SANTA ROSA, CA—It has been more than two months since the Wine County wildfires and assessing the impact on the housing markets is still only preliminary. It will likely take a couple of years to grasp the full impact of the fires.
Typically, sales activity slows between October and November, with an average decline between 6% and 14% in the three counties during the last 10 years. After the fires, sales, along with prices, soared in all three North Bay counties. Home sales activity increased notably year over year in November, up by 13% in Sonoma County and by 24% in Marin County but down by 11% in Napa County. Also, sales were markedly up from October with 16%, 17% and 23% increase in Marin, Napa and Sonoma respectively, according to Pacific Union International.
“While overall inventory continued to decline, October and November were characterized by higher levels of expired or withdrawn listings but also by an increase in new listings when compared with previous trends,” Selma Hepp, chief economist and vice president, business intelligence, Pacific Union International, tells GlobeSt.com. “Higher levels of expired/withdrawn listings drew the overall inventory down. The months' supply of inventory is now at its lowest level in two years in Sonoma and Marin counties.”
Median prices grew by 16% in Sonoma County, 17% in Marin County and 7% in Napa County compared with last November; a trend consistent across the Bay Area. While preliminary trends suggest that demand for homes has increased following the wildfires, overall tight market conditions in the Bay Area make it difficult to fully gauge the impact of the disaster, says Pacific Union.
The year-over-year increases in Marin and Sonoma counties were the largest among all Bay Area regions, while overall sales in the Bay Area declined by 2%. Napa's decline was a continuation of trends recorded throughout 2017.
While Sonoma County had some fluctuation during the summer, the three North Bay counties all posted a monthly November increase, again inconsistent with previous years' trends. Delving deeper into local Sonoma County markets showed that sales were up by 18% in Santa Rosa and by 24% in Sonoma Valley year over year in November.
Nevertheless, while sales have picked up, the inventory of homes for sales has continued to fall, but with some important caveats, according to Pacific Union. While overall inventory declined on an annual basis by 10% in Sonoma and Napa counties and by 9% in Marin County, there were 22% more new listings in Sonoma County, 20% more in Napa County and 6% more in Marin County. Comparatively, San Mateo County had the largest year-over-year increase in new listings, up 27%, while the overall Bay Area had 7% more listings than last year. While it is not clear that the increase in new listings was purely driven by the wildfires, last year's level of new listings in November in North Bay was on par with 2015.
The increase in expired or withdrawn listings, especially in Sonoma County, is in large part due to the disorder that follows a natural disaster. Some of the homes could have been burned or damaged, some were offered for lease instead of sale and some sellers may have decided to wait for the market to calm down. In examining expired or withdrawn listings in October and November that were then relisted in November, there is no clear trend that the homes were placed on the market for higher prices. On the contrary, out of 33 homes that were relisted in November, eight were listed with adjusted prices, six listed at lower prices and two listed at higher prices than prior to the expiration or withdrawal, according to Terradatum Inc. from data provided by local MLS databases.
The increase in sales activity coupled with lower inventory led to a decline in the months' supply of inventory in all three North Bay counties. Sonoma and Marin counties currently have only a one-month supply of homes for sale. Inventory in Napa County fell to 2.6 month supply. All three counties, but particularly Sonoma and Marin, have notably less inventory on both a monthly and yearly basis.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
