Sonoma County median home price breaks $700,000 barrier
In yet another milestone, Sonoma County’s median home price last month broke through the $700,000 mark.
However, the new record came as sales slowed, new listings increased and real estate agents warned sellers about the pitfalls of becoming too greedy.
The median single-family sales price hit $705,000 in June, according to The Press Democrat’s monthly housing report compiled by Pacific Union International senior vice president Rick Laws. The median increased 12.8 percent in the last year and has more than doubled since 2009.
Since October, when devastating wildfires set off a scramble for housing, the median price has set monthly records five times, most recently in May when it reached $689,500.
The jump in the median price may have occurred mainly as a result of increased sales of million-dollar homes, even as sales dwindled near the bottom of the market, according to real estate brokers and agents. More sales in higher-priced neighborhoods can lift the median price, even if the overall value of homes stays flat.
Real estate agents and brokers surmised that is what happened in the county. They maintained that much of the housing frenzy caused by the fires has passed.
“We have an overheated market that’s starting to cool,” said Trish McLean, an agent with Terra Firma Global Partners in Santa Rosa. One sign is that more sellers have been forced to reduce prices in order to attract offers.
In the past decade, the county’s housing market has weathered a historic crash and the most destructive wildfires in state history. Last fall’s infernos claimed 24 lives and burned nearly ?5,300 homes in the county.
Before the crash in home values, the county’s median price hit a high of $619,000 in August 2005. The median eventually plunged to a low of $305,000 in February 2009.
Prices have risen steadily in the last six years. But the median price still hasn’t reached the ?2005 high when adjusted for inflation - an amount worth about $794,000 in today’s dollars.
For the past six years, the market generally has favored sellers over buyers because of a relatively strong demand for a limited number of homes for sale. But agents and brokers said slower sales and a bump in new listings means buyers now have choices and more leverage.
“The desperation is leaving the market because there are now more options available,” said John Duran, a broker associate at the Santa Rosa Mission office of Coldwell Banker.
Buyers purchased 421 single-family homes in June, the smallest number for the month in the last decade. Meanwhile, new listings jumped to 671, the most for any month in more than seven years. For the first half of 2018, new listing have increased 7 percent over the same period last year.
The jump in listings is “a product of people deciding that now is the time to sell their property and move on,” said Laws.
Sellers may have been motivated to list homes not only as a result of record high prices but also to what Duran called the “wakeup call” of the fires. He maintained the widespread trauma caused many whose homes didn’t burn to ponder their futures. Whatever the reasons, brokers and agents said, many of those sellers are planning to leave the county.
Demand varies among the market’s different price segments. For homes selling from roughly $700,000 to $900,000, “sales are starting to stall,” said Cary Bertolone, an owner of Bertolone Realty in Santa Rosa. One reason is that most fire survivors who needed to purchase homes in that price segment already seem to have bought them.
However, fire survivors from Santa Rosa’s Fountaingrove and other high-end neighborhoods appear to still be buying homes in the ?million-plus market.
Many such survivors have considered rebuilding, but “I see exhausted people saying, ‘I don’t want to do it,’?” said Belinda Andrews, a broker associate with Century 21 in Santa Rosa. Instead, some now seek to purchase comparable homes in neighborhoods unaffected by the fires.
Andrews and agent Evelyn Baltazar are listing a home for $1.595 million in the Montecito Heights neighborhood in the hills of east Santa Rosa. Andrews said sales of such homes are a stronger segment of the market and “have pulled up the median price.”
For the first half of the year, buyers have purchased 446 homes at ?$1 million or more, a jump of ?34 percent over the same period in 2017. In contrast, they bought just ?230 homes selling for less than $500,000, a decline of 51 percent. Overall, sales have declined less than 2 percent to date this year.
Many sellers aren’t getting offers because they have priced homes too high, brokers said. Once buyers dismiss a home as overpriced, they said, the seller often needs to make a significant price reduction in order to regain their attention.
Seeing such reductions prompted Bertolone to start considering where home values were before the fire when advising clients on where to set sales prices.
Others expressed optimism that prices may drift but will still stay above what they were nine months ago. Even so, they said, more sellers still will end up cutting prices.
“They got out in front of what the market will support,” said Laws.
You can reach Staff Writer Robert Digitale at 707-521-5285 or firstname.lastname@example.org.