Sonoma County’s retreating condominium market is providing the starkest signals for the slowdown in local home sales.
Condo sales this year have fallen to the lowest level in a decade, while the number of units listed for sale in September reached its highest mark for any month in nearly 11 years.
Through September, sales of county condos and townhouses have declined 23 percent this year, compared with the same nine-month period in 2017. Sales of single-family homes dropped just 5 percent in that period, according to a monthly housing report compiled by Pacific Union International senior vice president Rick Laws.
Last month for the first time in more than six years, the median sales price for a condo declined from a year ago. The price decline is now limited to the county’s condo market, Laws said, but “could foreshadow what’s going to happen in single-family” home values.
Amid the decline in condo sales and prices, more sellers are joining the price reductions. After reviewing real estate multiple listing service data, Laws concluded prices had been reduced for at least four of 10 condos on the market in October. For single-family houses, price cuts had occurred for at least one in three properties.
“I think it shows a significant number of sellers are having to adjust their expectations,” Laws said.
The county’s housing slowdown stands in sharp contrast to the six-month period starting in October 2017, when fire survivors rushed to find replacement homes after the most destructive wildfires in California history.
Real estate agents said they began to notice the slowdown in activity in late spring. For example, in May certain condominiums started to sit longer on the market without offers, said Alanna Krinard, sales manager of Century 21 NorthBay Alliance in Santa Rosa.
“To me, the condos are the canary in the coal mine,” Krinard said. What happens with them can portend changes coming to the broader housing market, she said.
Prices have declined from a summer peak, and many buyers are waiting to see if values will keep falling.
For sellers, “if you’re not proactive on price, you’re going to sit,” said Ken Schrier, a partner in Re/Max Marketplace in Cotati.
Schrier said the condo skid doesn’t signify a bubble bursting in residential real estate, as happened a decade ago when home prices crashed. Condo inventory remains at less than a three-month supply at the current sales pace, he said, a level still indicative of a seller’s market.
But the greater housing market has moved past the shakeup caused a year ago when wildfires destroyed 5,300 homes in the county, agents said. Some sellers keep pricing homes based on what fire survivors would be willing to pay, Schrier said, but “that ship left port by May.”
Condos make up a small but significant slice of the county’s real estate market. Buyers last year bought 680 condos, compared with more than 4,700 single-family homes.
The multi-family units have long been an avenue for first-time homeowners to buy a place of their own.
“As people get priced out of single-family, they start looking at other options,” said Mark Hutchins, an agent with Pacific Union in Santa Rosa.
Jesse Swanson, a client of Hutchins, said his wife, Cathy, and he wanted to buy a home this summer and “decided a condo was more in our budget.”