Real Estate Article from Press Democrat

Home sales jump in April
By MICHAEL COIT
THE PRESS DEMOCRAT
Published: Monday, May 11, 2009 at 4:07 p.m. Last Modified: Monday, May 11, 2009 at 7:26 p.m.
A spring surge in Sonoma County home sales picked up strength in April, as sellers in financial distress and banks unloaded houses at low prices.
The good news for buyers was more bad news for home values. The median sales price fell to $315,000 — nearly 28 percent below a year ago. Prices are hovering near an eight-year low, meaning the housing downturn has wiped away much of the gains from the boom that pushed the median to a record $619,000 in 2005.
But sales are rising, climbing for the 13th straight month. Buyers purchased 432 houses in April, up more than 26 percent from a year ago and well above the typical volume for the month, according to the monthly Press Democrat home sales report prepared by Rick Laws with Coldwell Banker.
The outlook is for continued strong sales over summer, said Debby Benson-Miller, a Prudential California Realty agent in Rohnert Park. As prices drop, more Sonoma County residents can afford to buy a home.
“We are finally at a place where people who couldn’t afford homes can. We’ve got plenty of buyers out there looking for stuff right now,” Benson-Miller said. “Most properties have been priced to sell. We’re seeing a lot of multiple offers on properties.”
The sales activity is cutting into the supply of homes for sale, a sign the housing market is beginning to tighten. There was nearly a four-month supply of homes for sale in the county at the end of April, based on the current pace of sales, down from a nearly seven-month supply a year ago.
A three- to four-month supply of homes is widely considered a “balanced” market where buyers and sellers are on equal footing.
But looming large is another glut of properties expected to hit the market this summer and later this year. A temporary freeze on foreclosures by the federal government was lifted earlier this year, and a state law requiring lenders to wait 30 days before filing a default notice also slowed the process.
“More foreclosures are coming down the pike. It’s like a growing black cloud sitting behind the mountain,” said CJ Holmes, a real estate broker in Santa Rosa.
Foreclosed homes began flooding Sonoma County’s housing market about two years ago as more homeowners faced difficulty refinancing loans or selling homes. But sales remained sluggish until banks started slashing prices.
Distressed properties continue to dominate the market. Two of every three homes purchased in April were sold by banks or homeowners avoiding foreclosure.
Nearly half of all homes sold in April were priced at less than $300,000. The tilt toward less expensive homes dragged down the median to $315,000. The median — the price at which half the homes sold for more and half for less — dipped 1.6 percent from March.
Buyers seeking their first home and investors adding to rental property holdings are jumping at the best deals and sometimes bidding up prices. Buyers swamped a recent open house for a 1,400-square-foot, three-bedroom home in a desirable northeast Santa Rosa neighborhood that was listed for $262,000 — about half what it was worth when prices were peaking about four years ago.
“We’re still getting offers on stuff that’s in poor shape and on the busiest streets. That tells you there’s not a lot of inventory to choose from,” Benson-Miller said.
But a new wave of foreclosures is building. More county homeowners are falling behind on their mortgages, and some could lose homes to banks while others sell to avoid foreclosure. The latest data indicates 4.7 percent of mortgages in the county were 90 days or more late in March, up from 3.5 percent a year earlier, according to First American CoreLogic, a real estate research company.
Already, lenders have seized 2,970 homes in Sonoma County during the 12-month period through March, more than double from a year ago, First American CoreLogic reported.
A rising tide of foreclosed homes could wash over buyers if their numbers don’t grow to match the busiest years of the last home sales boom, Holmes said.
“If we have this much inventory and we’re not even keeping up with our peak year — even though prices are so much lower — it indicates we don’t have enough buyers,” she said.
Despite the surge in sales, new listings are outnumbering purchases. Sellers put 587 houses on the market in April, well above the 432 sales.
Some new listings were homes previously reported as sold, but the deals never closed. These typically involve sellers seeking a price below what is owed on the mortgage. Banks can take several months to review such short sales and may not agree to the price. Buyers may become frustrated or find a better deal and back out of the sale.
“So no matter what we sell, we’re still getting a bunch of new listings,” Holmes said.
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