Around the Bay Area, spring 2018 was one of the hottest markets in the last 2 decades. The market began to cool considerably in summer and autumn – demand, sales and appreciation rates dropping, while supply and price reductions rapidly increased – and then the mid-winter doldrums took hold. The Sonoma market has been significantly impacted by these changes to its supply and demand dynamic.

Spring into summer – summer is more active in Sonoma than in most Bay Area counties, because of its second home market – has typically been the busiest period of the year, and often the time during which appreciation gains have been the largest. The spring 2019 market is just getting started amid a diverse set of economic indicators. Financial markets have, so far, recovered in 2019, interest rates have dropped, and big IPOs loom in San Francisco. We will know much more soon.

Long-Term, Annual Median Home Price Trends

Short-Term, Monthly Median Price Trends

Year over year, monthly median house sales prices have been declining since November, as compared to the high appreciation rates seen over the same period 1 year ago. February 2019 saw a particularly large decline – but February is a low sales volume month, and too much should not be made of its data. What is far more important is what occurs in the next 3 to 4 months.

Median Home Price Appreciation
by City or Region, 2012 – 2018

Markets appreciate due to a wide variety of local and macro-economic reasons: economic cycles, inflation, consumer confidence, interest rates, employment, gentrification, new construction, comparative affordability (to other nearby markets), the decline in foreclosure sales, population growth, buyers’ median age, ease of commuting, tax law, and so forth. The combination of factors affecting any particular area is often specific to that market.

These appreciation percentages, measured since the Bay Area recovery began in 2012, should be considered very approximate.

To add context to the chart above on appreciation, below is one from last month’s report delineating 2018 median home prices (for homes on lots of 2 acres or less).

Listings on the Market
Homes for Sale in January-February
Year-over-Year Comparisons

There was a very dramatic surge in the number of active listings on the market in January-February, as compared to the same months in 2017 and 2018. In fact, they saw the highest numbers – for these 2 months – in at least 6 years.

Active Listings by Price Segment
as of 3/1/19

The number of active listings fluctuates daily, and the numbers below are rapidly increasing as more new listings come on market. These next 2 charts are snapshots of active listings on February 28th or March 1st.

The supply of listings available to purchase varies widely between cities, which can be a simple reflection of market size and/or an indicator of supply and demand dynamics. (Santa Rosa is the giant market in the county.) If median LIST prices (below) are well above median SALES prices (charted earlier in this report), it is typically a sign that the balance in listings for sale is disproportionately weighted towards higher priced properties, where demand is softer and homes take much longer to sell – and/or a sign of systemic overpricing beyond what buyers currently consider fair market value.

Market Seasonality
New Listings on Market
by Month

New inventory usually starts pouring into the market right now, in late February and early spring, to fuel the big selling season beginning.

Sales Volume by Month

Year-over-year monthly sales volumes have been dropping since November. March is typically the month when the spring spike in the number of sales starts to show up.

Market Statistics by City

As mentioned before, there are various factors at work behind appreciation rates and the respective market heats in different cities and regions. Looking at the next 3 charts, proximity and travel time south to Marin and SF is clearly one issue. Also comparative affordability: Demand in more expensive areas has typically been softer than in less expensive, a common dynamic around the Bay Area in recent years. Whether an area is primarily a destination for second-home buyers is yet another factor: The sense of urgency for a second-home buyer is distinctly less than for someone buying what is to be their one home.

Average Days on Market
by City or Region

Months Supply of Inventory
by City or Region

Percentage of Listings Going into Contract
in Quarter, by City or Region

Comparing Bay Area Markets
Median Home Sales Prices
in Q4 2018

Homes Listed for under $1 Million
by County, 3/1/19

Homes Listed for $2 Million+
by County, 3/1/19

In the wine country, acreage often plays a large role in luxury real estate sales. And what one gets for $2 million in Sonoma is usually fantastically more luxurious than buying a home at the same price in Marin, San Francisco or Silicon Valley.

County to County Migration
People Moving to or Leaving Sonoma

People move to the Bay Area from all over, and people leave its counties to move to a vast number of locations, for differing reasons. This analysis looks at those counties with the greatest number of people moving to and from Sonoma County. In many cases, there is a large exchange between 2 counties, with residents going in both directions, as between Marin and Sonoma. Often, but not always, the outward flow is greater to counties with more affordable home prices, but there are many factors – such as schools, employment, commuting, retirement and quality of life issues – at play.

Sonoma Housing Affordability

Housing affordability is an enormous issue in Sonoma and around the Bay Area. It is interesting to note that affordability in Sonoma County actually hit its nadir during the subprime loan bubble (when people were buying or refinancing homes with, often predatory, loans they couldn’t afford in the first place). Still, the current level is historically quite low.

Demographic Snapshot
Educational Attainment by County

Education & Income
Disparity between the Sexes

An indicator of the income-generating value of education, along with an unhappy indicator of where progress remains to be made in income equality. (As an aside, real estate is certainly one of the first professions that saw income equality established between the sexes: Women have been holding their own and not infrequently dominating rankings of top Bay Area agents for many decades.)

The statistics in this report are very general and approximate indicators based upon listing and sales data pertaining to assortments, of varying size, of relatively unique homes across a broad spectrum of locations and qualities. How these statistics apply to the current value, appreciation trend, and prevailing market conditions of any particular property is unknown without a specific comparative market analysis.