Large volumes of financially distressed real estate boosted Sonoma County home sales last year, but they also helped drag down prices to the lowest level in a decade.
Buyers purchased 4,637 single-family houses last year, a 7 percent jump over 2010, according to The Press Democrat's monthly housing report compiled by Pacific Union International vice president Rick Laws.
Nearly half of those sales were foreclosures or short sales, the latter being transactions where the price is less than the amount owed on the mortgage.
While sales rose, the median price for 2011 fell to $325,000, a new low for this real estate cycle. It hasn't been at that level since 2000. In contrast, the market peaked in 2005 with a median price of $595,000.
Laws maintained the median price fell mainly due to the concentration of sales in the entry-level home market. For homes priced under $300,000, sales jumped 39 percent last year compared to 2010. In contrast, sales for homes priced between $500,000 and $700,000 dropped by 25 percent.
Looking ahead, agents see occasional signs of buyer confidence. But many predicted flat prices and plenty of distressed inventory holding down the market in 2012.
"Everybody better get comfortable with it," said Shawn Hermosillo, an agent with Keller Williams in Santa Rosa, who on Friday visited a short sale listing in Windsor. "This is the new, real market. This is what it is."
Real estate has long been a major sector of the Sonoma County economy. But its impact has been muted by the Great Recession.
The total value of all resold single-family homes in the county last year totaled $1.9 billion, the lowest level since 1999.
In contrast, buyers purchased $4 billion worth of homes in 2005 at the peak of the market.
Along with the slide in existing home values, new home construction has slowed to a trickle during the last three years.
Last year's fourth quarter ended relatively strong with 1,214 home sales, up 20 percent from 2010. It was the best end-of-year result since 2008.
For December, buyers purchased 401 single-family homes. The median sales price was $316,000, down less than 1 percent from November.
The month ended with a sales inventory of 1,120 homes, less than a three-month supply at the current pace.
Several agents said the small inventory is holding back sales.
Dave Roberts, an agent with Healdsburg Sotheby's International Realty, said even second-home buyers are affected.
"People looking for the little country property with a few acres are not finding a lot out there," Roberts said, at least not in their price range.
Several agents said housing won't turn around soon because the economy is still struggling with high rates of unemployment.
"What fuels the market? Jobs," said Joanne Lumsden, an agent with Keller Williams in Santa Rosa. "We've got to have the jobs."
Over the last two years, the number of completed short sales has increased while the number of foreclosure sales has fallen. Last year, the county recorded 990 completed short sales, up 24 percent from 2009. In the same period, the number of foreclosure resales dropped 30 percent to 1,238.
Agents remain unsure how long it will take to work through all the distressed properties, though many suspect the nation's banks are being careful not to cause a plunge in prices by putting too many on the market at once.