Marin, Napa, Sonoma home real estate markets see rising inventory, pickier buyers

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As warm, dry weather finally returns to the North Bay, local real estate experts say the longer time homes are staying on the market in some areas and some price reductions necessary to get them to sell could be indicators that it’s more than the annual summer slowdown in activity.

Sales in Napa and Sonoma counties in the first five months of this year were off 11% by volume from that pace a year before, down 17% in dollar volume and decreased 7% in average selling price, according to the latest Bareis listing data analyzed by Better Homes and Gardens Real Estate|Wine Country Group.

Sonoma County residential transactions through May totaled 3,645 (down 9.8% from a year before) for $2.5 billion (down 16.6%) at an average price of $673,111 (down 10%). For Napa County, 940 deals (down 16%) were valued at $794 million (down 14.2%) at an average price of $845,085 (up 4.2%).

“It was a little unexpected that we were down so much in overall volume,” said Gerry Snedaker, broker and partner of Wine Country Group. “It partly reflects the seasonal downturn and the market conditions having reached a lull.”

Ted Strodder, a broker associate in the Greenbrae office of Golden Gate Sotheby’s International Realty, said the typical July through September slowdown in Marin County touring and deal-making has arrived early for the past two years — in May.

In May, 341 Marin homes and condos were sold, up 1.1% from a year before, according to data compiled by Strodder's office. Average sale price was $1.596 million, down just 0.9%, and median price $1.26 million, 1.6% lower.

At this point, softness in demand and activity isn’t in every price range or area of the county, Strodder said.

“It’s not necessarily a strong seller’s market like past eight years, and it is not necessarily a buyer’s market,” he said.

A rule of thumb for a healthy market, with enough homes available for interested buyers, is one-third of the listings in any price range in escrow at any given time.

But from the Great Recession until the past 12 months, a majority of Marin listings were in escrow, with many attracting multiple offers, Strodder said.

Another way to look at that the inventory of homes to sell is months it would take to sell through listings at the rate that deals are closing, Snedaker said. A balanced market has three months of inventory, but four months’ worth is trending toward putting buyers in command.

Sonoma County overall has two months’ supply at the current pace, 560 new sales in May, up 21.5% from a year before. But the inventory of high-end homes in the county (280 listings over $1.4 million) was 7.2 months, up 50% from a year before.

Snedaker attributed that backup in high-end sales partly to the fires, which accelerated demand for alternative housing.

But the 7.8 months of inventory in Healdsburg as of May — the highest in eight years — could also reflect a growing challenge in marketing homes in upscale markets such as Healdsburg, Sonoma city and upper Napa Valley, Snedaker said.

“When I came up here in the 1990s, all the folks in San Francisco wanted to be in Napa Valley, and that has slowly morphed into Sonoma County,” he said. “If you’re driving from San Francisco to Healdsburg, you’re encountering more traffic, and we’re seeing that also with Highway 37 backups starting at 3 p.m. when getting to Sonoma (city) and Napa. That would depress our market a little bit.”

The hottest markets in Sonoma, Napa and Marin counties are Petaluma and Rohnert Park, particularly for homes listed under $1 million, according to Snedaker. They have 37% and 133% more listings, respectively, from a year before, but brisk sales are keeping their inventories to just 1.5 months for Petaluma and a month for Rohnert Park.

“When properties are priced well, they are still getting multiple offers and selling quickly,” Snedaker said.

Marin properties that are still attracting such competition among buyers and top pricing reflect a shift in the traditional Marin buyer, Strodder said. An example is one of his firm’s listings, a 1,330-square-foot three-bedroom, two-bath home on Paloma Drive in Corte Madera that sold in April within a week for $1.56 million. That was $220,000 over the asking price after five offers.

“It checked all the boxes of the three L’s of what many — but not all — buyers want today in lot, location and layout: a good-sized flat lot in a neighborhood with sidewalks and lemonade stands out front, close to shopping, schools and parks, and one story, that is ‘done,’ with no work to do to, just move right in,” Strodder said. Such three-L properties tend to appreciate faster and garner sale prices north of $1,000 a square foot, he said.

That’s a challenge for Marin, known for its hills and mountains. While Novato and San Rafael neighborhoods have roughly half the neighborhoods on lev el ground, the proportion of hillside homes is considerably higher in Marin’s other towns and cities, he said. For example, Sausalito’s homes are largely on slopes.

It’s about demographics: A growing segment of buyers are older than 60 and don’t want stairs, and those over 50 are choosing homes with that future reality in mind, he said. Such concerns are also impacting the fix-and-flip market, a change that’s been gaining momentum for the past two decades.

“They want to spend their weekends at home and not at The Home Depot,” Strodder said.

Fix-and-flip deals have been a harder sell since the October 2017 wildfires destroyed about 6,000 homes in the North Bay, according to Mary Szykowny, a Sonoma-based agent with Century 21 Wine Country.

“Buyers used to never fear the fixer-upper, but now it has to be really cheap, because they know the cost of construction since the fires and tariffs,” she said.

The federal government in the past two years has imposed tariffs on Chinese steel used in building materials and equipment as well as for Canadian softwood used for framing. The National Association of Home Builders estimated that the lumber tariff of at least 20%, depending on the mill, has added about $9,000 to the cost of single-family homes and as much as $3,000 to multifamily units.

In addition to that, lower-end Sonoma Valley condominiums ($360,000-$400,000) are not selling as fast as they used to and sometimes requiring a couple of price reductions totaling up to $30,000 to move the deal, Szykowny said. But the mid-range and upper end of that market remains active.

“Since the fires, we have seen a lot of people coming back into Sonoma to buy a house, because their insurance has run out for rentals,” she said.

Jeff Quackenbush covers real estate, wine and construction. Contact him at or 707-521-4256.

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