values were breaking records in both counties.

 

 

By the last quarter of 2008 we were watching as our country was on the verge of financial collapse and the residential real estate market was in a freefall, the stock market tanked again and things slowed to a near stop. Enter the Great Recession, the largest recession we have seen since the Great Depression. Un-employment ramped up and there were more foreclosures than had occurred since the 1930’s. 

 

2009 crawled in as if in slow motion, the wheels of progress slowed to a near stop, the DOW hit a low of 6,500 by March and vineyard property sales had been reduced to just 10% of the amount of the year before. By the end of the year there were less than a hand full of vineyard properties sold in both Napa and Sonoma Counties. Most of these sales took place in the last quarter of the year and they were sold well below market value at the time.

 

2009 was also the first year since 1993 where California saw a decline in wine sales that broke a 16 year streak of consecutive growth. At the same time lower priced US wine sales were on an increase by 2.1%. Higher priced wines (over $20.00) were seeing a 20% to 30% drop in sales, while wines selling for under $15 were sailing off the shelves faster than they could be bottled due to an increase in less expensive imports from around the world. Wine selling for around $6 had increased in sales by 5%. To add insult to injury imports more than doubled to 13 million cases to capture 32% of the US market in the last 3 years. For instance, Argentina has over 510,000 acres planted to wine grapes compared to 480k acres planted in California. With the combination of acreage and farming expenses of less than half that of California it is easy to see how some imports have made so much headway in the low end wine market. Yes, over all it was an UGLY YEAR……..  

 

 

 

It was about late July or early August 2009 when we started seeing real buyers calling to see properties again. The phones were ringing, other brokers were calling to show our properties and it started to feel like things were turning around. People are still very cautious, but they are willing to dip a toe in the pool.

 

Fortunately, as we start 2010, we see some signs of stability as the fourth quarter of 2009 showed a significant rise in the national GDP and people are getting used to the “new normal”. The stock market DOW has rallied back to over 10,000, home sales are up and so are the median home prices. We’re not out of the woods yet but there are reasons to be optimistic. From our perspective, we are seeing more buyers in the vineyard and winery market. Of course they are all looking for the deal…………. And in some cases they are getting just that. Foreign buyers are out in force looking to pick over the bones of once successful American enterprises.    

 

After reviewing data of all vineyard sales in Napa and Sonoma Counties since 1950, it is clear to see that some goals were nearly achieved and others completely missed the mark. Napa made a run its 100% appreciation target in this decade, but Sonoma has fallen way short. Here are actual sales statistics showing low, high and average prices in each county.

 

 

The following is updated data for actual recorded vineyard sales in Napa and Sonoma Counties from 2001 through 2009.   We will provide our opinion for 2010 and see how close we come to reality.

 

 

Year	Low	High	Average
2001	$85,000	$180,000	$115,000
2002	$70,000	$180,000	$105,000
2003	$70,000	$180,000	$105,000
2004	$80,000	$220,000	$187,000
2005	$92,000	$256,000	$210,000
2006	$108,000	$290,000	$235,000
2007	$112,000	$300,000	$255,000
2008	$113,000	$350,000	$295,000
2009	$85,000	$305,000	$150,000

 

TWENTY TEN

Prime	$225,000	-	$300,000
Secondary	$115,000	-	$215,000
Carneros	$115,000	-	$150,000
Outlying	$55,000	-	$75,000

Year	Low	High	Average
2001	$60,000	$83,000	$74,000
2002	$62,000	$83,000	$75,000
2003	$60,000	$80,000	$70,000
2004	$60,000	$80,000	$75,000
2005	$62,000	$82,000	$76,000
2006	$63,000	$85,000	$77,000
2007	$71,000	$125,000	$82,000
2008	$75,000	$110,000	$92,000
2009	$60,000	$85,000	$75,000

 

Prime	$80,000	-	$90,000
Secondary	$70,000	-	$80,000
Below Avg	$50,000	-	$65,000

 

We receive calls from appraisers on a weekly basis that have been contracted to provide a market value for properties with vineyard. Some of them are veterans that have been in the business for years, while others have a more residential or commercial background and don’t understand the unique variables of vineyard valuation. We try to do our best to ensure that what they give to the banks and owners is accurate and not hype.

 

Of course there will always be agents that tell a property owner what he or she wants to hear in order to get a listing. Or the seller may have an unrealistic perception of value. In either case the owner ends up being hurt. The property will sit on the market as the asking price gets dropped lower and lower until it is near market value, then it may sell. It’s best to hire an appraiser or broker that is willing to tell you the real deal. It may not be what you want to hear, but it will most certainly give your property a better chance of selling at a fair market value. 

 

We know one thing for sure, “The only real value is what the property sells for, not what someone thinks it will sell for”. Actual sales comps are the best indicator of what a like property in the same neighborhood will most likely sell for.

 

We are definitely going to see some tough times ahead, but for us it is important to remember that we live in one of the finest wine regions in the world. We have the reputation and quality that very few other areas have or could even dream of. Our lifestyle is envied by many people from around the world. We feel 2010 is the turn around year for our wine/vineyard industry, however we will have to become more competitive and offer our great product at a more competitive price.  Our foreign neighbors are able to produce inexpensive wine that will continue to lure the lower end wine consumer and be a challenge for the domestic producers. As the economy turns around, we will see more of the high end wines being sold and price points increase.

 

As vineyard estate & winery sales are beginning to pick up a bit, we find ourselves with a shortage of good vineyard properties and wineries for sale. So if you have been thinking of selling, or just getting an idea of the value of your property, We would be happy to meet you on a confidential basis and give you an idea of what it would be worth in today’s economy.

 

We truly believe that at the end of 2010, you will feel better than you did at the end of 2009. Remember, top quality will always demand a premium. Think positive, keep a smile on your face, and remember that we live in one of the best places in the world………….. Have a great 2010.