Sonoma County home sales surge in March
Patrick and Kristie Coleman are first-time buyers fixing up their house in northwest Santa Rosa.
Mark Aronoff/PDPublished: Thursday, April 16, 2009 at 3:00 a.m.
Last Modified: Wednesday, April 15, 2009 at 4:02 p.m.
Sonoma County’s surging real estate market reached a milestone in March, when low prices drove up home sales for the 12th straight month, according to a report.
As the year-long housing rally marked its first anniversary, a familiar pattern has taken hold in Sonoma County: Buyers, predominantly first-timers, are targeting bank-owned homes and discounted properties dumped by sellers trying to avoid foreclosure.
Distressed properties accounted for nearly seven of 10 homes sold in March. With low-priced homes dominating sales, the county’s median price fell to $320,000 in March, down more than 27 percent from a year ago — and almost half off the record $619,000 hit in 2005.
But for the first time a year, home prices ticked upward from the previous month, according to the monthly report prepared for The Press Democrat by Rick Laws, Santa Rosa manager for Coldwell Banker. The median rose 4.9 percent from February, when it stood at $305,000.
“Don’t read too much into one month. It is not a trend. It is just one month,” Laws cautioned. “But when taken in the aggregate, inventory is decreasing and demand is increasing. It may be the beginning of something significant.”
Last year, home prices also inched up between February and March before resuming a steady descent for the next 12 months.
Prices are falling because the number of homes coming on the market is outpacing sales, despite the upswing in purchases.
But there are signs that buyers are cutting into inventory. At the current pace, it would take almost 4½ months to sell all the homes listed at the end of March. A year ago, there was an almost nine-month supply of homes on the market.
Prices will not bottom out until buyers make a deeper dent in the supply of homes for sale, primarily foreclosures. That may not happen in Sonoma County until early 2010, said LaVaughn Henry, senior economics director for PMI Mortgage Insurance Co., a national mortgage insurer in Walnut Creek.
“You have to remove the excess inventory from the region, and that’s happening. There are small signs of recovery. Foreclosures aren’t going away, but they’re not sitting on the market as long as they were before,” Henry said.
Overall, sales jumped 40 percent in March, compared with the same month a year ago. Buyers purchased 369 single-family homes — the strongest showing since December — as the market headed into the traditional spring home-selling season.
As prices fall and mortgage rates hover near historic lows, a growing number of Sonoma County residents are finding that homes are moving within their reach. Homes haven’t been this affordable for more than a decade, Henry said.
First-time buyers, such as Patrick and Kristie Coleman, are jumping at opportunities to purchase homes at prices that don’t bust their budgets. Just a year ago, the couple couldn’t think of buying a home.
“We just thought we never had a shot, basically,” Patrick Coleman said.
The Colemans started looking in January, joining the crowds of buyers seeking a home under $300,000.
“There was a lot to choose from. I sure was surprised,” he said. “I couldn’t believe it. The prices were so low.”
After looking at more than a dozen homes, they found a bargain-priced house in northwest Santa Rosa. The day the home hit the market the couple offered $230,000 — $11,000 more than the asking price. That strategy worked because they beat out several other offers, said their agent, Richard Paille, owner of Hart & Co. real estate.
“It was just a bidding war. You try to counsel your clients that this is the way they have to act in this market,” Paille said. “Offers are coming in on well-priced homes as soon as they hit the market. Frequently there are many offers on the same property. Offers to buy often exceed the listed price. Buyers are scrambling to take advantage of this one-time marketplace.”
The home was a bargain, priced at about half what it sold for just two years ago. The seller was motivated to make a deal for far less than they owed on the house to avoid foreclosure.
The Colemans now have a monthly payment that’s higher than the rent they had been paying on a Forestville home but well within their budget.
“We can definitely afford this. It’s pretty cool. I think I’m still in shock,” Patrick Coleman said.
The falloff in prices is affecting real estate offices across Sonoma County as they tally up their sales.
Home sales soared 70 percent during the first quarter of 2009, compared with a year ago, at Frank Howard Allen Realtors’ Wine Country Group. But after adding all of the sales up, the dollar volume was similar for both periods, said Gerrett Snedaker, broker for the Sonoma-based sales group.
“The reduced prices of the market are clearly reflected in our dollar volume. It is highly likely that we will be going through another series of cost reductions as we move through the balance of this year,” Snedaker said.
Banks have been slashing prices to sell off a steady stream of foreclosure homes. That puts pressure on homeowners trying short sales — or selling a home for less than they owe on the mortgage — to cut prices.
March’s new listings were dominated by homes priced at the lower end of the market, with half priced under $400,000.
Lower prices continue to draw in more buyers, but not enough to keep up with the supply of homes for sale. Sellers put 581 homes on the market in March, well above the 369 homes sold during the month.
Home sales would be even stronger, but some buyers have been pushed out of the market because they’ve lost their jobs or are concerned about future layoffs, Henry said. There were 24,200 unemployed job-seekers in Sonoma County in February, almost double the number from a year ago.
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