Over the past year, with many people searching for a more rural existence, I was curious to take a look at the market for residential lots in Sonoma County to understand if the cost of lots in Sonoma county has increased, where people are purchasing and which locations are lots selling in?
Looking at the map (above) showing the location of lot sales over the past year, you can see the vast majority focused on the east side of Santa Rosa. What is interesting is the concentration of lots sold out on the coast up by Sea Ranch and further north.
The overall number of lots sold in the year ending March 2021 has been fairly flat compared to the previous year with 359 lots sold. Over the year, the volume of lots for sale (ie coming. onto the market) was down 31% to 183 from 266 the year before. One of the main reasons for that was in the year ending March 2020, there were a lot of fire lots that were put on the market. However in the first quarter of 2021, the number of lots sold has increased sharply by 25% while the number of lots in escrow has increased by 71%. Perhaps this increase reflects peoples new fond desire to escape the city and build their dream home?
The average price of a lot was $617k compared to the median price of $272k. This reflects the fact that a large volume of the lot market is fire lots in north east Santa Rosa which cost from $200k$350k compared to the smaller volume of million dollar plus lots which are reflected in the average cost. The overall days on market has remained flat at 140 days from 150 days with the sale price to list price ratio up slightly at 89% versus 83% over the prior year.
While the overall market remained largely flat in the year ending March 2021, the top end of the market for lots over $1m was definitely stronger last year. The total number of lots sold increased by 54% to 20. If we look at the first quarter of this year there has been a 50% increase in the number of million dollar lots in escrow.
The map above shows the location of lots over $1m concentrated in and around Healdsburg, North East Santa Rosa and around Kenwood and Glen Ellen. The activity in the million dollar plus market is reflected in the average days on market falling from 182 last year to 156 days. Unusually for lots, the average sales price to list price is at 93% up from 81% the year prior. The median price of lots over a million dollars is $1.2m compared to the average price of $1.4m.
What Lots Are Currently For Sale
Because lots typically take almost twice as long to sell than a residential property there are always lots that have been on the market for a while. Although the lot in Bodega Bay (2980 Lucille Ave) that has been on the market for 2980 days is at the extreme!
Of the 184 lots currently for sale there are 70 for sale in Santa Rosa representing 38% of all lots for sale in the county. As can be seen from the graphic above, there is a fairly even distribution of lots for sale across the most popular Sonoma County destinations such as Healdsburg,
Sonoma and Russian River for wine country and river properties, with Sea Ranch being the best opportunity to purchase a coast lot.
In the over one million dollar range, Montage Healdsburg has been slowly drip feeding lots onto the market for its Estate Homesites. These lots are sold with plans for a pre-designed home. You could be forgiven for thinking that a 0.3 acre lot for $2.29m includes the building of the home but sadly not. That comes at an extra cost!
I am probably slightly biased but for someone looking for a lot to build an estate home, I have recently put this lot on the market on 2476 Wright Ranch Road on the east side of Healdsburg, which if the location is right, it represents great value given its panoramic views and the fact that it is build-ready. You can read more about what to look for when buying a lot in this blog post.
While the overall cost of lots has in Sonoma county has been reasonably flat there are probably three distinct markets. Residential building lots in and around Santa Rosa, estate lots for $1m+ in the popular wine country destinations and then rural lots in the $400k to $800k range. One of the biggest challenges for anyone looking for a lot that isn’t on city services is navigating the challenges of septic systems as well as zoning. If you aren’t careful, you can end up with a piece of land that you need to wait for year to build on, worse still, it might never be buildable. It pays to work with someone who understands some of the challenges involved.