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Sonoma County’s housing market has gotten off to its slowest start in six years.

Buyers purchased 260 single-family homes in February, according to The Press Democrat’s monthly housing report compiled by Pacific Union International Vice President Rick Laws. Sales fell 11 percent from a year earlier.

For the first two months of the year, buyers have purchased 535 houses. That is the lowest number since 347 homes were purchased in 2008, a time when prices were tumbling sharply.

“Without a doubt we’re off to a slow start,” Laws said.

Experts say housing is still going through a transition in the aftermath of a historic housing crash.

“The market has been driven by the investor buyer,” said economist Christopher Thornberg of Beacon Economics in Los Angeles.

Over the last year, the investors have pulled back, he said. Eventually sales will be spurred more by the “move-up buyer” who is selling one home and buying a more-expensive property.

“We’re in between these two waves,” Thornberg said.

February’s median home sales price declined 2 percent from January to $449,825. The median remained 18 percent greater than a year ago.

During the last decade, the county’s median price reached a record $619,000 in August 2005, before falling to a low of $305,000 in February 2009.

Agents said buyers remain on the hunt for homes this winter but sales are constrained by a continued lack of supply.

“It’s just remarkable how the inventory has shrunk,” said Mike Kelly, an agent with Keller Williams in Santa Rosa.

February ended with less than 600 homes for sale, slightly more than a two-month supply of inventory at the current sales pace. That remains considerably lower than the roughly six-month supply that experts say is needed for a balanced market.

The lack of inventory was blamed for the slowest February sales in six years for the entire Bay Area.

The nine-county area reported 4,963 houses and condominiums sold last month, a decline of 8 percent from a year earlier, according to real estate information service DataQuick.

While citing various factors for the slower sales, DataQuick President John Walsh said in a statement that “clearly the main culprit is an inadequate supply of homes for sale.”

The Bay Area median sales price last month increased nearly 3 percent from January to $540,000. The median increased 33 percent from a year earlier.

– Robert Digitale

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Comments

6 Comments

  1. Bob Dreyer

    Sales activity should pick up a little as we get into Spring. However note that even though the sales activity of the last two years was an improvement over the bottoming out of 2008-2010, it was never all that great. In the bigger picture, sales activity was mediocre and didn’t occur at a rate indicative of a strong overall economy.
    Expect a continued weak market. Persistent high unemployment, flat/declining wages, slightly higher interest rates, and regulations which make getting a mortgage harder and more expensive will keep sales activity down.

    March 13th, 2014 11:31 am

  2. Bronner

    That’s because junk houses are overpriced for no reason. No supply of decent houses. All in crap neighborhoods and the realtors keep pushing unsuspecting people into these future ghettos.

    March 13th, 2014 11:56 am

  3. Kevin Byrne

    I wonder if this real estate slowdown is really due to a lack of inventory or simply because fewer people have good enough jobs to qualify for loans? Sonoma County doesn’t seem to be an abundant supply of high-paying, secure jobs; a fact that may explain the low sales volume. We live in an increasingly Dickensian society of have’s and have-not’s.

    March 13th, 2014 12:22 pm

  4. randy

    When a city charges $70k + for permits fees and low income housing subsidies as well as the amount of time to process an application what they are doing is creating a giant spread in the market and pricing out what could be or used to be affordable housing

    if you get the lot for free.

    Build a 1400 sq ft house though most people want an 1800-2000 sq ft comfortable home. we’ll use the 1400 ft number for now. and build it for $125 per sq ft. thats labor and materials for a basic home. some guys have it down to $100 sq ft but thats using labor from way outside of our area.

    your bare bones construction costs are $175000

    add $70000 in permits and fees

    $245000

    now add in the 12 month construction loan at 10 percent thats for applications, design review and field inspections timelines. flat interest add $24500 obviously rates and points vary.

    Now that house is $290000 thats if you got the lot for free.

    anyone notice that 24% of that theoretical cost is FEES and subsidized housing. now add the $50000-100000 a lot might cost $390000 for a base model home with no profit for the builder in a market place with a $65000 average income.

    Now add green building features, urban wildfire sprinkler upgrades, septic design and limits approved county design options as well as a county permit system much like santa rosas that is unfriendly and punitive….. Does anyone wonder why there arent any new affordable homes on the market only old run down homes and high priced base models. These cities and our county have overly weighted the permiting system and also the subdivision map system making it impossible for the little guy or owner builder to actually find a lot, carry the cost of the permits and try to build their own home.

    out the gate if you are lucky enough to find a nice lot for $100k. you now need to cough up $70000 before you start construction. pull your loan and make interest payments while the city finds anything and everything they dont like to send you back to your designer about. 6 months later you can start building… Good luck millennial your parents have priced you right out of this market with the ponzi affordable housing and pension supporting building permit fees…..

    March 13th, 2014 12:34 pm

  5. Michelle

    So a lack of inventory caused sales to drop. That’s an interesting fact. I guess it is a buyers market. People needed a choice. With less than 600 homes for sale I could see that happening.

    April 5th, 2014 3:08 am

  6. Steve

    Thanks Randy. Spread the optimism. I was really excited to buy a house but after reading that uplifting optimistic rant I might just jump off a cliff.

    April 19th, 2014 11:48 am

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