Middle-class residents priced out of Sonoma County housing market
As million-dollar home sales mount, frustration intensifies for working Sonoma County residents trying to attain homeownership.
They have made many futile bids in recent months equal to asking prices or sometimes higher, only to get trumped by cash offers, often from outside buyers and sometimes more than $100,000 over houses’ list prices.
The local market for single-family homes exploded this spring, pushing median prices and sales volume to levels lofty even for an area used to robust housing activity, and one that features much steeper financial entry than long-standing strong home sales markets in Texas and Florida.
With the pandemic-fueled market pushed to an all-time high single-family median price of $780,000 in May — partly by wealthy buyers from San Francisco, Silicon Valley and the Los Angeles area — many county residents are priced out.
They remain renters, although that’s no bargain here, either, with the average apartment in Santa Rosa costing $1,958 last month, over $500 higher than the national average of $1,428, according to RentCafe.
It raises the question: Has the imbalanced local home sales market, in which only 27% of county residents can now afford the median priced house, finally reached a tipping point?
To Jenni Klose, executive director of Generation Housing, an independent housing advocacy organization in Santa Rosa, the answer is a resounding yes. Her group is calling for a county home construction spree of 6,000 new houses and apartments a year through 2030 to bolster supply and help reverse the escalating housing affordability crunch.
While housing advocates ramp up urgency for county, city, business and elected leaders to make tackling the affordability quagmire a top priority, residents striving to buy continue to share disappointment and rejection.
As husband and wife attorneys, Scott and Angela Emerick have a boutique law practice in Santa Rosa. He focuses on criminal defense representing clients in state courts on the North Coast, while she concentrates on immigration law with her cases primarily in federal court in San Francisco.
The Emericks have been leasing a three-bedroom duplex in Petaluma for four years. The property has a big backyard with ample space for their two boys, a 4-year-old and his brother almost 2, to play outdoors.
For the past six months, they’ve been searching for a house to buy in the $700,000 to $900,000 range. They’ve looked at about 10 houses but haven’t made a single offer. One home they were going to bid on got 17 offers in two days. It ended up selling for $140,000 over the $852,000 asking price, he said, despite needing a new roof and work done to the pool.
“We’re competing with San Francisco buyers who are buying up here sight unseen,” said Emerick, 45, and often engaging in “insane overbidding.”
The couple intends to keep saving money, figuring it could take one or two years before the market subsides enough for them to land a house. He said for the right property with four bedrooms, ample land and proximity to good schools they would pay up to $1 million or $1.1 million.
But they’re determined to avoid getting drawn into a bidding war.
He thinks from a practical standpoint the wild housing market eventually will need a “correction” and more reasonable prices will prevail. “Maybe when the people living the dream in Wine Country have to return to the office,” he said, regarding the new arrivals who are happily decamped in the county.
Rick Laws, a senior vice president at Compass real estate brokerage in Santa Rosa, estimated that group accounted for half of recent local home purchases.
“We recognize we’re more privileged than many in the housing market,” said Emerick, a San Anselmo native. “While it’s frustrating not to buy something now ... we figure we’ll get there. This market is nuts.”
Financial requirements to buy
Lender Scott Sheldon, branch manager at New American Funding in Santa Rosa, said in this “ultra-competitive” environment it’s imperative for buyers to have stable income, excellent credit and cash on hand for a 20% down payment.
To put that in perspective, Sheldon explained the financials required for a shot at buying a house priced at the $780,000 median in Sonoma County and making the monthly mortgage payment.
Here’s the breakdown:
– It requires a $156,000 down payment on a conventional 30-year mortgage carrying a 3.25% interest rate.
– To qualify for that home loan, county residents need to earn at least gross monthly income of $8,500 or $102,000 a year.
– For that dream house, the monthly mortgage payment with insurance and property taxes is $3,613. That’s not attainable for many in the county since latest U.S. Census Bureau figures show the median annual household income, meaning half earn less, is $81,018.