Sonoma County makes top 10 list of tightest housing markets
In another sign of the challenge facing local homebuyers, a new study ranks Sonoma County as the only North Bay county on a list of 10 areas in the U.S. with the most extreme housing shortages.
The Realtor.com study was the company's first attempt to look at what portion of a community's homes are on the market and whether that inventory is growing or decreasing. Sonoma County's supply of homes for sale was small and the inventory was shrinking.
The other places that made the top 10 list include northwest metropolises like Seattle and Portland and Rust Belt communities like Detroit and Buffalo, New York.
The rankings are a reminder that inventory around the nation has been declining steadily for more than two years, Jonathan Smoke, the company's chief economist, said Wednesday.
“It basically underscores that this phenomenon isn't rare,” Smoke said. “These 10 markets are the most extreme, but it's basically been true for the entire country.”
Local real estate brokers weren't surprised that the county was tagged as a tough place for buyers to find homes.
“The bottom line is we haven't had enough units built over the last few years to even come close to the demand,” said Bill Facendini, president and broker of Terra Firma Global Partners in Santa Rosa.
At the top of the list was Seattle, followed by Eugene, Oregon, and Grand Rapids, Michigan. Buffalo, New York, ranked fourth, followed by Fort Wayne, Indiana, Sacramento, Detroit and Portland, Oregon.
Santa Rosa and Omaha, Nebraska, rounded out the top 10.
For local brokers, the only surprises involved which other communities were or weren't on the list.
Brian Connell, managing broker at the Santa Rosa Mission office of Coldwell Banker, said he would have expected other Bay Area cities to make the rankings, too. Also, he was surprised that Detroit and Buffalo rose so high.
“I don't ever remember Rust Belt cities making this kind of list,” Connell said. In one sense, he said, “that's probably good news” for those communities.
Smoke said Detroit has experienced an upturn in both its economy and its real estate market.
“That is an area of the country that is truly turning around,” he said. Detroit even has appeared in some months on the website's “hottest markets” list.
When it comes to housing prices, Detroit, Buffalo, Fort Wayne and Grand Rapids all have “affordability going for them,” Smoke said.
“We're seeing very large numbers of millennials, people under 35, purchasing homes in those markets,” he said.
It helps to understand the Realtor.com criteria to grasp how Santa Rosa rose so high in the standings of the nation's 150 largest housing markets.
First, the company looked at the ratio of homes typically on the market in a community compared to the entire housing stock there, including rentals and vacant properties.
Seattle, the top-ranked city, and Santa Rosa both had just 0.4 percent of their housing stock for sale. That amounts to about one in every 263 housing units.
In contrast, about 1.4 percent of the nation's homes were for sale last year.
Both San Francisco and San Jose had an even lower proportion of such inventory, just 0.3 percent of total housing units for sale. But they didn't make the list as a result of the second criteria: shrinking inventory. Both cities last year saw a slight increase in the number of homes for sale, Smoke said.
In contrast, Santa Rosa had a 1.8 percent decrease in inventory in 2016, Realtor.com reported. That was smaller than the rest of the nation, which experienced an average drop of 4.9 percent in homes for sale last year, but still big enough to make the list.
At times, local brokers have questioned the Realtor.com data, including in the summer of 2015 when the Wall Street Journal used the site's research to proclaim Sonoma County the tightest housing market in the country. Brokers then said that the number of county listings on the company's website appeared to be far fewer than reported on the region's multiple listing service.
However, Realtor.com maintains that it receives and displays 98 percent of all properties listed for sale on the nation's multiple listing services.
Also, the data they used in the current rankings to calculate the county's ratio of available homes - a monthly median of 791 available homes and a total housing stock of nearly 200,000 - appear similar to numbers available for 2016 from the Press Democrat's monthly housing report and from housing reports from the state Department of Finance.
While local brokers may not have the means for comparing the county to the rest of the nation, they expressed the belief that the county's inventory long has been constrained by a lack of new construction.
Connell of Coldwell Banker maintained that Sonoma County has some similarities to Marin County when it comes to both restrictions on growth and to the outlook for future new home construction.
“We're always going to have a little bit of a supply problem,” he said, “not unlike our neighbors to the south.”
You can reach Staff Writer Robert Digitale at 707-521-5285 or firstname.lastname@example.org.