Sonoma County home sales dip, but median prices hit a new record

After a strong sales bump in June, Sonoma County’s housing market declined in July to the slowest pace of sales in seven years.

Meanwhile, a combination of appreciation and growing sales of pricier properties last month lifted the median price for a single-family home to a new record high of $644,000.

Buyers purchased 406 single-family homes in July, according to The Press Democrat’s monthly housing report, compiled by Pacific Union International senior vice president Rick Laws. It was the lowest sales total for the month since July 2010.

The results contrasted with June, when 512 homes were sold, the best showing for any month in two years. July sales declined almost 20 percent in one month.

“That’s a pretty precipitous drop,” said Laws. He and other brokers noted that June and July sales together were nearly the same as a year earlier. As such, the results may have been simply a strange concentration of transactions in one month rather than another.

Even as July sales slowed, the median price climbed almost 3 percent from June and surpassed the previous record high of $635,000 set in March. Last month’s median price increased 12 percent from a year earlier and now has risen 111 percent from $305,000 in February 2009, when home values hit bottom in the midst of a national housing crash.

The rise of the median price this year has come as a result of gains in appreciation and because of a change in the mix of homes sold. The county has seen strong growth in the sale of homes priced at $1 million or more, even as fewer starter homes are changing hands.

In July 2012, only ?17 county homes sold for more than $1 million. Last month that number rose to 70.

Meanwhile, the number of homes selling for less than $500,000 declined to 77 homes in July from 406 five years ago.

Seven years ago the county was in the midst of a buyer’s market, as waves of foreclosures and other financially distressed homes came up for sale. But as such properties significantly declined in number, the market shifted to the advantage of sellers.

In recent years, buyers have faced competition for a limited supply of homes on the market. July ended with slightly more than 800 homes for sale, about a two-month supply at the current pace of sales.

“That’s why the prices are up,” said Pat Provost, one of four owners of Century 21 NorthBay Alliance in Santa Rosa. “There’s no place for people to go.” Such limited inventory is a factor not only in the county but “all over the country,” she said.

Brokers blamed the limited supply for a decline in county home sales in three of the last four years. To date this year, sales have fallen 3 percent from the same period in 2016.

Typically the lowest-priced homes garner the most offers, said Laws. Nonetheless, “there’s no price point that’s easy for buyers in this market.”

In the search for properties, some buyers are seeking out agents whose clients are making preparations but have yet to list their homes. The buyers then write offers before the properties comes to market, said Lori Sacco, managing broker for Vanguard Properties in Sebastopol.

With such buyers, Sacco said, “a lot of them are people who say they’ve been looking for over a year.” The preemptive offers typically propose sale prices that are at least 10 percent higher than the expected listing prices.

Among homes near the county’s median price is a three-bedroom, two-bath home in the Oakmont retirement community listed for $639,000.

The listing agent, Nancy Devoto of McBride Realty, said the number of available properties remains down from three decades ago but has been steady for the past few years. So have sales. To date this year, buyers have purchased 100 single-family homes in Oakmont, the same number sold over the same period five years earlier.

“The only thing that hasn’t been steady are the prices,” Devoto said. “They just have been going up.”

Among the reasons for the appreciation is that the retirement community is drawing a large number of baby boomers from outside the area with the resources to make what for most will be their final home purchase.

“Eighty percent of my business is all cash,” she said.

While buyers can feel at a disadvantage, many prospective sellers remain reluctant to sell because of the difficulty finding a replacement home, brokers said. Since the county also faces a tight rental market, sellers have become more resistant to seeking a temporary apartment while they try to buy their next place.

“That’s a train wreck for most people,” said John Duran, a broker associate in the Santa Rosa Mission office of Coldwell Banker. For homeowners to become sellers, he said, agents have to find creative ways to help their clients acquire new homes and sell their current properties. The strategies can include making the sale contingent on the seller finding a replacement property.

The lack of available houses on the market is the result partly of a lack of new home construction over the last decade. County home building has increased in the past ?18 months, but those units now under construction still “will fall short of what the demand will be,” said Glenn Gephart, general manager of the Century 21 NorthBay Alliance office.

As for the increase in homes selling for over $1 million, Laws said the price segment continues to attract affluent buyers from around the Bay Area who are looking for second homes.

“I think it’s a sweet spot in the marketplace,” he said.

You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.