We are a little reluctant to talk about real estate market dynamics amid the suffering of so many of our friends and neighbors, but since there are people who still need or want to buy or sell, we have put together the following report.
Obviously, the loss of housing from the recent fires is adding further pressure to both the resale and rental markets in both the wine country and adjacent counties, which were already characterized by low supply. There are distinct groups within the Sonoma market – people who lost their homes, buyers who were already in the market to buy when the fires struck, and second-home buyers, who historically play a significant role in demand here – and each of these groups will react to the changed circumstances in a different way. The market usually goes into semi-hibernation from just before Thanksgiving to mid-January. This year may be somewhat different. There has certainly been a sudden increase in demand from those affected by the fire and financially able to buy another home now, but greater clarity on longer-term buyer response will probably have to wait until the first and second quarters of 2018.
We are already hearing of investors interested in buying up lots in affected areas for future construction, which on some level is a vote of confidence in a rapid recovery, though, of course, it is fundamentally motivated by investment calculations. The decision as to whether it makes sense to sell now should be carefully thought out: Values of affected lots will be lowest in the immediate aftermath of the fire. On the other hand, there may be the reasonable desire to move on with life – rebuilding will not be a quick or easy task, despite efforts to streamline the process – and let someone else deal with the many complex issues pertinent to rebuilding. The neighborhoods that rise from the ashes may be substantially different from those existing before. This occurred after the big fire in the Oakland hills 26 years ago.
How the disaster will ultimately affect the real estate market will almost certainly be more nuanced than expected or predicted, and will only become clear with time. Other factors will undoubtedly impact the market, as they always do. The scars on both the land and the emotions will fade, many Sonoma towns were spared damage, and the wine country remains one of the most special places to live on the planet, but it will take time for the shock to pass and the recovery to take hold. Disasters have this effect, but as with the Oakland hills fire and the 1989 earthquake, there is no doubt in our minds that Sonoma too shall fully recover.
Following is a look at the Sonoma real estate market from a variety of angles. Please contact me if I can answer any questions or be of assistance in any other way.
Median Home Price Appreciation Trends
Average Dollar per Square Foot Values by City & Town
Luxury Home Sales
Median Home Sales Price Trends for Selected Sonoma Cities & Towns
Remember that changes in median sales prices are not perfect measurements of changes in fair market value: Median sales prices can be affected by a variety of factors.
Three Suggestions: As recent events have reminded us, disasters can arrive suddenly and with little warning, so: 1) Contact your insurance agent to make sure your policy is updated to cover the full, current value of your home and possessions. 2) Get prepared: This website contains useful information regarding preparing and having a plan in the event disaster strikes: Disaster Preparation Guide & Resources. 3) Some communities now have early-warning communications programs that can automatically email, text or call you in the event of a disaster, and then provide useful ongoing updates on the situation. Check with your county and city governments to see what is available.
Again, please let me know if I can be of assistance to you.
All our Bay Area real estate analyses, including those for Marin and San Francisco, can be found here: Paragon Market Reports