If we focus on the niche market known as affordable luxury housing, or homes priced in the $1 million to $3 million range, the real estate market is very different from homes priced below this threshold.
Although we usually refer to the market as a whole, we often forget that there are segments of the market that function differently than the whole. Sonoma County’s real estate market has a distinctly different feel to the balance of the market for high-end homes, that is, homes priced over $1 million.
Today’s multi-million dollar homes, at least in California, aren’t filled with movie stars and fat Wall Street cats, adorned with gold-plated chandeliers, or have adjacent tennis courts and garages full of Bentleys. Not even. They are populated by hard-working people who strive to enjoy life and seek a more enriching environment in which to relax with family and friends at home. If we look at the niche market known as affordable luxury homes, homes valued between $1 million and $3 million, we find that there is a very different market for homes priced below this threshold. I understand.
Sonoma County, the largest North Bay county by population, ended October with a 19% year-over-year increase in housing inventory in this niche, while inventory levels in the sub-$1 million market were up 28% year-over-year. Ta.
According to BAREIS MLS, Sonoma County ended the month with 340 homes for sale ranging from $1 million to $3 million. During the period, buyers negotiated the purchase of 84 new properties, but only 61 new properties were introduced to the market, 23% less than in 2023. Sellers were able to close an additional 95 deals in October, bringing the absorption rate to 28. %. In this affordable to luxury segment of the market, this rate has fluctuated between 25% and 46% over the past two years. This means the market is more dominated by sellers than buyers, and we haven’t even sniffed a balanced number at any point in the past two years. year.
The absorption rate is calculated by dividing the total number of homes sold in a month by the total number of homes available for sale at the end of the same month. A high absorption rate of 20% or more indicates that the supply of available housing will decrease rapidly, making it more likely that owners will sell their properties in the short term. Conversely, an absorption rate below 15% indicates a buyer’s market, meaning homes are selling more slowly.
This market segment typically has a higher price paid per square foot (PSF) for homes under $1 million. This is because properties tend to be more decorated with features such as designer pools, larger landscaped gardens, views, and uniformity. Located in one of the county’s most sought after neighborhoods, yet with more desirable custom finishes. In Sonoma County, the average sales price for homes in the $1 million to $3 million range was 615 PSF as of October’s close, compared to 462 PSF countywide. This represents a 33% premium that buyers pay to access equipment at this tier of the market.
As of this writing, the median price for this segment of the market was $1,325,000 and the average price paid was $1,428,000. The average home sales price was $703,000, compared to the sub-$1 million market, where the median price was $727,000.
Would you like to search for more homes in the home you are looking for? This niche market requires understanding and noticing the simplest details in order to be able to truly appreciate what is in front of you. If you look at these details, you’ll see why there is such a difference in price per square foot between these segments of the market.
Jeff Schween, “Compass’s Top 1% Realtor,” provides market insights to The Press Democrat in this weekly column. You can contact him through his website: SantaRosaFineHomes.com.
