By David Hargreaves
The housing market in Sonoma County in 2024 has been impacted by high interest rates that have kept some buyers out of the market, resulting in slower activity, especially at the higher end. However, with the Federal Reserve recently cutting interest rates, the future looks brighter as we move into the final quarter of this year.
Based on our business, which is a pretty good anecdotal barometer of the market (because our business is fairly geographically diverse across the county and also across all price points), we have seen a noticeable change over the past month as more buyers have come off the sidelines, perhaps buoyed by the expected rate decrease and seeing this as a signal that we have turned the corner on the cost of borrowing.
If we dive into the numbers we can see that from January to September 2024, a total of 126 homes were sold in Healdsburg, which is down 5.3% from the same period in 2023. This is actually counter to what has happened across Sonoma County as a whole, where sales are up 8% overall and 11% for homes that are over $1 million. It’s hard to explain why except that perhaps many purchases in Healdsburg are often not primary homes, but more of a discretionary purchase, which we will get into in a little bit.
With lower sales volumes inventory has increased by 40%, which is reflected in the time it takes to sell a home. That has also gone up nearly 30%, with average days on market rising from 63 days last year to 80 days in 2024. If we look at the higher-end market for homes over $2 million, then the average days on market is even higher, at 122 days.
We can see this in homes like 728 University St., which originally came on for $10.5 million but after 9 months on the market is being taken off and rented. That being said, there are still very high-end homes selling, especially with a modern contemporary look, such as 383 Bridle Path in contract for close to $4 million. We also have a contemporary off-market home on Sunnyvale Drive which is for sale for $6.2 million, so there is still a market for super high-end homes, but they need to check all the boxes in this market.
Market Health
One of the key indicators for the health of the market, which shows the relative balance of power between sellers and buyers, is the months of inventory based on closed sales. This metric, showing months of available inventory, has increased significantly from 4.9 months to 7.2 months, indicating that for the first time in a long time the market is no longer a seller’s market.
A deeper dive into the buyer demographics also reveals some interesting trends. Out of 129 total home sales in Healdsburg during this period, 66% of the purchases were made by non-owner occupiers, meaning they were either purchased as second homes or investment properties.
It is easy to jump to conclusions that all these sales of homes are being bought by people from the Bay Area. However, nearly 20% of them are from people who already live in Healdsburg or who have their primary residence here. Perhaps this is because Healdsburg residents understand how special Healdsburg is, so are happy to invest in real estate in this market!
Buy or Sell?
“Should I buy or sell?” This is the question I always get asked, and it depends so much on individual circumstances. I think for a buyer who sees a property they love, now is a good time to buy, but they can afford to be choosy.
For those looking to sell, right now is probably not the best time except for a turnkey remodeled home, because we’ve just been through a presidential election, followed by Thanksgiving and then Christmas. We are marketing a few properties off-market, and waiting to put them on in January.
As we move into 2025 with the elections behind us and interest rates coming down, I think next year will see a lot more buyers in the market, which could make it a good time for sellers to sell. They just need to realize prices have fallen back off their peak of 2022.
David Hargreaves is a partner in BruingtonHargreaves / W Real Estate.
