Buyers returning to cheaper homes

Sinking home prices are attracting buyers for Sonoma County properties under a half million dollars, an area of rising sales in what remains a sluggish market, according to the latest Press Democrat real estate report.

Sales of less expensive homes are outpacing costlier residences, helping pull down the median price for a Sonoma County house to $435,000 in February, down 29.7 percent from the peak in summer 2005 and the lowest in five years.

Overall, February sales of existing single-family home tumbled to 180, the fewest since 1995 when housing was last in a slump. There were 2,138 homes on the market at month's end, again the highest number in 13 years.

Winter is normally real estate's slow season, and sales usually begin to pick up in spring. There are signs, however, that buyers already are coming back at the market's cheaper end.

Sellers accepted offers on about twice as many homes under $500,000 in February compared with a year ago. Some of the activity is from investors purchasing homes. Lenders also are selling more homes at discount prices after taking them back through foreclosure.

"More properties went under contract last month in that price range than we have seen in years. When the properties are properly priced, we're getting multiple offers on them," said Rick Laws, Santa Rosa manager for Coldwell Banker, which prepares The Press Democrat report.

Recent sales activity under a half million dollars reflects the market's continuing price decline. The county's median resale price fell for the 20th consecutive month in February when compared with the same month a year earlier, putting a greater number of homes in financial reach of more buyers.

"Prices got way out of line, there's no question about that. But they've been coming down, and they keep coming down," said Ron Wareham, owner of Hurd Real Estate in Santa Rosa. "We've got several houses in escrow, more than we've had in awhile."

A Windsor home, for instance, recently drew three offers in a week. At $629,000, it was priced under similar homes and about $100,000 less than it might have sold for a year ago, Wareham said.

Another indicator that prices have come down enough to generate more demand is the growing number of investors purchasing homes as rentals or for family members, brokers said.

"They see a value. I think it will help the market," said Beth Robertson, a broker-agent for Century 21 Classic Properties in Rohnert Park.

Home sales also could get a boost from reduced costs for larger loans needed by many borrowers in the high-priced Bay Area. Lenders tightened access to these so-called jumbo loans last fall as foreclosures soared.

Still, homes are taking more than four months to sell, on average, and there remains a glut on the market. At the end of February there was a 12-month supply of homes based on the current sales pace. Four to five months is considered a market in balance between buyers and sellers.

"There's a lot of buyers who are still holding out who may be missing the boat," Wareham said.

Helping to swell the supply of homes for sale is the steady rise in foreclosed properties lenders put on the market. A record number of Sonoma County residents lost their homes to foreclosure in 2007, and even more are in danger with default notices also at record highs.

"We're getting five or six listings a week. I'm busier than ever," said David Rendino, a residential investment property specialist now working with lenders.

Those properties typically are priced at enough of a discount to draw considerable buyer interest.

"I'm getting six or seven offers within 24 or 48 hours of going on the market," Rendino said.

Foreclosure sales and homes sold for less than the amount a homeowner owes on the mortgage contribute to the county's continuing price declines.

The median price fell 13 percent from January, when it stood at $500,000. Sales increased 7.8 percent between January and February. Month-to-month changes are not considered as accurate a barometer of the market's direction as year-over-year comparisons.

Sonoma County condominium sales fell 26.7 percent over the same period. The typical condo sold for $254,500 in February, a 13 percent decline from $292,000 in January.

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