Sales of million-dollar homes surge in Sonoma County
The 10-acre hilltop estate includes a pool in an enclosed courtyard, a small syrah vineyard, a full-size court for basketball and tennis and an expansive view over Santa Rosa’s Rincon Valley.
“It’s quiet, it’s private and yet you are only minutes from town,” said Mary Anne Veldkamp, a Coldwell Banker agent, standing in the home’s family room under its maple vaulted ceiling.
Listed for $2.99 million, the 6,400-square-foot house northeast of Santa Rosa is the embodiment of a gated Wine Country villa. It also belongs to a growing segment of Sonoma County real estate: homes selling for $1 million or more.
The county this month became nationally recognized for a jump in seven-figure properties on the market. Listings and sales in that segment are increasing, even as sales have sagged in the rest of the market.
A sizable portion of activity in the million-dollar-plus segment has been fueled by affluent Bay Area buyers looking for a slice of tranquility in the country. That includes buyers who’ve recently struck it rich around Silicon Valley.
“We’ve had literally thousands of new millionaires” created since the last recession at Facebook, Google, Apple and other tech companies, said Patrick Carlisle, chief market analyst for Paragon Real Estate Group in San Francisco.
Amid the boom times, San Francisco’s home prices have increased roughly ?50 percent above their previous peak before the housing market’s historic crash, Carlisle said. A median-priced home there, a condominium, sells for about $1.2 million, nearly double the median price for a Sonoma County single-family home.
Not surprisingly, the sky-high prices have caused Bay Area home buyers to look outside big urban areas. While Sonoma County locals may cringe in disbelief, Carlisle said, their backyard remains “one of the most affordable places to live in the Bay Area right now.”
In his research, Carlisle pinpointed the county’s top areas for million-dollar sales: Santa Rosa, Sonoma Valley, Healdsburg, Sebastopol and Petaluma. Of those, Sonoma accounts for the most properties that go for $2 million or more. Thirty-seven such homes closed escrow there in the past 12 months, compared to 23 in Santa Rosa and 17 in Healdsburg.
Last week, Sonoma County was named among U.S. metropolitan areas where the number of seven-figure home listings has skyrocketed.
Housing website Realtor.com cited the county, along with such metros as Denver, Boston and Seattle. The portion of county listings on its website at $1 million or more increased to 14.1 percent in the year’s first quarter, from 8.1 percent for the same period in 2014.
In an earlier era, a $1 million home typically meant a luxury property, said Javier Vivas, manager of economic research at Realtor.com. But today for many communities, such a home represents the threshold for living in an upper-middle-class neighborhood.
“In more and more markets, a million (dollars) is a new benchmark,” Vivas said.
Other areas of the U.S. are experiencing the same “spillover effect” that Sonoma County is undergoing in the Bay Area, Vivas said. A strong economy causes home values to rise in an urban core and “that starts pushing up the prices” in the surrounding suburbs.
Sonoma County’s residential market has seen a significant boost in home values in the aftermath of a national housing crash that began almost a decade ago. In May, the median single-family home here sold for $625,000, slightly above the former record peak of $619,000 set in August 2005. In February 2009, at the low point of the crash, the median price fell to $305,000.
But while prices have increased in Sonoma County, home sales have declined for three of the past four years, a drop generally attributed to a lack of available homes for sale. A closer look reveals a tale of two markets.
For the first five months of this year, the segment priced below $1 million has experienced a 32 percent decline in sales from the same period five years earlier. Meanwhile, sales of homes at $1 million or more have tripled, according to the Press Democrat monthly housing report, compiled by Pacific Union International senior vice president Rick Laws.
Some of that increase is the result simply of price appreciation - homes formerly selling for $900,000 now fetch more than ?$1 million.
But appreciation around the $1 million mark fails to completely explain the total jump in seven-figure sales. Since 2012, sales of homes priced between $1.5 million and $2 million have increased 65 percent annually, Carlisle said. Above $2 million, sales jumped 85 percent.
Agents and brokers maintained that such activity is spurred by buyers from elsewhere in the Bay Area.