March 14, 2018

Very Strong Market Dynamics Continue into Early 2018

Sonoma County Market Activity Update – 2018 – Let’s review the market dynamics for Sonoma County as we kick into the new year.

It is not unusual for monthly median sales prices to drop during what is often described as the mid-winter market doldrums, but, as seen in the first chart above, not this year in Sonoma: Median prices have been consistently climbing since autumn began, with the fire clearly increasing demand since it occurred, and overriding typical seasonal dynamics. The second chart above illustrates year-over-year changes using the 3-month period of December, January and February sales: Dramatic appreciation percentages. It is still very early in the year to come to definitive conclusions, but so far in 2018, the entire Bay Area appears to have shrugged off concerns regarding increasing prices, rising interest rates, stock market volatility and federal tax law changes. We will know more once sales data from the spring selling season starts coming in.

Monthly Median Sales Price Changes

Sonoma monthly median sales prices

Year-over-Year Comparisons Median Prices & Price per Square Foot

Sonoma year over year home price appreciation

Home Values by Lot Size

In San Francisco, a house worth $1m can sit next to one worth $3m, each on its own narrow, 25-foot-wide, 2500 square foot lot, but in Sonoma, land clearly plays a big role in home values. This is what many people come to the county for: More space, somewhere to sit outside with the dog and a bottle of wine, maybe even enough room to grow some grapes. As the lot sizes grow larger in the chart below, land begins to balance and then, eventually, often outweigh the value of the house itself.

Median House Sales Prices since 2012 by City & Town

The next chart is a snapshot of appreciation in 5 Sonoma cities since 2012. In this analysis, home sales were limited to those with lot sizes of 2 acres or less. The trends seen here are generally true for communities across the county.

Supply & Demand Statistics

As seen in the 2 charts following, as measured by several classic measures of supply and demand, the market in recent months has certainly not softened in comparison to the last 2 years. Indeed, it has become substantially stronger. Generally speaking, this is playing out around the Bay Area, but more dramatically in Sonoma than most other counties.

Months Supply of Inventory (MSI) & Average Days on Market (DOM)

Listings Selling within 30 Days Year-over-Year Comparisons

New Listings Coming on Market & Listings Accepting Offers

This next chart graphs the intense seasonality of the Sonoma market: We are just on the cusp on what is typically the biggest selling season of the year.

Sonoma Luxury Home Market

Rising Mortgage Interest Rates Short-Term Trends

Long-Term Trends

Long-Term Mortgage Interest Rate Trends Additional Sonoma analyses can be found here, if you scroll down to earlier reports: Sonoma Market Reports Page More reports for those interested: Paragon Main Real Estate Reports Page Positive & Negative Factors in Bay Area Markets Survey of Bay Area Real Estate Markets San Francisco & Bay Area Demographics Please let me know if you have questions or I can be of assistance in any other way. It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis. In real estate, the devil is always in the details.
These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term. Late-reported MLS activity may change certain statistics to some small degree.

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