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On November 14, 2019

Sonoma County Real Estate November 2019 Report

We will limit our comments regarding the fire to 2 thoughts: It is impossible to express sufficient gratitude to those who have worked on the fire line and those who have stepped forward to help those affected. Secondly, Sonoma has been through natural disasters in the past – floods, fires, droughts and earthquakes – and each time, its residents and local governments work together and learn lessons on how to limit their damage more effectively going forward. And Sonoma County remains an incredible place to call home.

It’s hard to get excited about a real estate report after the events of last month, but for those interested, our November newsletter follows.

Long-Term Median Sales Price Trends

Using a six-month-rolling average of monthly median sales prices smooths out the mostly meaningless monthly fluctuations to illustrate broad, long-term appreciation trends with more clarity.

Sales Volumes & Median House Prices by City

Median sales prices are generalities that disguise a wide range of prices in the underlying sales, and how they apply to any particular home is unknown without a specific comparative market analysis. Median prices are more prone to fluctuate – without great reference to changes in fair market value – in communities with lower sales volumes and wide ranges of sales prices.

Monthly Home Sales Volumes

An illustration of the substantial role of seasonality in the real estate market. One month’s sales volume mostly reflects accepted-offer activity in the previous month. Market activity hits bottom in December and January, which then makes January and February the months with the lowest number of closed sales.

Generally speaking, sales volumes have been slowly declining in recent years.

Sales vs. Listings for Sale by Price Segment

Demand vs. supply: If the price segment’s percentage of sales is significantly lower than the segment’s percentage of listings available to buy, it signifies much softer demand as compared to other price segments: This is the situation with $1.25 million+ homes with 8.5% of the area’s sales, but 28% of listing inventory. For homes of $2 million+, the supply and demand dynamic is much softer still: The ratio of current listing inventory % to 12-month sales % is 14% to 2%.

These are generalities: Overpriced listings in any segment will typically fail to sell (without price reductions), and appealing, well-priced listings can sell very quickly, sometimes with multiple offers.

Percentage of Home Sales Going into Contract within 30 Days, after Receiving Multiple Offers

The percentage of 2019 YTD home sales that went into contract within 30 days of coming on market subsequent to receiving multiple offers is down from the last 2 years, but up from 2016. About 1 in 6 such sales have occurred in 2019, and they averaged a sales price 3.3% over asking price – i.e. buyer competition pushed sales prices up.

Listing & Sales Volumes – Homes of $1 Million+

Active Listings on Market within Month

Higher Price Home Sales by Month

Market Dynamics by Price Segment

Location is, of course, always important in real estate value – within the county, within the city, within the neighborhood – but to a large degree, market dynamics within the county are also determined by the home’s price segment. And individual cities will often have homes in several or even all of the price segments broken out in the 2 charts below, with these segments seeing differing supply and demand conditions.

Generally speaking, demand is considerably softer and supply is higher (as compared to demand) above the $1.25 million price threshold, and that difference becomes much more substantial above $2 million. In this highest price range particularly, correct pricing is an imperative right now. The median list price in this segment for active listings is now $3.7 million.

Residential Lot Sales by Price Range
& Square Footage

About 400 residential lots were sold in the past 12 months, with a median sales price of approximately $240,000, and a median days-on-market of 104 days. The median list price of lots currently for sale runs about $350,000.

Sales without Price Reductions
& Withdrawn (No-Sale) Listings

The following 2 charts illustrate both year-over-year changes in market conditions and the role of seasonality within the calendar year.

Last year saw a large jump in the number of listings pulled off the market without selling in November and December – this was a particularly volatile time in financial markets and interest rates were relatively high. The situation with both of those factors has changed dramatically in 2019, but it is too early to see how that will affect the number of listings withdrawn in the last few months of this year. The fire will almost certainly skew these figures.

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