Sonoma County Home Sales Rate hits Two Year High, in February!

February just ended. It was a short, cold and rainy month but that did not deter home buyers and sellers from ratifying purchase contracts on 557 homes, from Santa Rosa to Petaluma, Sonoma to Healdsburg.

Every month I review the latest sales data for Sonoma County homes and country properties and make them available to you. This month there are some very striking results to report. The number of newly ratified sales contracts, which I reported as very high in January, has increased to the highest level in at least two years. Since February is seasonally a very slow, short month, this is particularly interesting.

In addition, Month’s Supply of Inventory is also at a two year low, and only 2.4 months supply of homes are available at the current rate of sales. Many of the homes available, if they haven’t sold in a few months, are purely not selling because they are priced too high for today’s market. This is particularly true for homes priced under $900,000. That means well-priced homes that are priced well and show well, are selling VERY FAST!

What does this mean for you if you are a buyer? If you want to take advantage of the $8,000 first time buyer or the $6,500 move up buyer tax credits, you must be in escrow (newly ratified sale) by April 30th, and close by June. At some price points and for particularly well-marketed, aggressively priced homes, you will likely encounter multiple offers and a competitive market place. It is important to have a good relationship with a strong realtor who is on top of the market so that you can take full advantage of home buying opportunities as they come up.

What does this mean for you if you are a seller? If you have been holding off putting your home on the market, following conventional strategy to put your home on the market in the spring, it is not too early to (A) start the preparations, and (B) think of moving up your timeframes to take advantage of the current low inventory and low interest rates and tax credits. The better you can prepare your home prior to market launch, if you will, the quicker it will sell and the more money you will earn. Please contact me for details.

(If your home is under-water, that is, if you owe more than it is worth, there is some hope the process of selling the home under those circumstances, will be improving in the coming months. That is subject for another post.)

Here are the rest of the data from this month’s reports. (Other points to note–the median price is up 15% versus last February, when it bottomed at $290,000. It is down from a whopping $619,000 a few years ago and down 20% versus February in 2008.)

Sonoma County Home Sales Trends March 1,2010 Pam Buda Prudential California Real Estate

The underlying story is a bit different. Inventory has declined significantly over the last two years. Newly pending sales (homes under contract but not yet sold) rose sharply to 496, one of the highest monthly rates in the last 13 months, even though January is typically slow. That is up 117% over January pending sales two years ago and up 17% over last year.

In early 2010, buyers remained active over the holidays. Pouring rain and football playoffs did not deter them in January, at most price ranges. Unlike last January, when activity was concentrated at the lowest price ranges (under $350K), this year the market is active up to about $800,000. There is also high buyer activity at price ranges from about $1,800,000 to $2,500,000. 37% of buyers in this price range paid cash in Q4 2009, making financing less of an issue for them, and buyers under $800,000 are finding conventional loans easier to obtain, putting the squeeze on sales in between those two price points.

I have compiled a report from the same data used to generate the Press Democrat’s stories and am posting it here. I pulled the data going back two years rather than just one so that the numbers can be viewed in the context of seasonal trends.

Most striking is the extreme increase in unit sales versus two years ago, the extreme decrease in inventory (from 3365 homes for sale to 2070)–thanks to the high rate of sales, and the increase in median price (year over year with last February representing a bottom in prices.) Please call or email me if you have any questions, or if you would like me to analyze a particular home or area. If you are considering selling your home but have been reluctant to do so “because of the market”, please get in touch. This may be a great time to sell!

Sonoma County Home Sale Trends January 2010

I thought I would pull the most recent sales data from our MLS (multiple listing service) to see what price trends have been like for country property over the last two years. For the purposes of this post, I pulled homes listed as single family residences or farms and ranches on lots of 2 acres or more.

You can get a property that might feel like country with a smaller lot size, but 2 acres seems like a practical dividing line in terms of what most people want. The County of Sonoma uses 2 acres for a dividing line for some of the zoning designations in terms of housing density, allowing second units on some lots of 2 acres or more. (note: don’t assume because you are interested in a property on 2 acres that you can build a second unit on it–it is way more complicated than that, contact me for specifics).

A 2 year low 12 units of country property sold in March of 2009 and 2009. The highest month’s sales total was 33 last October (very interesting due to the financial markets last fall.) The rate of sales seems to be picking up in the second half of this year. It generally bounces around in the teens and twenties, spiking towards 30 occasionally. Not the largest sample size which is why I am including all county sales in these figures as opposed to breaking out Healdsburg or Sebastopol for example.

