Sonoma County housing prices surge as many wildfire survivors opt to buy existing homes
Late last year, Santa Rosa residents Julian and Lisa Corwin wrote down on a whiteboard the money they had available to rebuild their home on Vintage Circle destroyed in the October 2017 Tubbs fire.
The couple, both trained engineers, wrote everything on the board, including their expected home insurance payout and the revised cost to rebuild that was $200,000 more than originally estimated. Then they considered what it would cost to buy an existing house after selling their Fountaingrove lot.
The Corwins loved their old neighborhood. But they couldn't fathom living in 'the middle of a burn zone' that could be a construction site for the next five to 10 years, Julian Corwin said.
Last week, the couple signed an agreement for the purchase of a newly built home on Jean Marie Drive in the Larkfield-Wikiup neighborhood, another Tubbs fire burn zone. Rather than being surrounded by empty fire lots and half-built homes, however, many of the houses north and west of their Jean Marie Drive house were spared by the fire two years ago.
The Corwins are not alone. Real estate experts say a late-summer surge of activity in the Sonoma County real estate market points to a second wave of wildfire survivors opting to buy instead of rebuild homes. That wave of buyers is driving up prices of single-family homes and putting pressure on an already depleted inventory of houses for sale, said Jeff Schween, an agent with Compass real estate brokerage in Santa Rosa.
In August, the median price of single-family homes in the county hit an all-time high of $712,000, according to data supplied this week by BAREIS multiple listing service. That's surpassed the previous record high median price of $697,000 in June 2018.
The median price last month clearly indicates a revival in what was a sluggish housing market. In the last few months, county median prices supplied by Compass were $636,000 in March, $645,000 in April and $658,500 at the halfway mark of 2019.
Schween said that at this point in the summer, housing market activity should be slowing. However, August saw a sharply higher number of houses going under contract to buy than during the same month for the past two years. Last month, 482 homes went under contract, compared to 402 in August 2018 and 425 during the same period in 2017.
Meanwhile, new listings of homes for sale in August were significantly lower than in same month the past two years. Last month, there were 363 homes put on the market, compared with 534 in August 2018 and 526 in August 2017.
'It feels like on the street, another wave is coming,' Schween said. 'The new wave is people coming to terms with the fact that they're probably not going to rebuild on their dirt.'
The Press Democrat's latest monthly housing report, compiled by Rick Laws, another agent with Compass in Santa Rosa, showed a similar trend: the median price for single- family homes in August reached $699,000, nearly the same as the $700,000 record median price of June 2018.
The record high was caused by large numbers of wildfire survivors aggressively seeking homes in the first half of last year, Laws said. Once the market absorbed those wildfire survivors, prices started to come down during the second half of 2018, as homebuyers began pushing back on price, he said.
Laws and Schween both said the recent spike in buying was predictable as the second anniversary of the Tubbs fire approaches. A significant number of people who lost homes — more than 5,300 houses were destroyed in that inferno — in the fire have not even begun the construction process.
In some cases, wildfire survivors are reaching their limit for insurance payments to cover their monthly rent. Many home insurers are paying fire survivors two years of monthly living expenses.
'We were thinking we'd see more buyers coming into market,' Laws said. 'A lot of people are deciding they're not going to rebuild and a significant number of people are running out of that housing stipend.'
The Corwins decided to all but give up their effort to rebuild a house on Vintage Circle last December, when they saw the numbers on the whiteboard didn't add up. Already, they had put a great deal of effort and money into the design and permitting process of rebuilding.
There were other considerations, too. The couple have a 7-year-old son and they didn't want him living in a construction zone for years to come. And balancing work and family kept them both busy.
Julian Corwin, a former Agilent engineer, now is a manual and movement therapist who owns his own business called Pain and Performance Solutions. Lisa Corwin works as a program manager at Medtronic.
On Tuesday, the couple visited the home they plan to purchase on Jean Marie Drive. Their deal to buy the house is scheduled to close two years and one day after fire destroyed their Fountaingrove home.
'We would have gotten the same amount of money whether we rebuild or buy,' she said. 'We said, 'Look, is it really worth it? It's a constant stress.' '
Schween said some buyers also may be partly motivated now by lower interest rates that allow them to buy the house they want with a lower monthly mortgage payment.
Westin Miller, a mortgage advisor with Pinnacle Home Loans, said low interest rates provide a greater 'level of comfort.' But he said the primary motivator of buyers is the desire to find the right home.
With the second anniversary of the fires approaching, Laws said there's likely to be another 'rush to shelter' at a time of the year when the housing market should be cooling off.
'I think that's what's driving the late market this year,' Laws said. 'The music has stopped, and it's time to find a new chair.'
Editor's note: An earlier version of this story misstated the amount of the revised cost increase for the Corwins to rebuild a house in Fountaingrove.
You can reach Staff Writer Martin Espinoza at 707-521-5213 or firstname.lastname@example.org. On Twitter @renofish.