The wind has shifted this summer in Sonoma County’s housing market, with slower sales, rising inventory and an end to sellers automatically asking for more cash than their neighbors received for comparable homes.
July home sales fell to their lowest level for the month in nine years, according to The Press Democrat’s monthly housing report compiled by Pacific Union International senior vice president Rick Laws. Sales for the past three months have declined 8 percent from the same period a year earlier.
“It’s going to be a very weak summer,” said Mike Kelly, an agent with Keller Williams Realty in Santa Rosa.
Other brokers and agents expressed more caution in describing the changes. But they acknowledged that activity has lessened since last fall’s wildfires set off a monthslong scramble for rental and resale housing.
“People are still buying houses, but there’s not the frenzy anymore,” said Tom Kemper, manager of the Coldwell Banker office on Bicentennial Avenue in Santa Rosa.
Buyers purchased 401 single-family homes last month, down 4 percent from a year earlier.
July’s median home price fell to $655,200, a decline of 6 percent from June’s revised record high of $700,000. Last month’s median remains 2.4 percent higher than a year earlier, when it was $640,000.
The county housing market in the last decade has weathered a historic crash and the most destructive wildfires in state history. The October fires claimed 24 lives and burned nearly 5,300 homes in the county.
For the last six years, residential home sales here have made news for limited inventory, frequent bidding wars and steadily rising prices — typical signs of a seller’s market. Even with last month’s decline, the median price has doubled since July 2011, when it was $325,000.
After the wildfires, the market grew busy in late fall and winter, normally a time of slower sales. A record $738 million changed hands in November and December for house and condominium sales. Demand also pushed sales of single-family homes to increase 6 percent from January through April, compared to a year earlier.
But starting in May, sales slowed, even as the median price for a time kept rising. That rise in the median price could be due to increasing home values but also to a shift in the type of homes that sell. The spring median increase does appear partly tied to a jump in sales of more expensive homes in May and June.
July’s drop in the median price similarly seems due partly to a decline in such sales. For example, the number of homes selling for $1 million or more declined to 69 last month from 100 in June.
Kelly, the longtime host of KSRO’s weekly real estate show, suggested buyers for years frequently bid against one another in order to purchase homes. Many still seem to think they need to offer the sellers’ listing prices when a lesser offer might prove acceptable.
“Guess what?” Kelly said of the market. “It’s shifted. It’s cooled off.”
The slowing isn’t limited to Sonoma County.
The California Association of Realtors last week reported that July was the third straight month of declining sales statewide when calculated on a seasonally adjusted annual basis. The association characterized the “softening of the market” as more a shift than a major correction, and attributed it mainly to rising prices and higher mortgage interest rates that together make homes less affordable.