Sonoma County housing market posts strongest year since 2006

While sales slowed markedly in December, Sonoma County's housing market in 2013 still posted its best year since 2006.

Buyers purchased more than $2.86 billion worth of houses and condominiums last year, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws. The total value increased 12 percent from 2012 and reached the highest level since 2006, when nearly $3.29 billion worth of homes were sold.

The sales value rose even though the total number of transactions declined. Buyers purchased 4,971 single-family homes last year, a drop of 8 percent from 2012. Condo sales fell 11 percent to 662 properties.

The activity suggested a return to more of a normal housing market, Laws said. Sales shrank dramatically for homes priced under $300,000 but increased 42 percent for properties priced above $400,000.

In the early years of the housing crisis, he said, "all we were selling was the bottom of the market, primarily distressed sales."

The county's real estate boom peaked in 2005 with $4.4 billion in sales. That year, the annual median price for a single-family home soared to a record $595,000.

But prices plummeted during the next six years, sending the median price to an annual low in 2011 of $325,000.

As prices dropped, foreclosures skyrocketed. Since 2007, more than 11,000 homes in Sonoma County have been sold at auction or taken back by banks -#8212; greater than one in every 10 homes here with a mortgage.

Home sales picked up in 2012 and the annual median rose 8 percent that year to $350,000. Last year it jumped an additional 23 percent to $431,500.

Among the changes in 2013 was a sharp drop in the sale of economically distressed properties. Foreclosures and short sales comprised just 18 percent of single-family home sales last year, compared to 40 percent in 2012.

Looking ahead, brokers and agents said they have plenty of buyers looking for properties. What remains to be seen is how many sellers will put their homes on the market this year.

"The questions all just come back to inventory," said Tim Freeman, manager of Coldwell Banker in Santa Rosa.

December ended with 550 homes for sale, less than a two-month supply of inventory at the current pace. In December 2010 the supply was more than double that amount.

The lack of available homes has been constraining sales, brokers said.

In December, buyers completed the purchase of just 335 single-family homes, the lowest amount for the month since 2007.

And sales agreements were signed last month for just 266 houses, the lowest figure in at least five years. Many of those agreements will be completed and the homes will be recorded as sold in January and February.

The median price of a single-family home last month was $465,000, up 19 percent from a year earlier.

Sales activity was similar for the entire Bay Area.

Buyers purchased 6,714 houses and condos in December for the nine-county region, according to real estate information service DataQuick. Sales decreased 12.7 percent from a year earlier and were the lowest in six years.

The Bay Area median price last month for houses and condos was $548,500, an increase of 23.9 percent from a year earlier.

For trends, some pointed to the lack of inventory as a force that will push prices higher this year. Others suggested the market doesn't seem as frantic since mortgage rates started to rise last summer.

"We didn't see as many multiple offers in the last few months of the year," said Glenn Gephart, general manager and an owner of Century 21 Alliance in Santa Rosa.

Even so, Gephart expressed optimism that sales will remain healthy in 2014. His agents tell him they have clients who plan to put their homes on the market between now and springtime.

Joanne Lumsden, an agent with Keller Williams in Santa Rosa, said she has a client who is getting ready to list a 2.5-acre property in southwest Santa Rosa. When she asked him when to put it on the market, he answered, "The day after the Super Bowl."

Until then, the client told Lumsden that he plans to spend his weekends watching football. And if the San Francisco 49ers once more make it to the Super Bowl, Lumsden expects that plenty of potential buyers will be tuned in to the game, too.