Single-family homes have decreased by 10% in October from the same period last year in Sonoma County’s with the continuing inventory shortage, especially among houses priced $500,000 or less.
A total of 389 single-family homes sold in October, which also represents a 10% decrease from September. With this inventory shortage of homes in the affordable price range, there is a strong chance that the number of homes sold in 2016 will be less than what sold in 2015. New listings during summer months, which tends to be peak inventory time, declined to levels not seen since the recession in 2009.
A new housing project near Sonoma State University, which will add 175 new single-family homes, will not make that much of a difference. Many buyers are finding that they have to “settle” for a home just because it fits in their price range and there are not many homes to choose from in the $500,000 or less range. Inventory has been an ongoing issue for Sonoma County and is not expected to change in the near future. Potential sellers are less inclined to sell their homes because they’re unsure they’ll be able to find a suitable replacement home. First-time buyers are the ones feeling the effects of the tight inventory conditions.
Condominiums, which used to be a viable option, are not faring much better. Condo sales are only up 4% through 2016. Home prices have rebounded from the recession in 2009, when the median price sank to $305,000. The current median price in Sonoma County is $595,000. With tight inventory conditions expected to continue, it is likely that the median price will continue to go up each year. However, buyers are pushing back and are unwilling to pay inflated prices in the marketplace. Several months ago, a seller would easily get immediate offers, most over asking price. In today’s market, there is an uptick in buyer activity, but sales are not as strong and homes are not getting multiple, above-asking price offers.
Distressed property sales have declined 20.1% in Sonoma County, with non-distressed property sales up 2%.
As has been the case for some time now, the problem is due to a lack of inventory, as buyer demand remains high. When prospective buyers do not have many properties to choose from, interest is lost as the buyer is unable to find anything, thus perpetuating the cycle until more inventory becomes available.