Sonoma County home sales remained strong in October, even as the portion of foreclosure sales fell to its lowest level in at least four years.
Only 8 percent of the 480 single-family homes sold last month were bank-owned foreclosure properties, according to The Press Democrat’s monthly housing report compiled by Pacific Union International Vice President Rick Laws.
It was the most homes sold for any October since 2008. At that time, half of the sales involved homes that previously had been lost through foreclosure.
The median sales price last month reached $366,000, an increase of of 3 percent from September and 18 percent over a year earlier.
However, Laws said the increases weren’t primarily due to rising home values. Instead, he attributed them to the decline in sales of lower-end foreclosure properties and a rise in sales of more-expensive homes by owners with equity.
“That’s all due to a fairly dramatic shift in what price range is selling,” he said.
For example, sales for the market segment priced between $400,000 and $700,000 have increased 38 percent to date this year, compared to 2011. In contrast, sales for homes priced below $300,000 rose 3 percent.
County median home prices reached a record high of $619,000 in August 2005 before tumbling to $305,000 in February 2009.
At the bottom of the cycle, three out of every four sales involved financially distressed properties — mostly foreclosures with a small number of short sales.
In the past four years, the number of short sales slowly increased and within the past year became roughly equal to foreclosure sales. But in June foreclosures sales sharply fell. Last month short sales made up 20 percent of the market, compared to 8 percent for foreclosures.
Buyers this year have purchased 4,568 homes, the highest number for the first 10 months since 2005. Sales to date this year increased 19 percent compared to the same period for 2011.
Even so, brokers and agents maintain that sales are constrained by a relatively low number of homes on the market. Inventory at the end of October was 806 homes, less than a two-months supply at the current pace. A balanced market would have roughly a six month supply of available homes.
Inventory often declines in the winter as many sellers wait for spring to market their homes, agents said.
Tim Freeman, manager of Coldwell Banker in Santa Rosa, said he expected inventory to rise in spring. But the market may be constrained this winter if many sellers worry how Congress and President Barack Obama will address tax increases and federal spending cuts associated with the “fiscal cliff.”
“It really is the story of inventory,” said Freeman, “and I just see the numbers going down, down, down.”
— Robert Digitale
