Housing Market Report: A Rising Tide

By David Hargreaves

Over the next week, you will start seeing the data for the Healdsburg housing market for 2023 compared to 2022, which will show that sales for 2023 were down 15% year over year to 171 residential properties, with median prices up 9% to $1.23 million.

However, looking at the headline figures for Healdsburg is potentially misleading and doesn’t tell the whole story because rural Healdsburg is very different from the city of Healdsburg.

Only when we take a more detailed look at the numbers do we really get a sense of some of the trends impacting the market. If we look at the numbers for Healdsburg city—all the homes that were sold within the 4.4 square miles of the city limits—we see a very different picture compared to homes that are in “greater Healdsburg,” which covers the 188 square miles of rural Healdsburg in the 95448 zip code.

Not only do the high prices of some of the more rural vineyard properties distort the numbers, but the sale of Montage homes in the city limits at an average price of $5.37 million and an average dollar-per-sq-ft price of $2,177, combined with Mill District sales likely to start affecting the numbers for 2024 (if the project doesn’t continue to have delays), will further distort the numbers over time for people with traditional single-family homes.

If we remove rural properties and Montage, the average $-per-sq-foot sale price is $761 compared to $918 for all properties, which is a 20% difference.

Most Expensive

So what was the most expensive home sold in Healdsburg this year? It was 3315 Westside Rd., a four-bedroom, six-bathroom home on 16 acres, including a small hobby vineyard and just a six-minute drive to the Plaza, that sold for $8.5 million. It checked all the boxes for the typical second-home buyer (the buyers came from, you guessed it, Woodside near Palo Alto). The only thing missing was a swimming pool, although it did have its own lake!

The most expensive home within the city limits was 135 Sagebush Court, one of the Montage Harvest homes which sold for $6.6 million to someone from Minnesota.

If we take out the Montage sales, then the most expensive home sold within the city limits was 681 S. Fitch Mountain Rd., a large, recognizable family home set on 1.3 acres. This sold for $4.1 million and was bought by a developer who is going to split the large lot, fix up the main house and then build a new, high-end custom home likely to sell for over $5 million.

So who are the people who have been buying and selling this year? Because of the high interest rates in 2023 there was very little incentive for people to sell their home unless they were able to purchase a replacement home with cash. In fact, nearly half (48%) of all purchasers were cash buyers in 2023.

Despite this environment, there were still plenty of buyers in the market, just not enough inventory to go around, leading to 24% of all homes attracting multiple offers from buyers.

This cooled in the last quarter, but with interest rates expected to start falling into the second quarter of this year, it feels like the market will continue to be a strong market for sellers who price homes appropriately, as the number of buyers exceeds the number of homes for sale.

Deeper Dive Into Data

If we delve into the data a little further we continue to see a rise in Healdsburg as a market for both investors and second-home owners. Looking at the tax records we see that 64% of all homes sold were purchased by people for whom it was not a primary residence.

This doesn’t necessarily mean it is a second home, it could equally be an investment property creating more rental inventory for the local community. This percentage has increased steadily since I first looked at the data in 2019, when 37% of homes were non-owner occupied.

It’s easy to assume that a lot of these buyers are from out of the area, elsewhere in California or the Bay Area, but there are many local investors as well. In fact, local investors represent 39% of these purchases, with 25% being from Healdsburg and the remainder from elsewhere in Sonoma County. With 31% of the non-owner-occupied properties being purchased by Bay Area residents, local residents represent the largest share of investor buyers.

What does all this mean for 2024? The investment that has come into Healdsburg from all over the country, combined with the town’s continued development as a destination for food, wine and outdoor lifestyle lovers, as well as Healdsburg’s own very special community, means that it will continue to be pretty well protected from the natural cycles of real estate. As the saying goes, a rising tide floats all boats. 

David Hargreaves is a partner in BruingtonHargreaves, online at www.modernlivingsonoma.com.