Sonoma Valley: Q3 Results

Like other regions across the Bay Area, the Sonoma Valley communities of Sonoma, Glen Ellen, and Kenwood continued to face a limited supply of properties for sale in the third quarter. As expected, virtually all homes that were priced “right” in the eyes of the buyers, reflecting a true value in terms of location and condition, generated multiple offers. Anecdotally, a vacant land parcel that had been on the market for over a year received multiple offers on the same day and sold for over the asking price. In another situation, a charming “under $500,000 country home” came on the market and after having little or no activity for three weeks, ultimately received four offers in the same three-day period.

 

Buyers looking for second homes accounted for an increasing share of the market in the third quarter. First-time buyers faced extra challenges in the region, because they often were in competition with investors who are able to pay more and submit attractive all-cash bids. Investors have found that they are able to rent their properties in the area at rates that cover their mortgages for the first time in a long time. Here, as in other Bay Area cities, rents appear to be rising at a faster percentage rate than sales prices.

 

Home prices did rise in the quarter, albeit moderately, although they remain below levels reached in 2006 and 2007. On a positive note, 50 percent more properties with sales prices over $1.5 million sold in the third quarter as compared with the second quarter of this year.

 

Looking Forward: 

 There is a concern that limited housing inventory for sale will continue throughout the fourth quarter and into the new year, which will promote the occurrence of multiple offers. First-time buyers may still face competition from investors, particularly in the under-$500,000 market, and may find themselves on the losing side of bidding wars more than once.

 

Defining Sonoma Valley:

 Our real estate markets in Sonoma Valley include the cities of Glen Ellen, Kenwood, and Sonoma. Sales data in the charts below refer to all residential properties – including single-family homes, condominiums, and farms and ranches – in these communities.