Sonoma County home sales dip in July but real estate market stays hot as Bay Area residents relocate here

Sonoma County homes sales and prices declined in August and September from record highs in July, but were still well above figures for the same time last year, as buyers continue to flee dense Bay Area neighborhoods for Wine Country amid the pandemic.

Untethered from the office, urban residents are seeking additional living space and a more relaxed lifestyle, since they’re now spending most of their time at home. North Bay homes carry significantly cheaper price tags than in other parts of the Bay Area, another draw.

That has pushed Sonoma County’s median existing home price to $715,000 in September, up 9.5% compared to the same month a year ago, according to the most recent area housing data from Compass real estate brokerage in Santa Rosa.

In September, there were 540 home sales, a 27% increase from the same month last year. But that number also represented a significant drop from the 556 transactions in August and 621 in July, at the local housing market’s 2020 apex.

The relative slowdown can be attributed partly because of smoke from recent wildfires, which halted house showings, local real estate professionals said.

“That obviously put people off, but not as much as I thought,” said Rick Laws, a regional vice president at Compass. “Every week we have marketing sessions, and everybody’s still got buyers who want to buy.”

Even if demand for county homes remains strong, the Walbridge and Glass fires in August and September, respectively, could influence what sections of the county buyers are willing to consider.

“Areas in high fire hazard areas, they are really getting hammered,” said David Rendino with RE/MAX Marketplace in Cotati.

Rendino and his wife, Erika, who together work as a real estate team, said, for example, buyers have become more wary of neighborhoods in east Santa Rosa where the Glass fire damaged or destroyed at least 30 homes.

In February, the month before the coronavirus temporarily upended the housing market, the median home price in the area was $641,250. Despite tight restrictions on in-person showings at the onset of the pandemic, county housing prices made a steady monthly ascent before peaking at an all-time high median of $720,000 in July.

In August, prices dipped to $701,000, before rebounding to the $715,000 mark in September, according to the Compass data.

“We’re still feeling the effects of the COVID bounce,” Laws said. “People are bouncing out of high-density areas.”

While buyers from San Francisco, the East Bay and Silicon Valley are largely responsible for driving up house prices in the North Bay, real estate experts say, local residents also are looking to move to suburban locales within the county.

Danielle Oliveira, 31, and her husband, Alirio, this summer decided to upgrade from their starter home in south Santa Rosa. They were able sell the house for 60% more than what they paid for it six years ago, enough to cover the down payment on a $570,000 house in the more rural southwestern part of the city.

“It’s our dream house,” she said. “It’s a fixer-upper, but it’s on an acre of property.”

The couple has a 2-year-old daughter and another child on the way. Having the extra space for their family as the pandemic drags on was a big reason for making the move.

Instead of taking their daughter to the park and having to adhere to social distancing, Oliveira and her husband set up a play structure in their new yard. It’s next to a chicken coop and a pond stocked with fish. “Now, were adjusting to the country life,” she said.

In addition to the spike in buyers, the hot county real estate has many bidders competing for an extremely low supply of listed single-family homes, a factor likely tamping down total sales. The number of available properties fell to 660 in September, down from 793 in July. That’s also 46% fewer homes than in September 2019, according to the Compass data.

The scarcity is in large part because of pandemic-related delays in construction and in prepping homes to come to market, local Realtors said.

“It’s been such a low-inventory year in every single price category that there are definitely still people looking now who were not able to find a home earlier in the year,” said Carol Lexa, president of the North Bay Association of Realtors.

For that reason, the strong local homebuying could extend well beyond the summer and fall, as buyers previously outbid on properties hold out hope for striking deals in the colder months ahead.

“We could continue through the winter with a lot of pressure on the market,” Lexa said.

Record low interest rates on home loans also could keep enticing more buyers to the area housing market. In October, the average mortgage rate on the 30-year benchmark loan dropped to 2.8%, marking a new all-time low for the eleventh time this year.

Ron Felder, chief financial and risk officer at Redwood Credit Union, said in addition to helping boost home sales, the historic low interest rates have caused a “boom in mortgage refinance activity” in Sonoma County. Through the first eight months of the year, total mortgage refinancings spiked by over 130% from the same period in 2019, Felder said.

At the same time, some longtime homeowners in fire-prone areas, exhausted by seasonal evacuations and power outages, are looking to sell and move away from the North Bay, the Rendinos said.

Still, they expect the county’s housing market to withstand the escalating wildfire concerns.

“People moving from the Bay Area are offsetting those leaving,” David Rendino said. “I don’t think its going to be something permanently debilitating to our market.”

The Associated Press contributed to this report.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian