Why home prices in these 4 Sonoma County areas are defying Bay Area downward trend
Forget “90210.”
The reality is, homes in only four Sonoma County ZIP codes out of all in the Bay Area saw values increase in the last half of 2022, according to real estate experts.
Positive home value growth out of the region’s nine counties came from these ZIP codes, reported Zillow, a Seattle-based housing data research firm:
- Sonoma’s 95476: $1 million, up 1.8%. It stretches from Agua Caliente in the north to the heavily traveled winery corridor in the Carneros region.
- Santa Rosa’s 95404: $830,000, up 0.6%. Included are the Fountaingrove, Mark West Springs and Riebli neighborhoods in the northeast area.
- Sonoma Valley’s 95409: $790,000, up 0.5%. The Oakmont senior community is in this area.
- Petaluma’s 94952: $1.1 million, up 0.4%. This area includes Valley Ford, Two Rock and the city west of Highway 101.
“For the Bay Area, the North Bay does stand out,” Zillow economist Jeff Tucker told the North Bay Business Journal.
Tucker pointed to two primary factors: inventory and desirability.
For one, inventory is low in Sonoma County, despite rising interest rates doubling from 3% to 6% on the average 30-year fixed-rate mortgage, as the Federal Reserve tries to cut inflation by curbing spending with hikes.
“I do think the lack of inventory here played a role in (values) not falling more than they did,” Tucker said. “The low inventory has insulated the market from declines.”
Much of that trend spans most of California, but the diminished supply is more prevalent in Northern California and particularly the Bay Area, the economist added.
And secondly, demand is driven by desirability.
Some prospective buyers will travel to get a piece of paradise. The migration continues from tech firms with employees still working from home. Then, those who must go into the office may face a pink slip, and therefore, may reconsider their surroundings.
This trend is heightened if they’ve lost money in the stock market and seen their home values decline.
“As employees in the Bay Area embrace remote work, proximity to the Silicon Valley and Peninsula has fallen,” he said. “The rural Bay Area’s demand holds up in these rural areas (because) that demand is tied to natural amenities — hillsides, mountains and ocean.” he
“Sonoma County still feels less densely populated. Even with this crazy weather we’ve had, it’s still paradise,” said Compass Healdsburg agent Carol Lexa, who has spent years tracking how the housing supply does not match the demand in Sonoma County.
‘More affordable compared to other counties’
In Napa and Marin counties, homeowners witnessed no price increase. Among ZIP codes in those counties, values decreased the least here:
- Downtown Napa’s 94558, down 1.6% to $940,000.
- Tiburon’s 94920: down 2.2% to a jaw-dropping $3.6 million.
Rosie Quinones said she gets why one of the value-growth areas is Sonoma Valley’s 95409. It’s anchored by Oakmont, a sprawling development off Highway 12 billed as an active age 55-plus community.
“I am surprised about the increase just because (the real estate market has) been so flat, but I know this community has a lot to offer. There are over 150 clubs here,” she said, while touring a house with Coldwell Banker agent Cristie Marcus for a friend looking to buy. “It doesn’t get any better.”
And even with the North Bay being an attractive place to live, Sonoma and Napa counties are still considered a bargain, California Association of Realtors economist Oscar Wei pointed out.
“They’re more affordable compared to other counties,” he said, singling out North Bay counties to the tech-heavy region of Santa Clara and San Mateo counties.
Rebound hoped for in the housing market
Going forward, it’s unclear exactly what the future brings, except that Wei believes a “continued slowdown in February” awaits the housing market. In March, he predicts a leveling off before demand accelerates in April, as the home buying season kicks off again.
“Interest rates are correcting, and the season will pick up. Year over year, we’ll still be down though,” he said.
The rise in interest rates has helped reverse the trend that has led to home prices declining.
The real estate association’s March 2023 housing forecast for the state calls for an over 10% drop in prices in California to $759,170 from a high watermark of $849,000 in 2022, Wei said.
Sonoma County recorded a median price of $834,000 in March 2022 and is predicted to decline to $767,000 in March, an 8% drop.
Home values dictate the appraised worth. Housing prices indicate what a buyer will pay for the property.
“Buyers will feel like they’ll have more certainty (in affordability),” he said.
