Stock markets hit new highs, interest rates hit multi-year lows, and by virtually measurement, the Sonoma County market rebounded in Q2 from the slowdown in the previous 3 quarters. However, these same indicators of market heat were distinctly cooler compared to conditions prevailing in late 2017 and the first half of 2018 – when the market was very hot – and the Sonoma median home sales price is currently about 5% below the peak reached in Q2 2018.
Median Home Sales Prices
Home Sales by Property Type & Bedroom Count
Sales Volumes: General Market
& Higher Price Segments
The total sales number in Q2 2019 was similar to Q2 2018, but both were down from previous years.
As illustrated in the next 2 charts, in the higher price segments, sales volumes are well down from spring 2018 highs.
In the $2 million+ price range, there were more than twice as many active listings in Q2 as sold in the last 12-month period. This segment is deep in “buyer’s market” territory.
Selected Market Indicators
As mentioned earlier, the spring Q2 market clearly strengthened over recent quarters, but remains significantly softer on a year-over-year basis.
To a large degree, the market is divided between listings that buyers find appealing and well priced – which sell quickly – and listings that don’t capture buyers’ attention, stay on market for longer periods of time, and go through price reductions. In the latter case, the issue could be a lack of preparation of the home to show at its best, or an inadequate marketing plan, but typically the biggest factor is pricing above what buyers believe is reasonable.
Overpricing: Negative Effects for Sellers
& Opportunities for Buyers
We performed longer-term analyses of the effects of overpricing – as indicated by the need for price reductions before the property sold – on every major market in the Bay Area and the results were uniformly similar. As would be expected, there were dramatic differences in the sales price to list price percentage and time on market before sale. But there were also very substantial differences in the average dollar per square value realized upon sale.
Overpricing lowers values for sellers, which also signifies opportunities for buyers who keep an eye out for price reductions and react accordingly.
Sonoma 2-4 Unit Multi-Family Properties – Median Prices, Average Dollar per Square Foot