Sonoma County’s hot housing market hits price record in March, indicating banner 2021
Sonoma County’s vibrant housing market turned red-hot through the first three months of 2021 as a rush of Bay Area residents continued to flee dense urban areas for Wine Country during the pandemic, sending the county’s median home price to an all-time high in March.
Untethered from the office, many of those house hunters sought bigger living spaces and a more relaxed lifestyle. North Bay home prices that remained cheaper than in many other parts of the Bay Area also were a draw. And historic low interest rates spurred homebuyers to take advantage of attractive mortgage terms.
In the face of a pandemic-battered local economy, the residential real estate sector has weathered the economic downdraft that’s crippled many industries and began a steady ascent last summer.
The first quarter surge in demand lifted the midpoint sales price for single-family homes in the county to a record $767,000 last month, according to data gathered by Rick Laws, a regional vice president at Compass real estate brokerage in Santa Rosa.
The median price for a home in Sonoma County has increased 13% since March 2020, when the pandemic had begun and started to affect the county housing market. Over the first three months of 2021, the median price was $745,000, a 15% bump from the same period in 2020.
In March, 421 area homes were sold, an increase of 39% from the same month last year. During first quarter of 2021, 1,049 home sales were finalized, a nearly 30% spike compared to the previous year.
Those figures represent a remarkable turnaround for a local housing market that went into free fall at the onset of the pandemic last spring. Recovery began in June 2020, when public health officials lifted restrictions on in-person house showings. That allowed sales to return to normal seasonal levels, reaching 473 for the month. Home buying then exploded in July, jumping to 621 sales, a 38% rise over July 2019.
Jenni Klose, executive director of Generation Housing, a Sonoma County nonprofit, said the increasing cost of owning a home creates ripple effects across the local housing sector and economy.
“As home prices go up, then folks who rent those homes have to pay more,” said Klose, a former trustee for eight years on the board of Santa Rosa City Schools. “Or people are pushed out of homeownership and into the rental market.”
Sales and prices remained far above the norm through the winter, setting records for the region in February, when the median price hit $740,000, and again in March. Now, with the traditionally brisk spring and summer home buying seasons just underway, local real estate agents say it’s possible prices could climb even higher.
“This is likely going to be a blockbuster year,” Laws said.
With the arrival of warmer weather, more sellers are putting homes on the market, including new houses rebuilt in the wake of the 2017 wildfires, real estate agents said. Still, demand from homebuyers is outpacing supply, keeping inventory low.
At the end of March, 470 homes were up for sale, down from 748 at the same time last year.
“We are seeing more homes come on the market because of the time of the year,” said Carol Lexa, former president of the North Bay Association of Realtors. “But there’s not an increasing available inventory because properties are going to contract so quickly.”
The county’s incoming buyers include high-paid workers ― hailing from urban hubs such as San Francisco, the East Bay and the Silicon Valley ― who are snapping up single-family homes and vacation houses for as much as six figures above the asking price. Many are replacing longtime residents who’ve decided to abandon the region or state altogether, for reasons ranging from intensifying wildfire seasons to the area’s high cost of living, real estate agents said.
The ongoing demographic shift could have lasting effects on the county. While an influx of high-skilled workers may provide a boost to the North Bay’s technology industry, for instance, it also puts a growing pressure on the local housing stock ― potentially exacerbating what public officials regularly describe as a local housing crisis.
Already, 41% of homeowners spend more than the recommended 30% their income on housing, Klose said, citing data from advocacy group California Housing Partnership. With such high fixed expenses, they may not have enough money for medicine, child care or other essentials.
“When you pay too much for housing, what are you not paying for?” she said. “That’s the most critical thing.”
Dawn Caccavale, 48, has decided to sell her house in Santa Rosa to shore up her family’s financial situation. Just a few months after she bought the home in 2017, it burned to the ground in the Tubbs fire in October. Now that the rebuild is nearly complete, the family plans to put the “super-modern farmhouse” on the market soon and move into a smaller cabin in Forestville.
“2020 really helped us reevaluate our priorities,” said Caccavale, who has two daughters in middle and elementary schools. “The big house and the hurrah that you’re raised with isn’t real.”
Caccavale hopes to use the profit from the sale to pay off the mortgage on the Santa Rosa home, as well her and her husband’s student debt. The real estate listing site Zillow currently estimated the value of the home at $1.7 million. Caccavale originally paid around $600,000 for the property.
“That the market is hot makes me more confident that this is the right decision,” she said.
Tammra Borrall, a real estate agent with Compass representing Caccavale, said the past nine months have been a whirlwind for both buyers and sellers.
“It depends on what side of the table you’re on,” Borrall said. “Buyers are exhausted, and we’re working hard to uncover every upcoming listing. They’re still hopeful, but it’s been exhausting for them. Our sellers are excited because it’s an opportunity for them to get to the next chapter.”
You can reach Staff Writer Ethan Varian at email@example.com or 707-521-5412. On Twitter @ethanvarian