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Sonoma home prices reach five-year high

30 May 2013 12:20 PM
Sonoma home prices reach five-year high

The housing market in Sonoma has been improving for some time now, but a new milestone brings that strengthening into clearer focus. According to the Press Democrat, the median price for a home in the region climbed past $400,000 in April for the first time in nearly five years.

After struggling in the wake of the recession of the late 2000s, Sonoma real estate appears to have finally turned the corner and returned to pre-recession levels. The source reports that prices and optimism have been rising steadily for nearly a year, but April saw even clearer gains.

During the month, home prices rose by 10 percent when compared to their totals in March, and a whopping 26 percent when compared to median prices in April 2012. All told, the average Sonoma property value has climbed by nearly $100,000 in the last year, according to Zillow.

What's driving the gains?
There are many factors contributing to the rapid gains - improving national optimism among buyers and a strengthening local economy are just two of these - but one of the most important causes of the improvement is the state of luxury real estate in the area.

Typically, lower-priced homes are the first to see gains during a real estate uptick, but top-end homes signal a deeper recovery. This appears to be the case in Sonoma, where wealthier neighborhoods have been experiencing steadily increasing buyer activity, the Press Democrat reports. These high-end homes have been prompting multiple bids, a common sign that demand is outpacing supply.

Going fast
Unsurprisingly, increased optimism and rising home values have depleted the inventory of for-sale homes throughout the region. According to the source, the local inventory is at its lowest point in nine years, likely contributing to the uptick in the number of properties that receive multiple bids and elicit fierce competition. 

The inventory is unlikely to increase any time soon. During April, buyers purchased 460 single-family homes, 4 percent more than were sold last April, meaning that the it will be hard for the inventory to replenish.