Sonoma County home sales rise, prices fall

Sonoma County home sales surged again in December as plummeting prices drew buyers into a market packed with properties unloaded by banks and sellers avoiding foreclosure.

The 408 sales was a four-year high for December, the ninth consecutive annual increase in the county and more than double the number from a year ago, according to The Press Democrat monthly home sales report.

Yet prices fell to a seven-year low, indicating the region’s housing downturn is far from a bottom. The median price dropped to $325,000 in December, down 30.3 percent from a year ago, because purchases continue to be concentrated at lower prices.

Home prices will not begin to level off until the glut of distressed properties disappears. Friday’s report shows that is beginning to happen: There was almost a four-month supply of homes on the market in December at the current pace of sales, down from an 11-month supply a year ago.

However, there are signs that the flurry of sales is not cutting into inventory levels as sharply as it may appear. As many as half of the accepted offers in November were not completed in December, often because buyers are making offers on several homes and backing out of agreements when a better deal emerges.

Sonoma County home prices are expected to continue falling through much of this year, according to economic forecasts.

There is a 61 percent chance that prices will decline in Sonoma County over the next two years, according to a study issued this week by PMI Mortgage Insurance Co., a national mortgage insurer in Walnut Creek. Three months earlier, there was just a 46 percent chance of price declines.

The forecast is based on current economic conditions, which are bleak. The recession and both rising unemployment and fear of job losses are a drag on housing’s recovery.