After years of targeting foreclosures and other low-priced properties, home buyers in Sonoma County are venturing into higher-priced neighborhoods and increasingly striking deals to buy move-up houses.
The median price shot up to $385,500 in August, up 11 percent from July, reaching its highest level in nearly three years, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws.
The median, which stood at $330,000 a year ago, represents a midpoint where half the homes sold for more money and half sold for less.
Part of the increase in the median price was driven by a jump in the sale of bigger homes in pricier neighborhoods. But agents and brokers said some of the increase was also likely due to a rise in home values because of a relative shortage of properties for sale. The number of available homes at the end of August was half the amount from a year earlier.
"There's more demand than there is supply," said Tom Torgerson, a broker associate with Century 21 Alliance in Santa Rosa.
Even so, with a weak jobs market, an uncertain economy and a host of homes still financially underwater, no one was predicting Wednesday that home prices are poised to soar.
Buyers today are informed and "they want to see well-priced homes," said Torgerson, who has spent 40 years in the business.
Buyers purchased 520 single-family homes last month, an 11 percent increase from the same month a year earlier.
To date this year, buyers have purchased 3,665 homes, a 21 percent increase from the same period last year and the most sales for the period in seven years.
The median price reached a record high of $619,000 in August 2005 before tumbling to $305,000 in February 2009.
In the past four years, sales have been dominated by two related market segments: Financially distressed properties and starter homes priced under $400,000.
In contrast, August saw a jump in sales of homes in the more expensive move-up market and properties whose owners have equity.
Homes selling between $400,000 and $800,000 in August made up 38 percent of all sales, the biggest share in nearly three years. Such homes made up 26 percent of sales a year earlier.
"That means we're finally getting people who are moving up," said Mike Kelly, an agent with Keller Williams in Santa Rosa. Many of the buyers are selling a starter home and purchasing a more expensive property.
Agents said the change in the market mix wasn't a one-month occurrence. To date this year, sales have increased 35 percent for homes priced between $400,000 and $800,000. In contrast, sales have risen 15 percent for homes priced under $400,000 and 27 percent for above $800,000.
"It's definitely a market shift," Laws said.
Meanwhile, 70 percent of last month's sales involved equity sellers. Short sales and foreclosures made up 30 percent, the lowest level in at least four years. Short sales are properties offered for less than the amount owed on the mortgage.
From a historical perspective, the market still has a large share of distressed properties. And more than 28,000 county homeowners, or 27 percent of all homeowners with mortgages, owe more than their houses are worth, according to a report released Wednesday by CoreLogic.