Summer 2020 marked a pandemic boom in the Sonoma County housing market, sending home prices soaring to all-time highs. In 2021, real estate values climbed even higher.
The median sales price for single-family homes in the county for all of 2021 hit $769,000, a nearly 10% jump from 2020’s record mid-point price of $700,000, according to data from Jim Michaelsen, sales manager with Compass real estate brokerage in Petaluma.
The skyrocketing prices last year continued to be driven by buyers from San Francisco, Silicon Valley and beyond pouring into the North Bay. Meanwhile, the dearth of properties for sale as Sonoma County continued to rebuild about 6,000 homes wiped out in wildfires since 2017 only put more pressure on the market.
That meant bidding wars, cash deals and regular offers six figures above the asking price.
“I’d say 2020 was more of a slow burn, and 2021 was full speed ahead with the pedal fully down to the metal the whole time,” said Tammra Borrall, a local real estate agent with Compass.
Untethered from the office, house hunters in Sonoma County sought bigger living spaces and a more suburban lifestyle now that they were spending much more time at home.
North Bay home prices that remained significantly less expensive than in other parts of the region also were a draw. At the same time, historic low interest rates spurred home buyers to take advantage of attractive mortgage loans.
Looking ahead, local real estate agents and economists expect the higher prices to persist for the foreseeable future.
That’s because with the shift to remote work appearing permanent, Sonoma County could remain a viable option for wealthier buyers who otherwise may not have considered leaving more populated job centers in the Bay Area and the rest of California.
“We used to be too far away, but obviously now we’re not,” said Sheela Hodes, a real estate agent and Borrall’s business partner.
Even as mortgage rates tick upward and financial markets enter bouts of volatility on expected interest rates hikes meant to curb inflation, the local housing market is likely not experiencing a bubble on the verge of bursting, said Sonoma State University economist Robert Eyler.
Unlike the risky lending that fueled the speculative housing boom in 2007, he said, today’s hot market is mainly the result of too many qualified buyers seeking not enough homes.
“Bubbles do not happen when you have explainable reasons behind demand and supply,” Eyler said.
To make matters worse, new home construction slowed last year as the cost of building materials spiked while the pandemic disrupted global supply chains.
“Just about everything is across the board more expensive,” said Amy Christopherson Bolten, director of Santa Rosa-based home builder Christopherson Builders.
Last month, the wholesale cost of building materials, paint and hardware increased 24% compared to the same time the year before, according to the Bureau of Labor Statistics.
Christopherson Bolten said she also saw monthslong shipping delays for components such as windows and cabinets. It’s all contributed to 20% increases to the final costs of many of the company’s single-family projects.
“People are shocked, especially people trying to rebuild with insurance,” she said.
In December 2021, the county’s median single-family home price rose more than 10% from November to $786,200. That’s still well below the all-time monthly high of $825,000 in June of last year.
Real estate agents say the recent jump, coming during the traditionally slow winter home-buying season, reflected the extremely low number of houses on the market.
At the end of December, just 206 homes were up for sale, compared to 469 homes 12 months prior.
“You’re hard pressed to find anything under $600,000,” said Michaelsen with Compass in Petaluma.
Scott Sugar, a 42-year-old homeowner in Santa Rosa, decided to get in on the seller’s market and move his family of five to New Zealand to be closer to his wife’s relatives.
Sugar planned to put the six-bedroom house with a hobby vineyard up for $1.7 million.
“We always planned to go at some point, and between COVID and fires and the market being good for selling, it just felt like the right move,” said Sugar.
Real estate agents say they are seeing increasing numbers of people looking to move out of the county for similar reasons.
The trend is reflected in state population data, which shows the county population dipped 1.5% to 484,207 between Jan. 1, 2020, and Jan. 1, 2021, according to the California Department of Finance.
Still, when it comes to the single-family home market at least, there are plenty of newcomers ready to replace those making an exit.
That influx of wealthier buyers driving up prices continues to raise concerns about the region’s already existing housing shortage — and whether middle-class families in the county will ever be able to afford to buy homes.
“You kind of wonder, do we reach a point where the only people who are buying here are from out of the area because the locals can’t afford it?” Michaelsen said.
You can reach Staff Writer Ethan Varian at [email protected] or 707-521-5412. On Twitter @ethanvarian.