Sonoma County home prices jumped in March as more homeowners with equity put their houses on the market, but sales remained slow due to a decline in short sales and foreclosures.
Buyers purchased 399 single-family homes last month, down 14 percent from a year earlier, according to The Press Democrat's monthly housing report compiled by Pacific Union International Vice President Rick Laws.
The median sales price rose to $396,000, a 24 percent increase from a year ago. The median has now risen for six straight months since last September, when it stood at $355,000.
March sales continue to tell a tale of two market segments: homes with equity and those deemed financially distressed. The latter include bank-owned foreclosures and short sales, where the sales price is less than the amount of the mortgage.
Among homes with equity, activity is up in the county this year. New listings in this segment rose 14 percent for the first quarter, compared to a year earlier. And sales increased 23 percent for the same period.
But listings and sales of distressed properties have been declining for months on a year-over-year basis. Such homes made up just 28 percent of March sales, compared to 53 percent a year ago.
Gerrett Snedaker, a senior vice president for Wine Country Group by Better Homes and Gardens in Sonoma, said he's telling agents who specialized in selling distressed homes to change their focus.
"It's time to switch gears and get back into the equity market," he said.
An unprecedented real estate boom sent the county's median home price soaring to $595,000 in 2005. But prices plummeted during the next six years, sending the median falling to an annual low of $325,000 in 2011.
In the darkest days, three out of every four homes sold in the county were foreclosures or short sales.
While delinquent mortgages remain well above historical averages, new laws and regulations have slowed the foreclosure process, said Tim Freeman, manager of Coldwell Banker in Santa Rosa. At the same time, rising prices have given bankers incentive to slow down the pace of foreclosure sales, causing them to ponder whether delay might bring them higher offers.
"They don't have the urgency that they might have had before," he said.
Better Homes and Gardens Mason-McDuffie Real Estate, the Pleasanton-based parent company for Wine Country Group, reports that 69 percent of its sales involve homes with equity.
In contrast, bank foreclosures have dropped to 3 percent of sales for its offices in Northern California.
"It's going from a significant portion of business to a rounding error," said Keith Robinson, the company's chief operating officer.
March ended with less than 650 homes available for sale, half the amount of a year ago and less than a two-month inventory at the current pace of sales. Agents said the lack of inventory and the demand of investors and other buyers are partly responsible for the rise in the median price.
Even so, the increase in the median also appears to be due to increased sales in more expensive neighborhoods.
Home sales below $400,000 declined 25 percent in the first quarter, compared to a year earlier. Homes selling for $400,000 or more increased 27 percent.
Mike Caselli, an agent with Wine Country Group in Sonoma, said he has counseled patience to several homeowners who have been unable to refinance their properties or who want to do a short sale.
"It may be good to hang onto your house," Caselli has told them. While there is no guarantee, the home's value may rise enough to allow it to be refinanced at a much lower interest rate and a more affordable monthly payment.
The heart of the county's market remains houses selling for between $300,000 and $500,000. That segment made up half of March's sales, many of which drew multiple offers.
Caselli represented a buyer who entered into escrow last week on a home with three bedrooms and 1,080 square feet in Kenwood. Listed at $450,000, the home drew multiple offers, and the winning bid went "considerably over" the asking price. Caselli said real estate law prohibits him from disclosing the price of a property in escrow.
Roughly 15,000 county homes have been lost to foreclosure and short sales in the past six years. Laws noted that due to damaged credit, the owners of those properties typically were locked out of the housing market for at least a few years. He said one reason the rise in equity sales is so important is that the sellers of those properties generally "are people who are buying another home."
You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com.
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