Unlike most Bay Area real estate markets, which surge in spring, slow in summer, spike again in autumn and then plunge in winter, the Sonoma County market typically starts heating up in spring to peak in mid-summer, and then cools until the next spring season. Presumably, this has to do with the importance of the second-home market in the Wine Country.
The median Sonoma house sales price in October and November dropped a little from the previous 2 quarters, but the size of the decline is probably not statistically significant. The condo median price remained relatively stable. The longer-term trend in median prices is much more meaningful than short-term fluctuations, and for the past 4 years that trend has been distinctly upward.
As a point of comparison, the median house price in San Francisco is now $1,300,000, and in Marin, $1,200,000.
47% of Sonoma County house sales occur between $400,000 and $599,000, while the great majority of its condo sales are under $399,000. Of course, home prices vary enormously between different communities, and some estates sell for prices that rival those anywhere in the Bay Area.
More information on Sonoma home values can be found here: Sonoma County Home Prices & Trends by City
Except for Solano County, Sonoma has the most affordable home market in the Bay Area, as measured by the California Association of Realtors Home Affordability Index – which uses a calculation that includes median prices, median household income and current mortgage interest rates. Though, like everywhere else in the Bay Area, Sonoma’s housing affordability rating has been sinking dramatically in recent years, the county is markedly more affordable than Marin and San Francisco. This is an important factor in what’s going on in Sonoma’s real estate market.
A snapshot of the luxury home market in Sonoma and Napa. Some estates sell at prices in excess of $10 million.
One indication of the heat of the market is how sales prices compare to asking prices. For the past couple years, Sonoma homes selling without price reductions have averaged a selling price a little bit above list price. Homes that were perceived as overpriced, going through one or more price reductions prior to selling, sold at significant discounts to original list price.
Another classic statistical measurement is how quickly listings accept offers. In Sonoma, the market responded relatively quickly to most listings, while, again, listings considered overpriced took much longer to sell – or indeed didn’t sell at all.
Months supply of inventory measures buyer demand against the supply of homes available to purchase: The lower the MSI, the hotter the market. The market for Sonoma homes selling under $1,000,000 has consistently remained a seller’s market for some time now. The higher-priced home market is not as strong – the higher the price, the fewer the potential buyers (and more expensive homes are also most prone to overpricing) – and it’s heat ebbs and flows dramatically, often straying into buyer’s market territory. The entire market slows down for the winter holidays, but the higher-priced home segment slows way, way down.
After the semi-hysteria – already half forgotten – that erupted in late August and September regarding the Chinese stock market and its impact on the U.S. stock market and economy, and possibly the Bay Area housing market, we thought it interesting to take a look back at how it has played out so far.
It is widely expected that the Fed will raise interest rates in December, probably by some minimal increment, but for the time being, as of the first week of December, rates have remained below 4%.