Sonoma County’s booming housing market sets another median price record
The median sale price of a single-family home in Sonoma County reached a record of $825,000 in June, signaling a continued frenzy in the housing market emerging from the pandemic that has exacerbated affordability for middle-class families striving to become homeowners.
That midpoint price tag jumped from the previous all-time high of $780,000 in May and was a 16% annual increase from June 2020.
Residential real estate sales are being driven by a dramatic increase in the number of houses selling in the highest price ranges with outside buyers in many cases paying cash for properties, said Rick Laws, a regional vice president at Compass real estate brokerage in Santa Rosa who compiles monthly county housing reports.
Runaway single-family house prices have put homeownership further out of reach for many locals. Before the pandemic began last year, an estimated 51% of Sonoma County adult residents paid more than 30% of their gross monthly income on housing, the federal barometer to determine if a person is “cost-burdened” by rent or a mortgage. That was the highest level in the Bay Area.
“One can safely assume we are way over half of our residents paying too much for housing,” said Jenni Klose, executive director of Generation Housing, a nonprofit group promoting more affordable housing options.
There were 613 single-family dwellings sold last month countywide, an 11% increase from May and a 34% jump from June 2020. The torrid buying activity this spring and summer has driven down last month’s inventory of homes available for sale 27% from June a year ago. Local home sales for the first half of 2021 are up 67% over the same period last year.
So has the residential real estate market peaked in Sonoma County? Analysts and real estate agents said they think the market might cool and the escalating prices stabilize in the near term.
“It seems obvious that sooner or later people are not going to be either willing or capable (to buy),” said Laws, who noted that buyer fatigue may be surfacing, especially for those who have lost out on several bids and so have opted to remain in their rental homes.
That’s what Realtor David Rendino is seeing now, pointing to a recent listing of a three-bedroom, two-bathroom house in Rohnert Park that he is listing for a client at $759,000.
“If this was two months ago, I would have already had 10 offers,” said Rendino, a broker with Re/Max Marketplace in Cotati. The property will have an open house this weekend, he said, and there was no need to do such a showing two months ago with the frantic buying demand.
County home buying activity has corresponded with an increase in monthly payments in the rental market, Rendino said, noting some potential buyers have decided to sit on the sidelines for now. The average monthly apartment rent for the second quarter was $1,794 in Sonoma County, which was an increase of almost 5% from the first quarter. That represents the largest jump in reported rent increases since the second quarter of 2015.
Ross Liscum, a Santa Rosa real estate broker affiliated with Century 21 NorthBay Alliance, also has seen a recent dip in buyer activity, though he had difficulty pinning down the reason.
“I haven’t seen the aggressiveness on multiple offers on everything that seems to come on the market. We’re still seeing multiple offers, but not to the degree of a month or two ago,” Liscum said.
In this hot market, some sellers are looking to move out of the county and take the home equity gains they have accumulated, while transferring to a place like Idaho or Montana with a lower cost of living, Liscum said. That departure trend started in the aftermath of the 2017 North Bay wildfires.
“I was talking to a past client of mine in Idaho now who said they hate California now because their housing prices have doubled in three years,” he said.
Klose’s group recently issued a report concluding that Sonoma County was already in need of 58,000 additional housing units by 2030 to make it more affordable for workers to live here. Generation Housing is urging the influx of granny units, as well as prefabricated modular homes, to quickly add housing inventory.
”This housing cost is a result of a supply and demand problem,” Klose said.
And no big changes in housing affordability will occur until many more homes come on the market in the county, said Robert Eyler, an economics professor at Sonoma State University who studies the local economy.
Certain cities and towns have experienced more brisk home sales than others, although there’s been a rising tide of sales and prices across the county since the spring. For example, the town of Sonoma has been one area that has been “white hot” in terms of residential real estate transactions, Eyler said.
“If you don’t have a lot of building. And you are not changing the supply conditions, but for the people who are putting up their houses for sale. And you have a lot of demand that’s coming from regional buyers,” Eyler said, “you are going to have a lot of pressure up in price."
You can reach Staff Writer Bill Swindell at 707-521-5233 or at email@example.com.
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