North Bay residential real estate lurches from hot 1st half to tepid 2nd half as interest rates bite

Top local business stories of 2022

The last week of the year, the Journal reflects on key trends that moved the North Bay economy.

The world of real estate experienced steep peaks and deep valleys in 2022, as Federal Reserve interest rate hikes helped rapidly cool a once-hot market.

At the start of the year, the North Bay saw bidding wars, all-cash offers and perks offered from buyers to sellers. The market came close to matching the dot com-era race for scarce homes 20 years ago, when prospective buyers put in offers without even going inside the homes.

Fast forward to June 2022, to a period now marked by economic turbulence amid soaring inflation and sharp interest rate hikes. Buyers, as a result, became reluctant to sign onto such a major purchase that would have cost much less a year ago.

By the second half of the year, that fixed rate mortgage that had so long hovered around 3% had doubled or more. Buyers took a step back, and sellers also retreated by either waiting to list their homes or taking them off the market.

At year’s end, four North Bay counties saw double-digit drops in new listings, according to Zillow, the Seattle-based housing data research firm. Compared to 2021’s figures in the same period, Solano County’s new listings declined 36% with 335; Napa County, down 24% with 96; Sonoma County dropped 21% with 347; and Marin County saw 17% fewer choices listed with 208.

With fewer listings came fewer home sales.

The monthly sales volume has subsided in Sonoma County since midyear. By November, sales flattened to about 300, down 41%, according to Compass Realty. Napa County’s chart of sales volume resembled a mountain range. Among the peaks and valleys, the chart showed sales taking a deep dive from this past July to October with only about 60 sales. The figure came in lower than when the pandemic hit in February and March of 2020.

Compass data also revealed most of the gains Marin County made in monthly sales volume from the beginning of January were almost eliminated by the last quarter of the year. Marin County recorded less than 200 home sales by November. In contrast, the mid-part of June 2021, the number was more than double that.

Following a boom period of activity fueled by pandemic-era migrations, Compass Healdsburg real estate agent Carol Lexa equated the market to “a roller coaster” riding the whims of rising interest rates yet a toppling number of listings.

Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach Wood at 530-545-8662 or susan.wood@busjrnl.com.

Top local business stories of 2022

The last week of the year, the Journal reflects on key trends that moved the North Bay economy.

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