Median price of country property in Sonoma County is down 14% since November 2007 when it was $1,200,000 versus $1,037,500 now. The lowest median price was in February (surprise!) at $620,000, just showing only the least expensive properties were selling last winter, not that individual property values fluctuated so much.

Months Supply of Inventory is at a two year low of 6 months at the end of November versus 19 months two years ago–with a high of 35 months supply in June 2008!

Here is the graph of median price as well as the underlying data. You can click on either of the images to enlarge them.

Petaluma consists of two MLS (Multiple Listings Service) areas-West and East–with very different characteristics. For the purposes of this post we will combine the two. It was very interesting to look at the trends here over the last two years because I think Petaluma is where the housing market crawled back over the bottom soonest. 80 units were sold in October 2008 which really put a crimp in supply for the winter months. The bottom was hit in February 2009 (noticing a pattern here?) when only 25 units sold, but sales are usually in the 20’s and 30’s. Median price was at $510,000 in October 2007 and is at $425,000 now, down 17%. But prices are up significantly from the low, which was $323,000. The median price does not fluctuate too widely in Petaluma compared to other Sonoma towns. Inventory peaked at an 8.5 months supply two years ago, but is a sparse 2.5 months now.

Interestingly, Sebastopol had only 5 months of inventory for sale in October 2007, trended above 7 for a few months and is now at 3.8 months supply. Inventory never really got too out of hand.

Sebastopol Home Resale Inventory Shrinking

Healdsburg real estate represents a small sample size with monthly sales ranging from 2 units to 24 units and median price ranging from $352,000 to over $3,000,000 on any give month over the last two years, with several months in which the median price was just over a million. So take this with a little grain of salt. Nonetheless, inventory never really spiked for long, sales are on the upswing, median price is down 27% since October 2007.

Month’s supply of inventory moved downward from 14 months in October 2007 to 6 months today, a balanced market, probably reflecting the amount of high priced inventory on the market here. MSI peaked at 25 months in February 2008.

Portrait of a more balanced market for Healdsburg Real Estate

I thought I would do a series of quick snapshots of inventory supply in each of the major Sonoma County MLS regions so we could see the variation within the county. Some of these have small sample sizes but I think they are big enough to spot trends. If you asked me about 3 bedroom homes on quarter acre lots in Northeast Santa Rosa, we might not have a big enough sample to be meaningful, but you can try me. If you would like more detailed information about your community’s sales trends, please email or phone me and I will send you more detailed reports.

Santa Rosa is the largest area in the county, spanning four different quadrants: NE, SE, SW and NW. I could pull reports for each one and I suspect we would find some good variation but let’s start here.

The median price of single family homes (including condominiums and farms and ranches) is down 33% from October 2007 when it was $450,000. The low was reached in February of 2009 at $250,000. It is currently just over $300,000 for the first time since September 2008.

Months supply of inventory is only TWO MONTHS, down from a peak of 16 in both October and December 2007. Anything under 5-7 months is considered a seller’s market.

Months Supply of Housing Inventory Shrinking in Santa Rosa, CA

Fast forward two years and there are only 2368 homes for sale in Sonoma County and 431 of them sold in October. So while the number of sales was down slightly versus two years ago at this time, the total number of available homes was down significantly. At the current rate of sales, there is only a 2.2 months supply of inventory. MSI measures the ratio of demand and supply. When the supply of homes for sale would be absorbed in less than five months at the current rate of sales, we have a seller’s market.

Generally a balanced market, meaning a level playing field for buyers and sellers, consists of a housing supply of 5 to 7 months. Deals are getting done and neither side feels that it has an upper hand. If you look at the graph below, it looks like we last had that between April 2008 and February 2009. That was when the first wave of foreclosures was starting to hit and sellers were reducing prices.

A buyer’s market is what we had in late 2007. Sales were slowing, inventory accumulating and prices were stalling or dropping. A buyer’s market is anything over 7 months supply, we were at 12.5 months. It peaked in December 2007.

What does this stat mean for you as a buyer or seller of real estate? It is a quick way to gauge price trends in a given market. But these numbers can be really misleading too because each town and area and more importantly today, each price point really varies. But that (and the anticipated coming wave of foreclosures) is a subject for some future posts.