It has taken some time to gauge the market in Sonoma County, especially after the Tubbs Fire of 2017. With such a tremendous loss of homes, it threw the housing and rental market quickly into a tailspin that escalated the prices across the board, both homes prices and rents to amounts never experienced here before.
The Starting Point
The Tubbs Fire of 2017 causing a loss of over 2800 homes, displacing families everywhere, caused a surge in the real estate and rental market to new heights in Sonoma County. The demand for housing, whether people were purchasing or renting, created a vortex of great need, elevating the prices straight across the board as families tried to settle in with their new sense of normal
There was no such placement on home prices as they began to soar as families were desperate to find a new home. Insurance payouts received, gave some homeowners the ability to name their price in areas, going way over asking to insure the closing of their new home.
Results of Actions Taken
Here is an example:
Action: FireVictim A receives the payout from the loss of their home as they have decided not to rebuild. They are looking for a new home and due to the lack of inventory or constantly getting overbid, they put in another bid on a property and are determined not to lose on this one. They come in over 30% more than the value of the home to insure their success of getting their offer accepted. They win the house.
Affect: In this same neighborhood, a couple are going through a divorce. The appraisal of the house is now being based on the most recent comp which is 35% higher than fair market value. The only winner is the spouse being bought out under unrealistic numbers.
The surge in home prices over the past 2 years may have elevated the expectations of sellers, which is what leads to why some homes are sitting on the market now for a great length of time. Buyers in this market intuitively know if they are paying way above fair market value and are content waiting until more inventory shows up.
The Facts on The Market – NOW
As of February 2020, the housing market in Sonoma County is still moving at a steady pace with homes that ARE fairly priced moving quickly. The homes that are over-priced or waiting for more “victims/insurance companies” to pay the price they are asking are waning. There is still a great demand for housing in all parts of Sonoma County. But we are now back in a market that is more balanced, meaning that homes that are priced well, move quickly, in less than 45 days. The demand from buyers are high and the inventory is still low, but growing, which currently keeps us in a slight “seller’s market” until more inventory hits.
The thing to keep in mind is that rates still remain extremely low and there are plenty of buyers looking for homes. The rates are predicted to stay low. So that coupled with the demand for housing leads us to remain in a very healthy real estate trend as we move through 2020.
But note, if your home is between $600,000 and $1,500,000 and hasn’t moved yet, check your price and make sure it is inline with what the market is dictating, because ultimately the buyers will determine where this market is headed.