Sonoma County home values, sales still sinking

While home prices are slowly rising across much of the Bay Area, home values are continuing to fall in Sonoma County, according to a report issued Thursday.

Sales, however, are dropping across the entire nine-county Bay Area region, according to DataQuick Information Systems, a real estate market research firm.

In Sonoma County, home sales tumbled 24.8 percent in August, compared with a year ago, as tightening lending requirements delivered another blow to the market.

The price for a typical Sonoma County home dropped to $505,000 in August, down from $550,000 a year ago, an 8.2 percent decline. The figure includes new and resale houses and condominiums.

Home sales across the Bay Area have tapered off to their slowest pace in 15 years, declining for 31 straight months. But the median price for the nine-county region rose to $655,000 in August, up 4 percent from a year ago -- the sixth straight increase in prices for the region.

Prices are rising in the costliest markets, led by Marin, San Francisco and San Mateo counties. Those gains outpaced declines in three counties -- Sonoma, Solano and Napa -- where more homes are in lower price ranges compared with the rest of the Bay Area.

"We're seeing clearly now that homes in upscale markets in the core Bay Area don't go down in value very much. The richer you are, the longer you can hold out," said John Karevoll, DataQuick's housing analyst.

The numbers provide a snapshot of the direction of the Bay Area housing market. The monthly Press Democrat housing report, which focuses on the resale market, is expected soon.

Housing's downturn is playing out in widely varying degrees across California. Hardest hit have been the Sacramento and High Desert areas and southern Riverside County, where sales and prices have plummeted and foreclosures are surging.

Sonoma County and Bay Area home sales are down by similar margins over the past year. But prices began to diverge six months ago.

Housing's downturn has hurt Sonoma County in particular because of a widening gap between incomes and home prices, pushing more first-time buyers out of the market.

Increasingly stringent loan qualifications are taking out even more buyers as lenders tighten the money supply with mortgage defaults soaring.

"That worsened it. The first-time home buyers went away. So the affordability is just not here any longer," said Alice Curtis, Creative Property Services manager in Santa Rosa.

Home prices have not fallen enough to make buying a house more affordable unless buyers have very good credit and can make at least a modest down payment, real estate brokers and lenders say. Those who can qualify might be cautious about buying because prices continue declining.

"We're at the edge of what people are willing to pay. It's wobbling around a threshold of affordability," Karevoll said.

The typical monthly mortgage payment for Sonoma County buyers in August was $2,251. While that was down from $2,416 a year ago, it remains high relative to incomes, Karevoll said.

Across the Bay Area, the typical mortgage payment for August was $3,171, up from $3,014 a year ago.

Slowing sales mean homes are sitting on the market longer. In Sonoma County, supplies have risen to their highest levels in more than a decade.

The soaring number of foreclosures is forcing more homes onto the market as banks attempt to sell houses.

Foreclosure resales accounted for 6 percent of all home sales in the county in August, up from 1.5 percent a year ago. They accounted for 4.8 percent of Bay Area sales, up from 1.2 percent in August of last year.

So far, however, the increase in foreclosure sales hasn't depressed prices significantly.

"The banks are not appearing to lower prices by much. There's not much of a discount yet on foreclosed properties," Karevoll said. "I don't really think we're going to see much of an impact on the Bay Area market."

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.