Lower prices lure home buyers but Sonoma County housing market still soft

Before the October 2017 Tubbs fire, Coddy and Kaitlin Garzini were living in Santa Rosa’s Junior College neighborhood, renting a three-bedroom home for $2,300 a month but actively looking and hoping to buy a house.

But about a month and a half after the devastating wildfire, which destroyed more than 5,300 homes in Sonoma County, fire survivors started entering the housing market with homeowner insurance money in their pockets. The result: Home prices began to skyrocket, and the Garzinis stopped hoping though they kept looking for a house they could afford.

“We were still looking but stopped actively pursuing things. ... The stuff that was in our price range was not attractive at all,” Coddy Garzini said. “We knew at some point down the road things were going to level off.”

That point came in late March, when Garzini, 33, and his wife bought a house for $650,000 in the city’s Montgomery Village neighborhood. They moved in just in time - the couple have a 2-year-old daughter and another child on the way.

Garzini, who owns a vineyard management company, paid just above the $638,000 median price in March for a single-family home in Sonoma County.

Last month’s median price was up 2.9% over February, but a 6.9% drop from the $685,000 median a year ago, according to The Press Democrat’s March housing report compiled by Rick Laws of Compass real estate brokerage in Santa Rosa.

March also saw a slight uptick in the number of homes sold compared to February, a sign that several months of declining home prices finally lured buyers back into the market. Last month, 268 homes sold countywide, a 14% increase from February, but 27% less than the blistering sales activity at this time last year.

Garzini said he and his wife resumed actively searching for a house in February. That’s when the county’s median home price had dropped to $620,000, a full $80,000 less than the all-time high median price of $705,000 in June 2018.

Danielle Willis, the Keller Williams real estate agent who helped the Garzinis find their home, said “buyers are coming out of the woodwork” and getting back into the housing market.

“Everyone is realizing that interest rates are going to go up next year,” Willis said. “They want to strike while the iron is hot.”

Willis, who has been selling real estate 4½ years, said she sold as many homes in March as she did last June. “I closed six properties in a matter of a week,” she said, adding that most of her clients had been looking for a long time.

Laws of Compass said the lull in county home sales since June was caused by a “confluence of dampening influences.” Last year’s third and fourth quarters, as well as this year’s January-through-March quarter, were markedly slower than the housing frenzy during the first half of 2018, he said.

The slowdown of the past nine months, he said, was triggered by a “pushback on price from buyers who did not want to buy at the top of the market.” Laws said the pullback may have been exacerbated in late 2018 when the stock market plunged from its peak in September and interest rates reached their highest point in years.

“Since that time both have turned in a dramatically positive direction in early 2019,” he said. “Now that the sun is coming out, we expect that our buying season will tell a new story.”

Jonathan Soh, a brokerage manager for Sotheby’s International Realty in Sonoma, said data from the Bareis multiple listing service, which covers northern Bay Area and Mendocino County real estate, illustrates the post-fire housing market volatility.

In the first quarter of 2018, the total value of home sales in Santa Rosa was $230 million, a 27% increase from the previous year. This year, the value of the city’s first quarter sales dropped to $196 million, a 15% decline from a year ago.

Soh said home sales activity during the warmer weather months ahead will indicate if the housing market is experiencing more than a “hangover” caused by the fires two years ago.

“The other thing that is very apparent this year is the weather. We’ve had a very, very wet winter,” he said, adding that some sellers often wait until spring to list their homes for sale and some buyers also wait until then to go out looking.

“Every thing got delayed at least 30 days because of the weather,” Soh said. “We are only now getting into our spring market.”

During the next few months, local home sales also could get a boost from fire survivors who move to buy houses because their insurance money for temporary rental homes is running out, said Laws of Compass. And there’s the expected injection of billions of dollars into the Bay Area housing market this year, as technology firms such as Uber, Lyft, Pinterest and Airbnb go public with stock offerings.

“There is speculation about what the creation of thousands of new millionaires in the San Francisco area will mean for our market,” Laws said.

Ross Liscum, a Santa Rosa real estate broker affiliated with Century 21 NorthBay Alliance, said recent home sales activity suggests that some buyers have resumed house hunting. Liscum said residential properties carrying price tags reduced since last summer appear to be getting multiple offers.

“Sellers have two choices, chase the market as it adjusts their prices to be more competitive or adjust to where the market is and get their home sold,” Liscum said.

For the young Garzini family, who recently bought their Montgomery Village home, it was the right time.

“It’s got to go into a buyer’s market at some point,” Coddy Garzini said. “It may not be as good as it was in the past, but it wasn’t going to be as expensive and untouchable as it was at the height of everything.”

You can reach Staff Writer Martin Espinoza at 707-521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @renofish.