ONE OF THE PERILS OF THE MORTGAGE BUSINESS is a common question I am asked whenever I attend any type of social gathering: How is business? Given the state of housing the last several years, the question is understandable — everyone wants to know if, and needs assurance that, the housing market is healthy.

The latest home values report came out last week with the news that home values nationwide had improved when compared to values a year ago. Some areas are better than others, of course, and the San Francisco Bay Area enjoyed some of the hottest gains, with a regional improvement of more than 23 percent. So what does that mean for the average homeowner who is thinking about selling — and just as important, what can buyers expect when looking for a home this buying season?

Supply and demand are significant factors in any market. Locally there has been an acute shortage of homes available for sale for almost two years. I looked at the list of available homes on the local MLS this morning and there were a total of 38 properties for sale in Benicia. Sixteen of these homes are listed as contingent status, and five are condominiums, so realistically a prospective buyer has fewer than 20 single-family homes to choose from in Benicia.

Presently there is nothing offered on the water, so at the top of the market are two exceptional downtown properties listed in the high 800,000s. These water view homes each offer four bedrooms and three baths, and both have close to 3,000 square feet of living area.

There are presently a few properties available in the Waters End development; these homes are priced just under $750,000. The lowest priced single-family home in Southampton is a four-bedroom home on Rose Drive listed at $485,000. Solar Village, a planned unit development near Henderson Elementary School, has a few homes for sale between $449,000 and $385,000.

Available condominiums in Benicia range from $435,000 for a home in Pointe Benicia facing the water to a one-bedroom unit on West L Street at just $120,000.

It is true that what is available represents a wide variety; the problem is that there are not enough desirable properties currently available.

Buyer demand typically is at its highest in the spring months, and this year is no exception. Sellers who have prepared and priced their homes correctly will typically receive multiple offers within a short period of listing their home for sale.

Will we see a double-digit increase in values again this year? Most analysts do not think values can or will continue to rise at the pace of the last couple of years, for one reason: affordability.

The reasoning goes like this: As values climb and affordability drops, folks who want to buy a home simply will not be able to afford the payments. This could remove potential home buyers from the market, and thus reduce demand.

But affordability is a tricky question, and in many cases is subjective rather than objective. Last year, for example, I was working with a young couple that decided to drop out of the home buying process when interest rates jumped last summer. On paper, they could more than afford the type of home they were seeking — but the jump in rates and corresponding increase in monthly payments pushed them outside of their comfort zone.

Now, a year later, they decided to try again — and they are now in contract for their first home. Interest rates are about the same today as last fall, but the big difference is that values have climbed. So for this young couple, affordability today is different than it was just six months ago.

Statistically, homes are still affordable for a great percentage of folks thinking about buying. Interest rates are low and home values are still below peak levels. At least in my experience, there does not seem to be any shortage of buyers.

Home sellers are still in the driver’s seat, however, with a continuing shortage of available properties and an ample supply of buyers eager to buy homes.

Guy Benjamin (CAL BRE License #01014834) writes a weekly column for The Herald, offering general information on real estate matters. As it is impossible to address all possibilities and variations, he will try to answer individual questions by readers who contact him at 707-246-0949 or gbenjamin@rpm-mtg.com.

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