There was continued median home price appreciation throughout the Bay Area in 2017, with Sonoma County seeing a noteworthy jump in the fourth quarter due to heightened demand after the tragic fires. From the 3rd to 4th quarters, the house median sales price increased 5%, and condos saw a particularly large percentage increase of 11%. (See third chart below.) However, too much should not be made of short-term data until substantiated over a longer term. Sonoma County home prices are still vastly more affordable than in Marin and San Francisco (as illustrated in the first chart below).
One new dynamic is the market for lots affected by the fires. Looking just at Northeast Santa Rosa, the area most severely damaged, as of January 8th approximately 60 fire-damaged lots have been listed for sale in the past 2 months, 19 of which have accepted offers, and 2 of which have been sold. The median list price of lots for sale or under contract is $325,000. The largest such lot on the market is 22 acres with a list price of $799,000. The median sales price of the 2 lots sold was $232,500. Note that other sales activity may be occurring outside of the MLS listing system. Undoubtedly, the market will continue to wrestle with the issue of what the fair market value of these lots is as more come on the market, and we will know more when the current batch of listings under contract close sale.
Moving into 2018, there are a lot of spinning plates in the air – local, state, national and international factors that could affect markets. 2017 saw real estate markets surge and financial markets soar. After some cooling from mid-2015 to mid-2016, the Bay Area high-tech economy surged back into high speed. Unemployment rates have flirted with historic lows, and 2018 may see some major local IPOs, which could create great quantities of new wealth. The Bay Area still has probably the most dynamic, innovation-fueled economy in the world and indisputably remains among the great metro areas on the planet – but there are social, economic, political and environmental challenges looming as well.
Congress delivered an unpleasant holiday present to many Bay Area residents in the form of federal tax law changes limiting the deductibility of mortgage interest and state and local taxes. These changes will most dramatically affect counties with more expensive home markets such as Marin and San Francisco, but some Sonoma County residents will also be adversely affected: Talk to your accountant or financial planner. Predictions regarding the effect of these tax changes on Bay Area housing markets and the business environment range from one extreme (economic devastation) to the other (shrug), and the state legislature is currently working on bills that might blunt the negative financial impacts. It is too early to guess how it will all play out. We live in interesting times.
This report will review real estate trends in 2017, and some of the economic factors that impacted them. Most of the charts are self-explanatory, so we have kept the text to a minimum. Towards the end is an extensive analysis of home prices by city and bedroom count.
Sonoma County Luxury Homes Market
Sonoma County Home Prices by City & Bedroom Count
All our Bay Area real estate analyses can be found here: Paragon Market Reports
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