Sales keep growing for Sonoma County’s million-dollar homes
Homes worth $1 million or more this year continue to generate the biggest growth in residential sales for Sonoma County, even as the number of purchases keep falling in the less expensive portion of the market.
Buyers purchased 180 single-family homes in the million-plus segment during the first three months of the year, according to The Press Democrat’s monthly housing report compiled by Pacific Union International senior vice president Rick Laws. Sales of homes priced at or above $1 million increased 38 percent from a year earlier and have quadrupled in the last five years.
In contrast, sales fell 36 percent from a year ago for homes priced less than $600,000.
Last fall’s deadly wildfires burned thousands of the region’s homes. The disaster is blamed for pushing a sizable number of fire survivors to seek replacement properties in the million-plus market.
“It increased demand, no doubt about it,” Laws said. “It put more players into the buyer pool.”
Nonetheless, Laws and other brokers said other factors also played a role in the increased sales of upscale homes, including the appreciation in prices, which has pushed more homes across the million-dollar threshold, and ongoing competition from elsewhere in the Bay Area, where prices are generally higher. A year ago Pacific Union surveyed buyers and found that about a third of its sales were to out-of-county buyers.
The October wildfires were the most devastating in state history, claiming 40 lives and destroying nearly 6,200 homes in the North Bay. The disaster exacerbated a housing shortage and spurred a year-end record for sales dollar volume as fire survivors scrambled to find new places to live.
In March, buyers purchased 357 county homes, essentially unchanged from a year earlier. For the quarter, sales increased 5 percent.
The median price ended the month at $685,000, essentially unchanged from February and nearly 8 percent higher than a year earlier. Prices have climbed steadily for the last seven years after the market crashed during a national housing crisis. The median price hit a low of $305,000 in February 2009.
Last month ended with fewer than 550 single-family homes available for sale in the county, or 1.5 months’ worth of inventory at the current pace of sales. Most brokers consider that a sign of a market that greatly favors sellers over buyers.
After the fires, survivors who lost homes eventually found new places to live, albeit often in rentals or other temporary arrangements. Brokers said many of those residents have yet to decide whether they can or will rebuild, especially in certain neighborhoods.
“I think the reality in Fountaingrove is there is so much uncertainty,” said Doug Solwick, a broker associate with Pacific Union International in Santa Rosa.
Solwick and others noted that the public water system serving about 350 Fountaingrove burned properties is contaminated with cancer-causing hydrocarbon benzene. City officials have said they are seeking faster alternatives, but replacing the system could take more than two years - by which time survivors said they would have lost insurance payments for temporary housing.
“That’s going to push even more people to buy rather than rebuild,” said Diana Blakeley, owner/broker at Wine Country Real Estate in Cloverdale.
The fire survivors often offer strong bids when competing for houses, in part because they put their insurance settlements toward the payment.
“People are walking around with large checks,” said Sally Crain, a broker associate with Century 21 Alliance in Santa Rosa. As a result, she and others said, sellers have fewer worries that deals with such buyers would fall through because of financial problems.
For the year’s first quarter, the million-plus segment comprised about one in five sales. Five years ago that figure exceeded one in 20.
Today some sellers of million-dollar homes land buyers within a week of placing houses on the market, Crain said. In contrast, she recalled how slow the million-plus segment was after the Great Recession, a time when the housing market was awash in foreclosures.
When taking a home listing for over $1 million in those days, she said, “You used to think, ‘I’m going to be working this for a long time.’”
The relative shortage of available homes here and the high housing prices throughout the Bay Area will keep demand strong for the coming months, brokers said.
“I can’t imagine that that won’t continue as long as we’ve got a good quality of life,” said Brian Connell, managing broker at the Santa Rosa Mission office of Coldwell Banker. “We do need housing units in this county and we need them badly.”
Laws, of Pacific Union International, said he can’t help but wonder about today’s sellers of upscale properties. Putting a home on the market typically means becoming a buyer and entering the fray in search of a scarce number of replacement homes. That prospect seems even more daunting after the fires, except for those who plan to leave the area.
“Who are these sellers?” Laws asked. “And where are they going?”
You can reach Staff Writer Robert Digitale at 707-521-5285 or email@example.com. On Twitter @rdigit.