When the financial crisis of 2008 hit, American’s financial system “was shaken to its core” as quoted by the Wall Street Journal. Millions of homeowners lost their homes and jobs, small business owners were forced to close, dreams of higher education were destroyed and the divide between the rich and poor widened significantly.
The effects on Sonoma County were profound. Over 15,000 homeowners lost their homes to foreclosure and those properties were snapped up by investors at recession level prices. The loss of middle-income jobs, homeowners that were forced to rent, underfunded pensions and owners that were overextended with credit all felt the impact of the financial crisis.
During this 10-year timeframe, housing wasn’t getting built because developers could not secure financing or take the risk and homeowners couldn’t get home loans due to tightened credit standards. Prior to the receission, builders were adding approximately 1,585 homes per year in Sonoma County. Had the recession not hit, that pace would have continued and Sonoma County would have had an additional 10,400 homes. With construction coming to an almost halt, builders only average about 280 homes a year.
In 2014, Sonoma County developers and bankers finally saw a turnaround and the housing market came alive again, with local developers starting to build again in 2018. With banks still cautious about lending, local developers have had to find financing through private investors.
Couple this shortage and housing loss with the October wildfires, which destroyed over 5,300 homes in Sonoma County. Developers are working hard to rebuild for homeowners that lost homes and to design new communities, but with the significant loss of homes over the years and increasing demand, developers will be challenged to rebuild Sonoma County in ways that meet consumer demand and affordability.