For five years — 60 straight months — Sonoma County’s home prices have remained higher than those from a year earlier.
The trend held again in May, when the median single-family home price reached $625,000, according to The Press Democrat’s monthly housing report, compiled by Pacific Union International senior vice president Rick Laws. The median price increased 7 percent from May 2016, when it was $583,000.
May 2012 was the last time home prices were higher the year prior. The median price then was $329,500, and home values were just on the verge of rebounding after a historic market crash.
Five years ago, home prices had been depressed by record numbers of foreclosures and by fears about the economy, both agents and brokers said. But a sharp drop in new home construction eventually helped spur demand and led to a sellers’ market, with steadily rising prices.
“The bounce started five years ago, and that bounce has a trajectory, and we’re still on that trajectory,” Laws said.
Prices have risen, but home sales and new listings have fallen for three of the past four years.
In May, buyers purchased 416 single-family homes, a decline of 4 percent from a year earlier. Meanwhile, new listings to date this year are at their lowest level in at least eight years.
May ended with about 750 homes for sale in the county, or less than a two-month supply of inventory at the current sales pace.
The limited inventory has made it difficult for buyers, especially those competing with households willing to pay cash for a property, said Ingrid Mathews, a co-manager in Santa Rosa of Better Homes Realty. In response, agents often encourage buyers to write personal letters to sellers in hopes of winning hearts to obtain a property. Agents also are keeping an eye out for those willing to sell homes without making the properties available to all buyers via the multiple listing service.
Many sellers “don’t want to deal with all the commotion and stress” of open houses and multiple offers, Matthews said.
Other brokers said good data is hard to come by, but many buyers today are making purchases via what are called “off-market” sales. As a result, agents are constantly networking with each other to learn which properties might soon become available, either through the multiple listing service or for private sale.
“Everybody’s on the hunt,” Laws said.
Brokers said the market is different today than it was 12 years ago, when high demand was fueled by an abundance of risky loans. In that era, home prices peaked in August 2005 at $619,000.
However, a few years later the bubble burst and home prices plunged until they hit a low of $305,000 in February 2009. Prices eventually stabilized and rebounded, with a new record peak set in March at $635,000.
From month to month, median home prices rarely rise or fall in a consistent pattern. That’s why agents and brokers generally compare such prices to what happened a year earlier.
For the first five months of the year, the median price has increased 9 percent from the same period in 2016.
Brokers this week said it’s too difficult to predict when prices will stop rising. But they did note a few factors affecting home values.
Further jumps in both prices and mortgage interest rates would reduce the number of residents with the means to buy a home in the county, they said. About a quarter of county households could have afforded the median priced home in the year’s first quarter, compared to nearly six in 10 nationally, according to the California Association of Realtors.
In theory, a further drop in potential buyers could slow the rise in home prices. However, brokers and agents said Sonoma County continues to attract a significant number of buyers from the rest of the Bay Area, where median home prices are considerably higher. Those out-of-county buyers continue to put upward pressure on prices.
“We’re still the cheap date in the Bay Area,” said Paul Heck, an agent with RE/MAX Gold in Santa Rosa.
Heck said he remains more optimistic than many professionals that the available home inventory will increase before year’s end. Even so, some of that extra supply is expected to come from retirees and others looking for less-expensive locales to call home.
“People have started making their plans to get out of California,” he said.
More buyers also may start to make alternate plans.
Tom Kemper, manager of Coldwell Banker in Santa Rosa, said 15 years ago the rise in prices led many county residents to purchase homes in Lake County and to commute to their jobs here. Such purchases could happen again.
“At some point,” Kemper said, “people have to start looking somewhere else.”
You can reach Staff Writer Robert Digitale at 707-521-5285 or firstname.lastname@example.org. On Twitter @rdigit.