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Experts see some thawing in home sales

LOWER PRICES DRAWING BUYERS; MARIN COUNTY STRONGEST IN NORTH BAY

NORTH BAY – For nearly two months, North Bay real estate agents have noticed an uptick in the number of buyers attending open houses and making offers on homes. Now, data has emerged that at least partially supports those claims.

According to an analysis of data on single-family homes under contract – pending escrows plus accepted offers – sales activity has increased year over year in Marin County and leveled off after more than a year of sharp declines in Sonoma County. Activity in Napa County, however, remains well below its level a year ago.

If Marin County has the strongest resurgence in sales, it is also the North Bay county that suffered least from the downturn overall. The median home price was $932,000 in February 2008, down just 2 percent from February 2007, according figures from Vision Real Estate. Numbers from Prudential California Realty show that sales did not begin to slow until the third quarter of 2007.

In February, 213 homes were under contract in Marin County, an increase of 25 percent from the same month a year earlier, according to data from Bay Area Real Estate Information Services.

“No one rings a bell at the top or the bottom of the market, and it’s hard to say when it’s happening, but I think we’ve turned a corner,” said Melissa Lyckberg, a vice president with Frank Howard Allen Realtors and assistant manager of the company’s Greenbrae office.

“In our office in the last two weeks, 25 percent of the sales that our agents made were multiple offers,” Ms. Lyckberg said.

Still, it may be too early to tell whether the surge in contracts in February represents a trend or a one-time fluke. The number of closed sales in February was still down 34 percent year over year.

In Sonoma County, broker Rick Laws, manager of the Santa Rosa office for Coldwell Banker Northern California, said data on homes under contract is a better indicator of current conditions than closed sales.

“To have a more current snapshot of what’s happening in the market, rather than look at sales, which could be 35 or 40 days old, what we want to look at Ö is how many ratified offers there are in a given month,” Mr. Laws said.

In Sonoma County, 320 homes were under contract in February 2008, nearly even with the 322 homes under contract in February 2007, according to data compiled by Mr. Laws.

That leveling off came suddenly, following year-over-year declines of more than 30 percent in the previous six months and double-digit declines for at least a year.

“In tracking the pending sales month by month” in Sonoma County, he said, “what I found was at the end of February, we had more pendings than we had in any month since last June or July,” Mr. Laws said.

Unlike Marin County, Sonoma County’s stronger sales have not come without a larger decline in prices. The median sale price for single-family homes dropped to $430,500 in February 2008, according to figures from broker Beth Robertson of Century 21 Classic Properties in Rohnert Park. That is down 22 percent from $550,000 in February 2007, reflecting both softer prices and an increase in sales at the lower end of the market.

The price drop in Sonoma County is likely the cause of the stronger sales figures, according to Mr. Laws.

“The segment of the market that seems to be on fire and getting multiple offers is that segment of the market south of $500,000,” Mr. Laws said.

In Sonoma County, 193 homes under $500,000 went to contract in February 2008, an increase of 69 percent from February 2007 and the highest number in at least two years. In February 2008, those lower-priced homes made up 60 percent of all new contracts, compared with just 35 percent of contracts in February 2007.

The price decline in Sonoma County helped to make homes more affordable, according to an index from the California Association of Realtors, which measures the percentage of households that can afford an entry-level home.

In the fourth quarter of 2006, Sonoma County’s index was 25 percent, which was equal to the state average. By the fourth quarter of 2007 it rose 11 percentage points to 36 percent, moving above the new statewide index of 33 percent. Over the same period, Marin County’s index held steady at 22 percent, one of the lowest in the state. An index for Napa County was not available.

The rise in sales in Sonoma County reflects an opening of the market to segment that was previously priced out, according to Mr. Laws. “There’s a lot of pent-up demand in our marketplace,” Mr. Laws said.

Napa County has not seen a major price decline like the one in Sonoma County, and the latest figures show that sales activity is still down from last year. The median home sold for $604,500 in the fourth quarter, down just 1 percent year over year. The number of homes under contract in February dropped 50 percent year over year to 27, according to figures from Coldwell Banker Brokers of the Valley.

“There are lots of people out here looking,” said David Bulger, manager of Coldwell’s St. Helena office. “There’s a lot of bank-owned [homes] and properties that are perceived as great values. It just hasn’t translated into a real bump up in the number of units that we’re doing.”

A common factor affecting all three North Bay counties is the stream of new inventory coming from foreclosures. In Marin County, foreclosure filings – notices of default, notices of sale plus repossessions – more than quadrupled year over year, reaching 121 in February, according to RealtyTrac. Foreclosures filings rose 66 percent year over year to 452 in Sonoma County and more than doubled to 107 in Napa County.

“Of the properties that are on the market, there’s a good chance that over 50 percent of them are either a short sale or already owned by a bank,” said Lisa Marsey, owner of Fieldstone Real Estate Group in Napa and a specialist in bank-owned properties.

While foreclosures put downward pressure on prices, they can also help stimulate sales, Ms. Marsey said.

“Buyers are coming out because they’re able to get into neighborhoods that they’ve always had their eye on and they’ve gotten priced out,” Ms. Marsey said.