Bay Area residents flock to Sonoma County, boosting home prices to record high

Homebuyers are fleeing dense Bay Area neighborhoods for Wine Country environs, heating up a local real estate market rapidly recovering from a pandemic-induced slowdown.

Untethered from the office, many urban residents are seeking additional living space and a more relaxed lifestyle since they’re spending most of their time at home. North Bay home prices that are significantly cheaper than in other parts of the Bay Area also are a draw.

Local real estate agents say the demand is in large part driven by buyers from San Francisco, the East Bay, Silicon Valley and even the Central Coast. That’s pushed Sonoma County’s median existing home price up 10% in July from a year ago, to an all-time high of $720,000, according to the most recent data from Compass real estate brokerage in Santa Rosa.

In February, the month before the coronavirus temporarily upended the real estate market, the median home price in the area was $641,250. Despite the limited ability for in-person showings at the onset of the pandemic, county housing prices have made a steady monthly ascent driven by many buyers’ freedom to work remotely.

In July, sales of single-family houses in the county soared 36% from the same time last year, according to Compass data. A total of 612 homes were sold, compared with 451 in July 2019.

“We always have the local market upsizing and downsizing, but the amount of people coming from the Bay Area has just skyrocketed,” said Tammra Borrall, a real estate agent with Compass.

Borrall said her clients are seeking rural settings, sweeping views and what area agents agree is the most sought-after home feature this social distanced summer — a swimming pool.

She recently hosted around 40 showings at a $1.2 million home on Occidental Road in Sebastopol that checked all of those boxes. Over half of the potential buyers for the house were from San Francisco.

After large Bay Area companies, including technology giants Facebook and Google, signaled in the spring and early summer that employees could continue working remotely even after the virus eventually is under control, many in the real estate industry had expected the exodus into the region’s suburbs including Sonoma and Napa counties.

“It’s not a theory anymore, it’s happening,” Borrall said.

Megan Rhodes, 65, who works for a credit union in Capitola near Santa Cruz, recently paid about $840,000 for a new 2,300-square-foot home in Windsor. She relocated north after her company allowed her to continue working indefinitely from home.

In Windsor, Rhodes found she was able to afford a larger home with a yard and a pool. But the main reason for the move was to be closer to her son and grandchildren, who also live in the town.

“As bad as COVID is, it’s really provided an opportunity for people and families to be together and think about what this new normal is,” she said.

During the early months of the pandemic, the county real estate market slowed in terms of sale transactions as residents were ordered to shelter at home. Sales rebounded in June after restrictions were loosened, and spiked even higher in July, according to the Compass data.

Rick Laws, a regional vice president at Compass, said the local luxury housing market was the first to see a dramatic increase in sales. Those properties continue to receive multiple bids from wealthy Bay Area residents willing to offer hundreds of thousand of dollars more than asking prices, he said.

Last month, a hilltop mansion in Sonoma sold to a San Francisco family for $14.75 million, one of the most expensive home sales in Sonoma County history.

That demand has expanded to mid-priced homes, too, with transactions between $500,000 to $700,000 seeing strong growth, accounting for the highest number of sales of any price range in July, according to the Compass data.

Laws said both local and out-of-area buyers in a variety of income levels are looking to upgrade to properties with home offices or more space for distance learning for families with children.

The challenge is that very few houses are now available to meet the surging demand, due in part to pandemic-related delays in construction and in prepping homes to come to market.

“It’s kind of like musical chairs, all of the sudden the music changed, and everyone's looking for the next seat,” Laws said.

Michele Wieser, 56, and her husband recently were able to buy a house under construction in Fountaingrove, on a plot where a home burned down in the 2017 Tubbs fire. Wieser grew up in Healdsburg and is returning to Sonoma County after 16 years living in Dublin in Alameda County.

Despite moving back to the North Bay, where there have been a series of devastating wildfires in recent years, she’s not overly concerned about the threat.

“We are of the thought that they’re also having fires in the East Bay,” Wieser said. “So I think they’re everywhere in California, and you can’t escape that.”

Local Realtors said that for some, buying a home in Sonoma County is a matter of trading one risk — the higher odds of catching the coronavirus in dense urban communities — for another with increased wildfire danger.

““People will compromise as long as they get the house that they want and insurance they need,” said Erika Rendino, a broker with RE/MAX Marketplace in Cotati.

If new homebuyers continue to flock to the area, it could exacerbate what housing advocates and public officials regularly describe as a local affordable housing crisis.

“It’s definitely something that’s going to impact a variety of different low- and moderate-income households in the area,” said Robyn Van Ekelenburg, director of home ownership at the nonprofit Burbank Housing.

Ethan Brown, director of business development with the county’s Economic Development Board, also pointed to increasing pressures on the already limited housing stock. But he said an influx of Bay Area residents could provide a boost to the local economy, both by increasing consumer spending and possibly adding high-skilled tech workers to the county’s workforce.

“What remains to be seen is if they stay (with their current companies), or if they leave those firms and come to work for local firms,” Brown said.

Rendino and her husband, David, who together work as a real estate team, said they have seen a number of area buyers purchasing second homes to use as their primary residences during the pandemic.

“We have Google buyers, and they’ve been told that they’ll work from home until July of next year,” David Rendino said. “If they have to go back, they’ll do some kind of (vacation rental service).”

Those plans could be complicated, though, by Sonoma County supervisors’ recent decision to impose a temporary cap on vacation rentals in most areas of the county outside of city limits.

With interest rates for mortgages remaining near historic lows, and a glut of backlogged properties still waiting to hit the housing market, the Rendinos expect the county’s homebuying trend to extend well into the fall.

In the longer term, David Rendino said he wouldn’t be surprised if homes in the area stay a hot commodity for years to come.

“My gut feeling is that there will be more advances in telecommuting, which will make Sonoma County an even more desirable place to live,” he said.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian