Sonoma County Real Estate Update June 2010

This is a good article about the current state of the real estate market in Sonoma County.

It mentions a couple of the biggest question marks going forward: the lapse of the Federal tax credits and the number of distressed properties.

There is breaking news that the completion of sales qualified for the tax credit now in the pipeline (accepted offer by last April, but not yet closed escrow) may be extended from the end of June until Sept., but no word on any new extension of the tax credit for new sales from this point forward.

May home sales, prices increase in Sonoma
County
By SAM SCOTT
THE PRESS DEMOCRAT
Published: Wednesday, June 16, 2010 at 6:22 p.m.

Sonoma County home sales increased for the fourth consecutive month, rising nearly
8 percent from April to May, but activity still trails last year.
Buyers purchased 410 single-family homes in May, up from 381 in April but down
slightly from 416 a year ago.

Prices, meanwhile, increased for the first time in five months. The median price hit
$362,000, up 5 percent from April and up 4 percent from a year ago.
“It shows we have a very steady growth in demand in the marketplace,” said Rick
Laws, manager at Coldwell Banker in Santa Rosa, who compiles The Press


Democrat’s monthly housing report.

But others said economic uncertainty was still keeping the market down. Sales have
dropped nearly 9 percent in the first five months of the year, compared to the same
period a year ago — despite a $8,000 federal tax credit for home buyers who signed
their contracts by April 30.

“It’s just sort of a mediocre market right now,” said Mike Kelly, senior sale
consultant at Keller Williams Realty in Santa Rosa, who added that unemployment
and job insecurity were partly responsible.

Unemployment in Sonoma County doubled over the past two years and has hovered
in double-digits in 10 of the last 11 months, receding only slightly to 10.6 percent in
April.

The true impact of the federal tax credit won’t be felt until June sales figures are
finalized, Kelly said. The credit extends to people who signed by the April deadline
but close by the end of June.

Laws said he didn’t think the end of the tax credit would have a big impact on the
housing market. The credit offered an incentive to buy, but ultimately wasn’t enough
to make or break most deals, he said.

Both Kelly and Laws said the mix of sales is changing as the market settles into a
more normal pattern. There has been reduced inventory in distressed properties —
usually either short sales or foreclosed properties, the “rocket fuel” in much recent
buyer interest, Kelly said.

In February 2009, more than 75 percent of homes sold in Sonoma County were
bank-owned properties, according to Laws. In May less than 47 percent were.
As banks put fewer properties on the market, buyers are increasingly having to
compete with each other, particularly for homes in the lower end of the spectrum,
Laws said.


He said the market was “bifurcated.” Above $500,000, he said the situation tends to
favor buyers. Below $400,000, it is generally a seller’s market with inventory not
meeting demand, Laws said.

“If the value is there and the house is in good condition and in a good neighborhood
and priced at market, it gets multiple offers,” said Glen Hurley with Platinum Real
Estate, who is president of the Santa Rosa Chapter of Realtors.

The return of “normal sellers” who aren’t trying to unload distressed properties is
encouraging, Kelly said. When they sell, they tend to “buy up.” A short sale or foreclosure, however, is rarely matched with a corresponding purchase.

The competition is driving up home prices. The median price for a single-family
home, $362,000 in May, was its highest level since December 2009.
The median is the mid-point at which half the homes sold for more, and half for less.
Sonoma County home prices peaked in August 2005 when the median hit $619,000
before tumbling to a low of $305,000 in February 2009.

Through May the median price of a single-family home sold in 2010 was $350,000,
up 10 percent from the same five-month period last year.
“There is very little inventory,” said Paula Gold-Nocella, a broker with Prudential
California Realty in Healdsburg. “That’s what’s driving the price up.”