Sonoma County home prices level off

July home sales in Sonoma County hit their highest mark for the month in 10 years, though prices leveled off for the third straight month as a growing number of buyers find themselves priced out of the market.

The median sales price ended last month at $545,000, essentially unchanged from a revised median of $545,500 for June and $545,000 in May. July’s median price did increase nearly 8 percent from a year ago, according to The Press Democrat’s monthly housing report compiled by Pacific Union International Vice President Rick Laws.

“It’s pretty obvious the price escalation has slowed,” said Sally Crain, president of the North Bay Association of Realtors.

Crain, a broker associate with Century 21 Alliance in Santa Rosa, suggested one reason may be declining numbers of those with the ability to make a purchase.

Earlier this week, the California Association of Realtors reported that only a quarter of county residents today can afford the median-priced home, compared to 29 percent a year ago. It would take a minimum annual income of $112,180 to qualify for a median-priced home, which would come with a $2,800 monthly mortgage payment, including taxes and insurance.

Even as prices leveled, sales came in strong.

Buyers purchased 536 single-family homes last month, up 5 percent from a year ago and the highest for July since 2005, when 557 homes changed hands.

The jump in sales occurred even though the supply of homes remains constricted, with less than a two-month supply of inventory at the current pace of sales. That is considerably lower than the roughly six-month supply that experts say is needed for a balanced market.

Given the lack of inventory, sales “seemed to ramp up a little more than what we expected,” said Jeff Schween, an agent with Pacific Union International in Santa Rosa.

County home sales got off to a slower start this winter, but for the past four months have exceeded the results for the same period in 2014. To date this year, sales are 2 percent ahead of the same time last year, a pace that if continued would approach the annual average of nearly 4,900 home sales.

In contrast, 2005 - the year with stronger July sales - ended with more than 5,900 homes sold. By then the median price had tripled over 10 years.

Amid a historic housing bubble, county home prices peaked in August 2005 with a median of $619,000. Two years later, prices began an unprecedented dive, finally bottoming at $305,000 in February 2009.

Agents and brokers were mixed in their views about what’s ahead for prices. The supply of available homes for sale remains relatively low compared to demand, some said, normally a condition that favors rising prices. But others expected the Federal Reserve in the coming months to raise interest rates, which would increase the cost of borrowing for home mortgages.

“I think that’s going to have a calming effect on the market as we head into the New Year,” said Brian Connell, managing broker for the Coldwell Banker office in east Santa Rosa. The result may be less price appreciation.

Some of this year’s change in the median price is due to a shift in the mix of homes sold, while some is the result of rising home values.

Sales of homes priced for less than $500,000 declined 16 percent this year, compared to the same period in 2014.

Meanwhile, sales of homes priced above that amount increased 22 percent. The boost in sales extended to higher-priced homes, with deals increasing 25 percent for homes that sold at or above $800,000.

Agents and brokers expect the pace of home sales to follow a typical seasonal pattern.

The market has been in its “August recess,” Connell said. It happens this month as people take time out for trips to the county fair, for back-to-school preparations and for one last vacation before the academic year resumes.

“To me, August is a time to take a little bit of a breather,” Connell said. However, activity is expected to pick up again in September and then slow in autumn.

Brokers noted the busy pace of activity in the south county during July.

Gerrett Snedaker, senior vice president in Sonoma for the North Bay division of Wine Country Group by Better Homes and Gardens, noted that home buyers signed 48 contracts last month for single-family homes in east Petaluma, compared to 34 in June.

And in Rohnert Park and Cotati, buyers completed purchases of 43 houses in July, even though the month began with only 25 for sale.

“It’s very rare to have new sales exceeding the inventory,” Snedaker said. It was possible because sellers there placed 40 houses as new listings in July.

Pat Provost, one of four owners at Century 21 NorthBay Alliance in Santa Rosa, said the activity in the south county shows demand is still spreading out from San Francisco and the Silicon Valley.

“That’s a good sign for Santa Rosa,” Provost said. “It just moves north.”

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.