Sonoma County Market Update, Heading Into Autumn 2016

Since 2011, the Sonoma median house price has appreciated by 85% and its median condo price by 129%. One major factor in such large jumps is that the distressed property crisis plunged Sonoma home prices to unreasonable lows during the recession. For the last few years, the market has been like a balloon which has been untied from an anchor, the anchor of subprime loans, foreclosures and short sales. In 2016, median sales prices have continued to increase in almost every city and town within the county. Most are now approaching peak prices reached in 2005-2006, and some have begun to exceed them.

September 2016 Report ------------------------------------------------------------Sonoma County Median Home Price Appreciation by Quarter and by Year  ------------------------------------------------------------Home Values by Sonoma Community 2016 YTD Overview  While the markets in more expensive counties have generally started to plateau and cool, the Sonoma real estate market has continued to strengthen in 2016. Generally speaking, this is a dynamic playing out around the Bay Area: The pressure of buyer demand has shifted to more affordable home segments.Year to date statistics in Sonoma on months supply of inventory (averaging an extremely low 1.4 months of inventory), and sales absorption are outperforming 2015. For homes under $1.25m that have sold without going through any price reduction, average days on market (a moderate 43 days) and percentage of sales price to original asking price (100.6% of list price), are very similar to the stats for the first 8 months of 2015.------------------------------------------------------------ Long-Term Appreciation Trends By City & Town, 1999 to Present Below are updated home-price trend charts for 6 of Sonoma’s communities. If you’d like information one not included below, or have any other questions, please let me know. Please remember that median sales prices are generalities that usually disguise an enormous range of prices in the individual underlying sales. How a median price applies to any particular property is unknown without a specific comparative market analysis. ------------------------------------------------------------ Paragon Special Reports on Bay Area Real Estate Markets & Housing Affordability In August we issued 2 reports that received extensive media coverage in Bloomberg News & BusinessWeek, WSJ Mansion Global, San Francisco Business Times, KGO, KTVU, KCBS, SFGate, Curbed and others, even some international publications. Below is a sampling of the many analyses in the reports, as well as links to the full articles. As you can see, Sonoma stands out for its housing affordability when compared to most other Bay Area counties. Full report: Income, Affluence, Poverty & the Cost of Bay Area Housing Full report: Bay Area Real Estate Markets & Demographics ------------------------------------------------------------ A Tumultuous Time in Financial Markets The S&P 500 vs. the Shanghai Composite Index We initially created this chart last autumn, and thought it would be interesting to update it for a longer term perspective. A year ago at the end of August 2015, a very volatile year began for national and international financial markets. Initially triggered by a crash in the Chinese stock market, sparking serious concerns regarding the international economy, the S&P 500 fell significantly, but then recovered completely by mid-autumn. Then the oil price crisis of early 2016 brought another sudden and dramatic drop, but again, the S&P recovered completely within 2 months. When the Brexit vote came in late June, the market barely reacted (despite expectations), and soon thereafter the S&P hit a new all-time high, a little above its previous spring 2015 peak. Thousands of pundit prognostications later, many predicting crash and doom, U.S. financial markets are basically back to where they were when the Chinese stock market crisis began one year ago. ------------------------------------------------------------ As always, please remember that the heat of different market segments can vary significantly by property type, price range and specific location. These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Statistics are generalities, longer term trends are much more meaningful than short-term, and we will always know more about what’s actually going on in the present, in the future.