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Local real estate makes comeback in 2012

Published: Tuesday, January 15, 2013 at 6:34 p.m.
Last Modified: Wednesday, January 16, 2013 at 7:45 a.m.

Buyers purchased $2.5 billion worth of Sonoma County houses and condominiums in 2012, the most spent in six years.

Spending jumped 25 percent from a year earlier, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws. Total sales of condos and houses grew 13 percent, but spending rose even higher because of an increase in sales of more-expensive homes.

Brian Connell, broker/manager at Frank Howard Allen in Santa Rosa, called 2012 "a good comeback year" after the county's annual median price bottomed in 2011.

"We're seeing some normalcy creep back into the market," Connell said. "Which is nice, because it's been a while."

Buyers purchased 5,381 single-family homes in Sonoma County last year. The median price for those sales equaled $350,000, an increase of nearly 8 percent from 2011.

Sales of single-family homes increased 16 percent from 2011, amounting to the largest total since 5,919 houses were purchased in 2005.

That year the median price of a single-family home soared to $595,000. It marked the height of an unprecedented real estate boom, with the total sales of county condos and houses reaching a record $4.4 billion.

But prices plummeted during the next six years, sending the median to an annual low in 2011 at $325,000.

Part of that lengthy price decline was because of a sharp drop in the sales of homes priced at more than $500,000. Such sales remained relatively scarce for several years, while investors and other buyers focused on purchasing lower-priced starter homes.

But in 2012, those trends reversed.

Sales dipped 5 percent from 2011 on properties priced at less than $300,000. But for those priced at more than $300,000, sales rose 30 percent. And home sales for those more than $1 million increased 43 percent.

The nation's housing market also showed signs of improvement.

"For the first time in almost six years, most U.S. markets experienced sustained increases in home prices in 2012," Anand Nallathambi, president and CEO of CoreLogic, said in a statement Tuesday. "We still have a long way to go to return to 2005-2006 levels, but all signals currently point to a progressive stabilization of the housing market and the positive trend in home price appreciation to continue into 2013."

As well, the California Association of Realtors reported Tuesday the state's median single-family home price rose nearly 12 percent last year to $319,340.

Even as county sales increased, inventory declined through most of the year. December ended with only 608 single-family homes for sale -- less than a two-month supply at the current pace. A year ago, inventory numbered 1,120 homes.

"It's still kind of a weird market," said Mike Kelly, an agent with Keller Williams. Agents will be seeking more sellers to list their homes this spring because "it's never a good market when you have this scarcity of product."

The year ended with buyers purchasing 376 single-family homes in December, a decrease of 10 percent from a year earlier.

The median price for those sales reached $389,750, an increase of 24 percent from a year ago. It was the highest median price for any month since July 2008, when it was $399,000.

Laws predicted the number of buyers and sellers will increase this year because of "pent-up demand."

"People have been sitting on the sidelines for six years," he said.

Even so, inventory levels have fallen so low that supplies likely will remain relatively tight.

Last year's housing market featured a sharp drop in foreclosure resales, even as sales and prices rose in the overall market. Banks sold 862 foreclosures, compared to 1,764 in 2009.

The number of short sales increased 25 percent from a year earlier to 1,246 properties -- the first year in which short sales outnumbered foreclosure resales. In a short sale, the home is sold for less than the amount owed on the mortgage.

Together, short sales and foreclosures last year amounted to four out of every 10 houses sold, still far above historic levels. But in 2009, such distressed sales involved six in 10 homes. During the past three months, the number fell to three in 10.

Agents and brokers expect fewer foreclosures this year as more distressed homeowners are allowed to surrender their homes through short sales.

"It took awhile for the banks to figure it out, that it's in their own best interest to do a short sale," Laws said.

You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com.

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