Sonoma County home sales remained strong in October, even as the rate of foreclosure sales fell to its lowest level in more than four years.
Only 8 percent of the 480 single-family homes sold last month were bank-owned foreclosure properties, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws.
It was the most homes sold for any October since 2008. At that time, half of the sales involved homes that previously had been lost through foreclosure.
The median sales price last month reached $366,000, an increase of 3 percent from September and 18 percent from a year ago.
However, Laws said the increases weren't due primarily to rising home values. Instead, he attributed them mostly to a decline in the sale of lower-end foreclosure properties and a rise in the sale of more-expensive homes by owners with equity.
"That's all due to a fairly dramatic shift in what price range is selling," he said.
For example, sales for the market segment priced between $400,000 and $700,000 have increased 38 percent to date this year, compared to 2011. In contrast, sales for homes priced below $300,000 rose 3 percent.
County median home prices reached a record high of $619,000 in August 2005 before tumbling to $305,000 in February 2009.
At the bottom of the cycle, three out of every four sales involved financially distressed properties — mostly foreclosures, plus a small number of short sales.
In the last few years, the number of short sales has steadily increased and within the past year became roughly equal in number to foreclosure sales.
Then in the past five months foreclosure sales fell markedly. October short sales made up 20 percent of the market, compared to 8 percent for foreclosures. The remaining 72 percent involved homes of sellers with equity.
To date this year, buyers have purchased 4,568 homes, the highest number for the first 10 months of any year since 2005. Sales in 2012 increased 19 percent compared to the same period for 2011.
Even so, brokers and agents this year have maintained that sales are constrained by a relatively low number of homes on the market. Inventory at the end of October was 806 homes, a decrease of 57 percent from a year ago and less than a two-month supply at the current pace. Experts say a balanced market has roughly a six-month supply of available homes.
Inventory typically declines in winter as large numbers of sellers wait for spring to market their homes, agents said.
Tim Freeman, manager of Coldwell Banker in Santa Rosa, said he expected inventory to rise again in spring and the housing market to keep moving in the right direction. But more sellers may stay on the sidelines this winter because of worries about how Congress and President Barack Obama will address the tax increases and federal spending cuts associated with the "fiscal cliff."
"It really is the story of inventory," said Freeman, "and I just see the numbers going down, down, down."