Sonoma County condo listings, prices rise

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Sonoma County’s condominium market marches to the beat of its own drummer, and this year the tempo appears to be quickening.

New listings of condos have increased 8 percent this year from the same period in 2015, according to The Press Democrat’s monthly housing report, compiled by Pacific Union International senior vice president Rick Laws. For the first five months of the year, new listings are at their highest level since 2011.

In contrast, new listings for single-family homes have decreased 5 percent this year and are at their lowest level in at least seven years.

“We’re seeing a definite increase in activity,” Laws said of the condo market.

May condo sales increased nearly 13 percent from a year earlier. Single-family sales, meanwhile, declined nearly 6 percent.

Mike Kelly, an agent with Keller Williams Realty in Santa Rosa, said some of the increased activity may stem from investors believing 2016 could be a good year for cashing in on their condos. Many bought such units at distressed prices after the market hit bottom five years ago. The median price since has more than doubled, and the economic outlook for the next few years is anything but certain.

“A lot of investors are probably realizing, ‘this is my time to sell this property,’” Kelly said.

The county’s median condo sales price in May reached $324,000, an increase of nearly 4 percent from a year earlier. Meanwhile, the median single-family home price climbed nearly 7 percent last month to $580,500.

Condos comprise a small slice of the county’s housing market. Buyers last year purchased 673 condos, versus 4,831 single-family homes.

Sonoma County’s condo market “has always been kind of a default” for those priced out of a stand-alone house, Laws said.

In the years of the housing bubble, the condo market rose at a faster clip than single-family homes and then fell more precipitously when the crash came.

Median condo prices have increased 143 percent since hitting a bottom of $133,000 in June 2011. In comparison, the median single-family price has climbed 93 percent since its trough of $305,000 in February 2009.

Even so, May’s median condo price remains 20 percent below the monthly peak of $390,000, reached in October 2005. In comparison, the May median single-family price is about 7 percent below the peak of $619,000 set in August 2005.

Those numbers are essentially reversed on a statewide level, said Jordan Levine, an economist with the California Association of Realtors. For the state, the May median condo price was 7 percent below its peak, while the single-family median price was 20 percent below.

Another anomaly: The county’s median single-family home price is higher than the state’s, but the county’s median condo price is lower. The state’s median condo price for May was $410,680, and the median single-family home price was $518,760.

California has recorded higher condo prices than the county because statewide the units are concentrated in urban areas with generally higher housing values, Levine and agents said.

Also, when condo buyers from such areas move to more suburban areas, they often choose to trade up to a house.

“I can move from San Francisco to Sonoma County and actually afford that single-family home,” Levine said.

One challenge for today’s buyers is that most condo complexes in the county today don’t qualify for FHA loans, which can offer lower down payments, better interest rates and easier credit score qualifications than conventional loans.

“It’s taken a chunk of buyers out of the market,” said Otto Kobler, branch manager in Santa Rosa for Summit Funding.

About five years ago the FHA implemented new rules to define which condo complexes would qualify for financing. The result was that all but a handful fail to qualify, either because too many units in them are owned by investors or because of questions regarding the financial strength of the homeowners association there.

Kobler said the FHA rules don’t apply to similar-looking multi-family complexes known as Planned Unit Developments or PUDs. In the PUD complexes, each owner holds title to the land beneath the unit. With condos, the homeowners association owns the ground beneath the units.

Kobler said the high prices of the county’s single-family homes is causing more buyers to look at multifamily dwellings.

“We’ve got a more vibrant condo market because of that,” he said.

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit

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