On April 13, 2018

Sonoma County Median House Price Hits New High in Q1 2018

In Q1 2018, the Sonoma County median house sales price hit a new high of $681,000, 12% above the Q1 2017 price of $608,000, and 4% above the Q4 2017 price of $665,000. Prices usually increase from Q1 to Q2 as the spring selling season really gets going, so it will be interesting to see if the surge in values keeps rolling on.

Median House Sales Prices by Quarter
since 2012

Long-Term Bay Area Home Price Trends
since 1987, per S&P Case-Shiller Home Price Index

The Case-Shiller Index does not use median sales prices to measure appreciation, but instead employs its own algorithm. This chart illustrates the appreciation trends for low- and mid-price-tier houses in the 5-county SF Metro Area. Sonoma is not actually part of the designated SF metro area, but these trend lines apply quite well to its real estate market. (The high price tier, not illustrated on this chart, applies best to markets in Central-Southern Marin and San Francisco.)

Lower-priced homes in Sonoma had a huge subprime bubble and gigantic crash as shown by the blue line on the chart below, with the mid-priced home segment (orange line) somewhat less dramatic in its rise and fall. Since 2012, both segments have seen spectacular recoveries.

In this chart, home prices in January 2000 are designated at a value of 100, thus the reading of 277 in December 2017 for the low-price tier signifies a price that has appreciated 177% in the 18 years since then, and a little above the previous peak hit in 2006-2007. This chart does not reflect Q1 2018 appreciation.

As always, market dynamics often vary significantly by specific location, property type and price segment, and median prices are often affected by other factors besides changes in fair market value (such as fluctuations in luxury home and new construction sales, and in the average size of homes sold). Late reported sales may affect the median sales prices illustrated in the quarterly chart, though typically only to a minor degree.

Sonoma County Home Values
by City & Town

Sales Reported to MLS, 10/1/17 – 4/10/18

Below is a glance at recent house median prices and average dollar per square foot values broken out by community, for sales reported to MLS in the last 6 months or so – basically since autumn sales began to close in early October.

Average house sizes vary: Of the cities, towns and regions listed in these charts, the smallest average house is in the Russian River region at 1255 square feet, then comes Santa Rosa SW at 1508 sq.ft.; Healdsburg, Sebastopol, the city of Sonoma and Cotati all have average house sizes between 1600 and 1800 sq.ft.; Windsor, Petaluma, Penngrove, Santa Rosa NE and Coastal Sonoma have averages ranging from 1800 to 2000 sq.ft.; and Sea Ranch has the largest average house size at 2032 sq.ft. (For sales of houses on lots of 2 acres or less, from 10/1/17 to 4/10/18)

Median House Sales Prices

Average Dollar per Square Foot Values

Post-Fire Residential Lot Market Activity
Santa Rosa Lot Sales by Lot Size

This chart reviews post-fire sales of residential lots in Santa Rosa by size and median sales price, as reported to MLS. It has been a very active market (and this chart does not include transactions unreported to MLS). Unsurprisingly, steps up in size correlate with increases in median sales price.

Additional Chart: Sonoma County Home Sales by Lot Size

Sonoma Market Dynamics

The market has just begun what is typically the busiest selling season of the year, as new listings pour onto the market, and buyers jump on those listings. Buyers are jumping all over the Bay Area.

Sales Price to List Price Percentage
by Month

Average Days on Market

Sonoma Home Sales of $1 Million+

The number of sales in Q1 2018 in this higher price segment was 43% higher than in Q1 2017. There is typically a big jump from Q1 to Q2 each year.

The Facts Regarding Bay Area
Migration, Population & Employment Trends

Alarmist Media Reports Forecast Doom for Bay Area

Many semi-hysterical articles were published in March regarding Bay Area residents fleeing in droves, that more people are leaving than arriving, that Silicon Valley is over, and this may spell disaster for the region. That sounds very bad – but is not true: Though the rate of growth has considerably slowed from the torrid pace of recent years – which is probably a good thing, since the Bay Area is now bursting at the seams – more people are still arriving than leaving, and population and employment numbers are still increasing. Our report, Will the Last Person Leaving the Bay Area Please Turn Off the Lights covers this topic in much greater detail.

Though Sonoma is not technically part of the 5-county SF metro area, it is, of course, deeply connected to economic trends there.

Below are 3 charts from our full article, based on recent U.S. census and CA state employment data.

Net domestic and foreign migration in and out of the SF Metro Area,
natural population increases and annual net population growth

The San Francisco Bay Area population continued to increase in 2017,
though slowing from the feverish growth rates of previous years.

The Bay Area continues to be a job-creating machine, though hiring intermittently speeds up or slows down.

Mortgage Interest Rates

Interest rate changes are one of many factors we reviewed in a recent report Positive & Negative Factors in Bay Area Markets. It may be that fears of impending rate increases are helping to fuel the strong buyer demand we are seeing so far in 2018.

Additional reports can be found here: Paragon Main Reports Page

Please let me know if you have questions or if I can be of assistance in any other way.

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

© 2018 Paragon Real Estate Group

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