Pandemic real estate roller coaster in Sonoma Valley
Sonoma Valley became a white hot destination in the pandemic, when many companies switched to working from home, creating new opportunities for employees. But as the price hikes begin to level, and properties sit longer on the market, some Realtors are wondering if the frenzy in the market is starting to slow its roll.
“This has been a really incredible year, really, these last few years,” said Kathleen Leonard of Sonoma’s Compass Realty. “But it always slows down in the winter.”
The numbers indicate a slowing trend. In April, houses were selling in an average of 34 days, but as of November, that number dropped to 57 days. While before, almost everything was snapped up quickly, now houses that need work are more likely to sit on the market, some over 100 days. In 2021, houses appreciated between 13% and 20% year over year, while in 2022, some experts are estimating a more conservative 6% rise in value.
The winter always quiets the real estate market, but this year seems to be more dry than others. Last week, only 15 new listings came on the market across Sonoma County, three of which were in Sonoma Valley. Traditionally low inventory leads to a spike in prices, as buyers battle to get their piece of the Valley, but prices have also cooled with the weather.
“We did see a little bit of a reduction in prices,” Erin George, of Sotheby’s International Realty in Sonoma, explaining that in November 2020, homes were often selling for 95% to 100% of asking price, while in November 2021, that number dropped to 88%. Whether prices will rebound in the spring when more people shop for homes remains to be seen.
“Some might say the market is slowing, but we have never seen such a strong December,” George added. “A lot of it has to do with lack of inventory.”
George explained that in November 2020, there were about 50% more homes on the market than in November 2021. But buyers are still making multiple, strong offers on turn-key properties that won’t require a major remodel, especially if they are priced to sell.
“I disagree with the idea that there’s low inventory, it’s just more spread out,” Leonard said, adding that she expects a flood of houses to hit the market when the weather clears up in February and March.
As global pandemics are an exceedingly rare occurrence, it’s been harder to finger the trends and predict where the market is heading.
When the pandemic first set it, the market slowed as people were unsure what would happen next. Sellers didn’t want to open their homes to strangers. People waited and watched, with no way to know how the modern market would respond to such a global incident.
As inventory dropped, demand began to rise. Cooped up inside from the pandemic lockdown, more and more buyers realized they weren’t in the right home. Whether too small, too inaccessible or too much maintenance, more people looked to Sonoma County to find their next property.
“The world has become so distracting, you don’t want your house to be,” said George.
The bulk of the buyers, George and Leonard agree, came from San Francisco and the Silicon Valley. Many were looking for their second, third or fourth home purchase, drawn to Sonoma Valley for its small-town charm, natural beauty and world-class food and wine.
“Sonoma is a bargain in the Bay Area,” Leonard said when asked about the draw of Sonoma Valley. “Compared to lots of places, you can get more for your buck.”
The pandemic also seemed to be a time to find the “right fit” for each family. Aging couples traded in their two-story houses for something single level, and gave up expansive and maintenance-heavy mountain properties for smaller lots that were easier to manage.
“Many buyers want to be on the Valley floor,” Leonard said.
Houses that are priced just under market value are the ones that bring in the biggest lot of buyers, and often sell for over asking price. That’s especially true of they won’t require any major design updates.
“Having a turnkey property is key,” George said.
Leonard added that, while most trends come and go, the classic white farmhouse design has remained popular with buyers.
“People are loving those,” she said. “I thought it was just a trend, but people just love those farmhouses.”
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