Sonoma County’s housing market starts the year with continued sluggishness
Sonoma County’s housing market started the year the way it finished 2018 - in decline as buyers remain content to sit tight as sellers reduce home prices.
Throw in the usual dip in the market during the winter months, as well as record rainfall that led to the worst flooding in decades and it’s no wonder many sellers decided to keep homes off the market while buyers await better deals.
Demand for homes has “slacked off,” agent Rick Laws of Santa Rosa’s Compass real estate brokerage said of the stagnant sales during the first two months of the year.
In February, 227 single-family homes were sold in the county, a 15 percent drop from the same month a year ago, according to The Press Democrat’s monthly housing report compiled by Laws. The median home sales price last month fell to $620,000, down 10 percent from February 2018.
Home prices, which had retreated since an all-time record $700,000 median last June, recovered slightly in January to $650,000 before dipping again in February.
Laws said homebuyers continue pushing back on housing prices that in the first half of last year steadily increased to the June peak.
“There’s been an affordability and price pushback in the second half of last year and, coupled with seasonal price softening, that’s why I think we saw this pronounced price slide,” he said.
Despite the robust first half, the local housing market flattened considerably in 2018. The total value of all single-family homes sold countywide last year was $3.65 billion, almost $60 million less than the $3.71 billion in 2017. It marked the first annual decline in the value of county home sales since 2011.
After the wildfires in October 2017, the housing market went on a tear that lasted until June 2018. There was a sudden influx of buyers looking for a place to live, mostly temporarily, after losing homes in the infernos.
Home insurance companies were obligated to provide temporary housing to fire survivors similar to the houses they lost, so they dispatched agents in search of rentals for high-end properties, Laws said. Homes listed for sale were snatched up on monthly leases and within a few months much of the inventory for sale was depleted, he said.
Gail Johnson, a Realtor with Century 21 who specializes in properties in Santa Rosa’s Oakmont neighborhood, said home prices in her market have come down to where they were just before the fires.
“They went up as much as 20 percent,” she said.
Johnson said houses now listed for $900,000 to $1 million are “sitting,” with some sellers “still thinking the houses are worth what they were right after the fires.” She said in Oakmont, houses listed between the high $400,000s and $600,000 are selling.
Real estate agents blamed the wet winter months for the sluggish home sales in January and February. During those two months, 470 homes were sold, or 12.3 percent fewer than the 536 sold during the two-month period last year.
Norbert Tenenbaum, a west county real estate broker, said the storms and subsequent flooding discouraged many sellers from putting their houses on the market.
“The rains have really cut everything back in terms of timing,” he said.
But Tenenbaum said the housing slowdown in west county started before the heavy rainfall and continues because of a lack of available homes to buy.
“As far as Sebastopol is concerned, there’s just so little inventory,” he said.
As spring approaches and brings sunny weekends, agents say there will be more and more open houses to lure buyers.
“I predict that this weekend, open houses will be stuffed,” Laws said. “People will be signing listings this week. ... People are like birds in that they get ‘nesty’ in the spring. When the mustard blooms, they start thinking about nesting.”
He thinks home sales are “bottoming right now” and that sales activity will pick up in the warmer months ahead.
“There’s more inventory because of less demand, and less demand means less of an increase in the median price, because people have more options,” Laws said. “But I do think median prices will continue to go up.”
Through the rest of 2019, he projected inventory of homes to buy will grow by 20 percent, while the median sales price will increase by 3 percent.
The second anniversary of the wildfires in October will mark another critical milestone for the local housing market, Laws said, because most home insurers will stop paying monthly rents on temporary homes for fire survivors.
“They’ll have to make a crucial decision, to move back or to move on,” he said. “It’s going to play out this year in our market.”
You can reach Staff Writer Martin Espinoza at 707-521-5213 or firstname.lastname@example.org. On Twitter @pressreno.