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Sonoma County’s retreating condominium market is providing the starkest signals for the slowdown in local home sales.

Condo sales this year have fallen to the lowest level in a decade, while the number of units listed for sale in September reached its highest mark for any month in nearly 11 years.

Through September, sales of county condos and townhouses have declined 23 percent this year, compared with the same nine-month period in 2017. Sales of single-family homes dropped just 5 percent in that period, according to a monthly housing report compiled by Pacific Union International senior vice president Rick Laws.

Last month for the first time in more than six years, the median sales price for a condo declined from a year ago. The price decline is now limited to the county’s condo market, Laws said, but “could foreshadow what’s going to happen in single-family” home values.

Amid the decline in condo sales and prices, more sellers are joining the price reductions. After reviewing real estate multiple listing service data, Laws concluded prices had been reduced for at least four of 10 condos on the market in October. For single-family houses, price cuts had occurred for at least one in three properties.

“I think it shows a significant number of sellers are having to adjust their expectations,” Laws said.

The county’s housing slowdown stands in sharp contrast to the six-month period starting in October 2017, when fire survivors rushed to find replacement homes after the most destructive wildfires in California history.

Real estate agents said they began to notice the slowdown in activity in late spring. For example, in May certain condominiums started to sit longer on the market without offers, said Alanna Krinard, sales manager of Century 21 NorthBay Alliance in Santa Rosa.

“To me, the condos are the canary in the coal mine,” Krinard said. What happens with them can portend changes coming to the broader housing market, she said.

Prices have declined from a summer peak, and many buyers are waiting to see if values will keep falling.

For sellers, “if you’re not proactive on price, you’re going to sit,” said Ken Schrier, a partner in Re/Max Marketplace in Cotati.

Schrier said the condo skid doesn’t signify a bubble bursting in residential real estate, as happened a decade ago when home prices crashed. Condo inventory remains at less than a three-month supply at the current sales pace, he said, a level still indicative of a seller’s market.

But the greater housing market has moved past the shakeup caused a year ago when wildfires destroyed 5,300 homes in the county, agents said. Some sellers keep pricing homes based on what fire survivors would be willing to pay, Schrier said, but “that ship left port by May.”

Condos make up a small but significant slice of the county’s real estate market. Buyers last year bought 680 condos, compared with more than 4,700 single-family homes.

The multi-family units have long been an avenue for first-time homeowners to buy a place of their own.

“As people get priced out of single-family, they start looking at other options,” said Mark Hutchins, an agent with Pacific Union in Santa Rosa.

Jesse Swanson, a client of Hutchins, said his wife, Cathy, and he wanted to buy a home this summer and “decided a condo was more in our budget.”

Swanson, a tattoo artist in Santa Rosa, said the couple looked at seven or eight properties and found one they liked in a condominium complex on Westberry Drive in northwest Santa Rosa.

“The one we ended up buying had a pretty big price drop,” he said. The reduction was enough to persuade the Swansons to go with a one-bath unit instead of one with two baths.

The family moved in about a month ago and the two-bedroom condo is working out well, Swanson said. That is partly because of its proximity to the school for the couple’s two boys and also because the community pool sits right outside their sliding glass door.

Besides first-time buyers, condos appeal to older couples who want to downsize after their children have left the nest.

Mike and Megan Cramer had long owned houses, most recently a three-bedroom home on a 9,000-square-foot lot in Rohnert Park. Last year, the couple decided to look for a smaller place, one where Mike Cramer would no longer need to tackle such chores as climbing on the roof to blow off leaves from an overhanging oak tree.

“It was just getting to be too much work,” said Megan Cramer, 64, who retired from administrative work in staffing and electronics companies. “And we wanted to travel more.”

Schrier of Re/Max helped them buy a two-bedroom, one-and-a-half bath condo in a small complex on William Street in Cotati. Mike Cramer, 66, a retired lieutenant in the state correctional system, said the couple now enjoys the tranquil views of liquid amber and sycamore trees outside their condo.

Also, he said, “It’s nice not to have to do yard work any more.”

The Cramers also noticed a shift in the condo market this summer when one of their neighbors couldn’t find a buyer willing to pay the initial listed price.

That unit in the Cramers’ complex went on the market in July at $420,000, said Sheila Weisberg, broker/owner for Gem Properties, who represents the owner. The price eventually was cut to $399,950, and is now under contract with a buyer at a price that is “relatively close” but less than the listed amount, she said.

Buyers today worry about paying too much for a home, Weisberg said.

“They’re afraid to move,” she said. “They have to see a really killer value.”

Laws of Pacific Union recently sought to determine how many sellers today are cutting prices. Working with the local multiple listing service, he found that last month sellers reduced prices for 82 condominiums and 538 single-family houses. That represents a third of all single-family homes and 44 percent of all condos that were on the market during October.

As sales have slowed, condo inventory has steadily increased this year. At the end of September, sellers were offering 109 units for sale. The last time inventory was that high for any month was December 2011, when roughly half of all residential properties on the market were foreclosures or short sales, the latter being sold for less than the sellers owed on their mortgages.

In the widespread housing crash a decade ago, condos took a steeper drop than houses.

The median sales price for single-family homes was cut in half, from $619,000 in August 2005 to a low of $305,000 in February 2009.

But the median priced condo lost nearly two thirds of its value. The median price reached $390,000 in October 2005 and hit a low of $133,000 in June 2011.

September’s median sales price for condos was $366,500, down from a record peak of $430,000 in July but still nearly 5 percent higher than a year ago.

Looking ahead, agents and brokers said various real estate experts earlier this year had forecast small increases in North Bay housing prices for 2019.

However, Laws cautioned that preliminary numbers indicate the October median price for condos hit $383,500. That was higher than September but still represents a decline from a median price of $420,000 a year earlier. Such a year-over-year price drop hasn’t occurred in many years.

The local slowdown in sales is mirrored on a statewide level. California home sales in September posted the steepest year-over-year decline in more than four years, according to the state Association of Realtors. The housing market “continued to deteriorate” as buyers stayed on the sidelines in hopes that prices would further decline, association President Steve White said in a prepared statement.

At current prices, most families in Sonoma County can’t afford to buy a typical single-family home. In the third quarter ending Sept. 30, only 22 percent of county residents could afford the median-priced house, according to the association. For the entire state, 27 percent of households could afford a single-family home and 35 percent could afford to buy a condo or townhome.

Krinard of Century 21 said many young couples with children already cope with such major financial commitments as student loans, car payments and child care costs. Adding a condo mortgage and monthly homeowner association fees are more than many can handle, she said.

Some fire survivors are expected to buy houses and condos in the coming months, agents said. But there likely won’t be enough of them alone to reverse the sluggish trend.

“Now, we’re in a different market,” Krinard said.

You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.

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