Sonoma County Pricing Trends for REO, Short Sales, and Open Sales

What's the right price for a house?

It's been a long time since any of us had a clear idea of what a "right" price might be. During the early 2000 to 2004 time frame there was a steady increase in housing value. Maybe a little more than we were used to, but it seemed like an authentic valuation was going on. Then 2005-2007 was a crazy acceleration of value that we all rode along with, maybe with deep misgivings. Since then, it's been a roller coaster on the down side of the hill followed for the last 18 months by a more sane level of pricing. That's in my area anyway. I think different regions are experiencing the balloon, the bust, and the aftermath in different ways. I'd like to hear what's happening in your region.

In any case, I wanted to build a clearer idea of the local market trends among REO homes, short sales, and the increasing volume of good old-fashioned open market sales (Shown here as NONE for "no special sales conditions). It's great to see that a family can finally put their home on the market without it being an REO or a short sale. In fact, the big plurality of the sales in Sonoma County are now open market transactions.

The chart shows the price per square foot for all the single family residences that have sold in Sonoma County in the 18 months from the beginning of 2009 until June 30, 2010. The most reassuring element to me is the relative stability of the data reading from left to right. There are small fluctuations up or down in each of the three sales types, but the primary takeaway from this graph is that Sonoma County has been a relatively stable housing market during this time frame.

The title of this post mentions price trends and we are beginning to see a converging-of-value movement on the last four months on the right of the chart. The values for both REO and short sale transactions in Sonoma County are moving up in value relative to open market sales. There's still almost a $60 per square foot price differential between open market and short sales, but for much of the last year it was closer to $80 dollars difference. All along there has been about a $10 per square foot premium for short sales over REO transactions. I think we'll see that continue, but my instinct is that both REO and short sales are going to get closer to the value of open market transactions.

I've got some more charts going up at sonoma.net and reo.sonoma.net to show more detail for some of the cities in Sonoma County. This chart shows the absolute volume and type of transactions for the time frame indicated in the chart above.