What Homes Are Still Selling For 55% Over Asking?

Unless you have been living under a rock for the past few months, you might have guessed the housing market as taken a turn for the worse. Last week I was sent an email from a client who had just offered on a property with the headline “Pending US home sales down 10%”. I realize that the news media can only report headline figures from across the US but it is incredibly dangerous to pick up a country-wide statistic and presume it is the same in Sonoma County or a sub-market of Sonoma County such as Sebastopol. I am not saying the local market will be better than the overall US number, it may be a lot worse. The important thing to note is that even within Sonoma County, there are lots of separate geographic markets as well as markets at different price points which all behave slightly differently. In this blog post I take a look at the latest market data from across the county as well as looking at some of the key markets where I do the majority of my  business: Healdsburg, Russian River, Sonoma and Sebastopol. 

One of the main indicators is the overall volume of properties for sale, the number of properties sold and the number of properties in contract. For the purpose of this analysis, I have taken a look at the data for the last quarter (August to October) and compared it with the same quarter in 2021.

If we look at the overall volume of properties for sale across Sonoma County it  is 28% compared to the same quarter last year. The one market that is bucking this trend is Russian River with the number of properties for sale down just 3% with Sebastopol and Sonoma also seeing much smaller drop off in the volume of properties for sale (Sebastopol down 22% and Sonoma down 19%)

While the number of properties for sale across Sonoma County is down 28%, the number of properties sold is down significantly with a fall of 40%. It is also important to note that the fall in the number of properties going into contract (escrow) is also down by over 40% indicating that this trend in a fall in sales volume is clearly continuing.

While the volume of sales in Sebastopol is also down, it is down “just 21%” and the number of properties going into contract is down just 19% compared to the same quarter last year. This is significantly different from the Sonoma, Russian River and Healdsburg markets that have all seen the volume in sales over the past quarter fall by 47%, 45% and 38% respectively. The drop off in the number of properties going into contract across these three geographies is also significant  with all three markets showing a decrease in the number of properties going into escrow by over 40%.

After five consecutive months of properties across Sonoma County being sold for over asking price from February to June, the last 3 months have seen properties selling 2% below asking price. Sebastopol and Russian River on the other hand are continuing to see properties sell for over asking price at 101% for Russian River and 102% for Sebastopol. Somoma is broadly in line with Sonoma County levels at 98% however sale prices in Healdsburg have fallen significantly with the average sale price to list price now 91% over the past quarter with September at 86% being the lowest sale price to list price for a number of years.

The number of multiple offers also continues to fall. It is probably surprising to hear that in the Russian River, 51% of properties are still getting multiple offers. I am sure a significant reason for this is that these properties are among the cheapest in the county and yet the buyers a disproportionately Bay Area buyers on Bay Area salaries. In Sebastopol, 38% of properties were still getting multiple offers while the number of multiple offers in Sonoma and Healdsburg has continued to fall to 30% and 20% respectively. 

While the average sale price to list price is only just over asking price there are still some properties that are still getting multiple offers. For example there was one property in Sebastopol, 2560 Meier Road which sold for $3.1m which as 55% per cent over its asking price of $1.99m. It was a home of real beauty which was featured in Dwell magazine so it definitely had the "I want this at any price vibe." While this home had 9 offers, there was another home in Sebastopol that had 13 offers. 4896 Todd Road, Sebastopol, sold for $825,000, 17% over its list price of $700k.

2560 Meier Road Sebastopol: $3.1m, 55% over asking price

The Russian River also featured a couple of properties that attracted disproportionately high volumes of offers and high sales prices. For example, 17726 Orchard Road in Guerneville attracted 12 offers and sold for $1.43m which was 32% over its asking price and 11251 Skyline Road in Forestville, sold for $908,000, 33% over its list price of $682,000. 

11251 Skyline Road: Sold for $908,000, 33% over asking price. This will qualify for a vacation rental once the moratorium is lifted

Interestingly in Healdsburg the home that attracted the highest sales price as a percent of list price was one of the new build homes in Arden: 655 Winding Creek Way sold for 15% over its asking price  of $1.175m. 

With such a dramatic change in the sale price to list price, It will be of no great surprise to see the average days on market increasing dramatically to 141 days over the past month with a similar dramatic increase in the inventory levels based on closed sales increasing to 5.2 months, signaling a shift from a sellers market to a buyers market in Healdsburg.

While the average days on market for Sonoma County has gone up the last three months to 47 was still at 47 days in September, compared to 35, 39 and 42 days for Sebastopol, Sonoma and Russian River. 

The months of inventory based on closed sales is still at 2.1 months in Sonoma County as whole which is generally indicative of a buyers market (anything less than 3 is a buyers market). Healdsburg at 5.2 months can no longer be considered a sellers market, the same is true of the Sonoma market which increased to 3.5 months. Sebastopol and the Russian River markets are still showing resilience with inventory levels still below the magic 3 level at 2.4 months and 2.3 months respectively. 

In Summary

There is no question that the market is turning from a sellers market to a buyers market. This has already happened in Healdsburg and I have no reason to believe that this is going to change any time soon. Sebastopol on the other hand, along with Russian River to some extent, seems to be bucking this trend. It is hard to know exactly why although I feel Sebastopol has been on the way up during the last couple of years as Bay Area buyers continue to be attracted to it. 

If you are looking to purchase, there will continue to be properties that attract multiple offers and get 20% or 30% over asking price, but depending on where you are looking to purchase will drive your offer price. You definitely don’t want to be one of the 8 people in Healdsburg who purchased a home with no other offers on the table and went as much as 10% over asking. 

If you are a seller, remember you no longer hold the upper hand nor can you expect to get the same price that you would have done this time last year. If you get an offer make sure you work with your agent to determine how aggressive you can be. There will be sellers out there who turn down an offer only to realize that that offer will not be coming back again any time soon. You don’t want that to be you.