Sonoma County home prices stabilize in October

<p>Sonoma County home prices held steady in October as the inventory of starter homes continued to shrink.</p><p>The median price hovered at $360,000 in October, up slightly from $350,000 in September and virtually unchanged from a year ago, according to the monthly Press Democrat home sales report prepared by Rick Laws of Coldwell Banker in Santa Rosa.</p><p>Sales also remained stable. Buyers purchased 416 single-family homes in October, compared to 409 homes in September but down from 512 a year ago.</p><p>Prices have started to stabilize in Sonoma County after a 3 1/2-year slide that cut the median home price in half. After peaking at $619,000 in August 2005, the median dropped to a low of $305,000 in February. Since then, the median price has risen slowly and remained essentially flat since July.</p><p>Steady sales are cutting into the inventory of starter homes. The number of houses for sale under $400,000 fell in October to 360 properties, down from 949 in January. That amounts to slightly more than a month’s supply of homes in that price range, compared to four months worth of inventory a year ago.</p><p>Real estate agents said they could easily sell more homes under $400,000 if more properties were available.</p><p>“It’s because we don’t have the inventory, not because we don’t have the buyers,” Laws said last week during a presentation at a breakfast meeting of the North Bay Association of Realtors chapter in Santa Rosa.</p><p>By comparison, there is nearly a six-month supply of homes priced between $500,000 and $1 million, Laws said. A supply of four to six months is considered balanced for both buyers and sellers, he said.</p><p>Today’s potential buyers often think that since home prices have fallen so far, the market is depressed and they can easily obtain a starter home, agents said.</p><p>Instead, they find the available homes in that price range often attract multiple buyers, allowing sellers to select offers that come with the most cash or the best likelihood of closing escrow.</p><p>“I have several buyers that have written many, many offers,” said Scott Rowlands of Frank Howard Allen in Santa Rosa. Sellers “have learned to be very choosy about which buyers to choose to sell their homes to.”</p><p>Both agents and buyers say the competition remains intense for homes priced under $400,000. </p><p>“It’s been very frustrating, to say the least,” said Shelly Davis, a Sonoma State University student whose parents are seeking a home in Rohnert Park that would double as a home for their daughter and an investment with the rental of spare bedrooms.</p><p>The family has been trying since July to purchase a home, she said, and has an offer in for a property known as a short sale, a home priced for less than the amount owed on the mortgage. For such properties, a lender must agree to a sale that often would result in a loss of investment worth tens of thousands of dollars.</p><p>Davis, 22, who plans to graduate from SSU in May with a business degree specializing in wine, said her family has looked at more than 10 properties in the under $400,000 market. Nearly all of them were listed as short sales, which on average stay on the market twice as long as other properties because of the difficulty in obtaining the current lender’s approval.</p><p>“We just figured with what we thought was a great buyer’s market that the potential for this investment would be pretty high,” she said. “And it will be. It’s just turned into a pretty big headache.”</p><p>Her agent, Paul Heck of RE/MAX in Santa Rosa, said Davis’ experience is typical of many clients in the starter home market.</p><p>“There isn’t enough inventory for people who want homes,” Heck said.</p><p>For the agents, a bit of good news was this month’s extension of the $8,000 federal tax credit for first-time buyers. As well, Congress approved a $6,500 credit for homeowners who have lived in their principal residence for at least five years and who purchase a new home. The extension means an eligible buyer has until April 30 to enter into a binding home sales contract.</p><p>“It should definitely help with the move-up buyers,” said Paula Gold-Nocella, a manager/broker with Prudential California Realty in Healdsburg.</p><p>The tax credit has pumped new life into the housing market. She noted a survey this summer from the California Association of Realtors that found 40 percent of first-time buyers wouldn’t have purchased a home if the tax credit had not existed.</p>