Sonoma County Luxury Home Trends

Luxury homes aren't necessarily expensive and expensive homes aren't necessarily luxurious. A discussion has to start somewhere, however, so for the purpose of this post, Sonoma County luxury homes will be defined by me as anything costing over a million bucks.

Since the summer of 2005 there have been more than 1,500 home sales in that luxury price range in Sonoma County. What emerges from the data is a picture of a market that is holding reasonably steady. The average price of a home in this category has slowly increased over the last five years, but has been in the neighborhood of $1,500,000 (see chart below). The number of sales hasn't been nearly as strong as the price stability suggests. The peak sales years during the bubble featured volume of sales that were two or three times higher than current sales levels. Prices are steady, but there's a lot of inventory.

The final analysis I performed was to compare all the homes that had sold twice in the last five years. It's as close as I can get to an apples to apples analysis. It's imperfect due to remodels, new construction, and other changes, but it does show the changing values of luxury property in Healdsburg, Sonoma, Santa Rosa, and Petaluma. Prices rose, as you would expect from the summer of 2005 through the next several years. The decline from the peak has been relatively gradual and is not a uniform curve. Some properties have only had price decreases of a few percent. The most dramatic decline came over a 44 month period for one house which ended up selling for a 35% discount on the earlier sale.

We see mucy higher price reductions and a broader impact on valuations at the low end of the market. Discounts of 50% or more are not uncommon for the homes that were purchased with sketchy financing. Eager buyers desperate to take part in the housing "boom" put no money down at the height of the bubble and frequently made no house payments at all. The valuations of the homes they purchased at the peak made no sense, unlike the luxury marketplace which had some connection with ability to pay and to get more rigorously vetted financing.

I use this information as a useful tool to aid market understanding for current buyers and sellers. Hand waving about generic market trends isn't nearly as useful to my clients as the ability to see what is actually happening in the luxury Sonoma home market.