Home prices jump to record highs after Sonoma County fires
October’s deadly wildfires sent shock waves through Sonoma County’s housing market, simultaneously leading to record high prices, a drop in completed sales and a jump in newly signed deals in the weeks after the disaster.
The median sales price for a single-family home climbed last month to $648,000, according to The Press Democrat’s monthly housing report, compiled by Pacific Union International senior vice president Rick Laws. The median increased nearly ?9 percent from a year earlier and surpassed the previous high of $640,000 set in July.
Among a string of other shifts, buyers last month purchased 366 single-family homes, the lowest number for the month in six years. In hard-hit Santa Rosa, only 130 homes sold, the lowest for October in a decade. The lagging results reflected both the loss of properties to fire and delays in closing deals as home insurers, lenders and title companies exercised caution in the aftermath of the most destructive wildfires in U.S. history.
Meanwhile, buyers, including many whose homes burned to the ground, signed contracts in the county for 483 houses, the best results for the month in at least eight years.
And sellers in October pulled 206 properties from the county market, at least double that of any other month this year. Many of those properties had been damaged or destroyed by fire, brokers and agents said. But others were taken off the sales market in order to be rented at premium rates by insurance companies vying to temporarily house burned-out clients.
Vicki Roberts, an agent with Bertolone Realty in Santa Rosa, said she has seen unusual housing markets during her 27 years in real estate “but nothing like this. This is unprecedented.”
It’s too early to know how much the housing market has changed since the firestorms began Oct. 8, eventually killing 23 people and destroying ?5,130 homes in the county. The uncertainty is partly because many of the sales contracts signed after the fires remained in escrow at month’s end.
But the loss of so many homes from an already limited housing stock is prompting many buyers and sellers to conclude that property values just reset higher.
“This is a perfect storm in terms of demand for housing and shelter,” Laws said.
Buyers commonly are paying 10 to 15 percent above the listed price for houses, he said. The final sales prices “jumped because there was an intense demand. People were scrambling for shelter.”
The fire is the latest chapter this millennium in a housing market that already had weathered a housing bubble, a foreclosure crisis and a historic slowdown in new home construction.
“We’ve not been in a normalized market in the last 15 years,” said Randy Waller, broker/owner of W Real Estate in Santa Rosa.
During the bubble, the county’s median price set a record high of $619,000 in August 2005 but then plunged to a low of $305,000 in February 2009. Since the market crashed, home prices have risen steadily for five years.
In recent times, the biggest complaint of both agents and buyers has involved the lack of available homes for sale, an issue tied partly to historically low levels of new home construction.
October ended with fewer than 630 existing homes for sale, less than a two-month supply at the current pace. Most brokers consider such low numbers a sign of a ?sellers’ market.
Waller, whose firm specializes in new home construction, said his agents typically sell three or four such houses in a good sales month. But in the five weeks since the fire buyers have purchased 65 new homes, including models at three of the four developments he represents. Those houses typically will be completed in the next 30 to 90 days.
Waller said he normally recommends in November that potential sellers delay putting their homes on the market until Feb. 1, rather than list them in the historically slow days of late fall and early winter.
“This year I’m telling people, ‘Put your house on the market right now,’?” he said.
Tom Kemper, manager of the Coldwell Banker office on Bicentennial Avenue in Santa Rosa, said the fires seem to have prompted more homeowners to accelerate the listing of homes. Those owners often had been thinking of selling in six months to a year, but “this just made them say, ‘Why not do it now?’?”
Brokers and agents said they will be watching the pace of recovery in such burned areas as Coffey Park, Larkfield and Fountaingrove.
“I think one of the big questions is going to be how quickly are these houses going to be rebuilt,” Kemper said.
Laws said new and replacement housing are the main ingredients needed to “put a cap” on rising home prices. As a county, he said, “we need to do something and we need to do it fast.”
Roberts said she already is hearing from younger couples who feel they can’t compete in this market.
“A lot of first-time buyers are thinking this is crazy,” she said. “Prices are going up too fast.”
You can reach Staff Writer Robert Digitale at 707-521-5285 or firstname.lastname@example.org. ?On Twitter @rdigit.