Over the next week, you will start seeing the data for the Healdsburg housing market for 2023 compared to 2022, showing that sales for 2023 were down 15% year over year to 171 residential properties with median prices up 9% to $1.23m. 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 Healdsburg City.
It’s only when we take a more detailed look at the numbers do we really get a sense of some of the Healdsburg housing market trends that are impacting the market. If we look at the numbers for Healdsburg city, all the homes that were sold within the 4.4 sq miles of the city limits, we see a very different picture compared to homes that are in “greater Healdsburg” which covers the 188 sq 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 now with the sale of Montage homes in the city limits at an average price of $5.37m and an average sq ft price of $2177 and with sales of Mill District likely to start showing in the numbers for 2024 (if the project doesn’t continue to have delays) then the numbers will only become further distorted 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% uplift in price.
So what was the most expensive home sold in Healdsburg this year? It was 3315 Westside Road, a four-bedroom six-bathroom home on 16 acres including a small hobby vineyard just a six-minute drive to the Plaza. 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!
If we look at the most expensive home in the city limits then it was 135 Sagebush Court, one of the Montage Harvest homes selling for $6.6m to someone from Minnesota. If we take out the Montage sales, then the most expensive home sold within the city limits was 681 South Fitch Mountain Road which is a large family home you would recognize set on 1.3 acres. This sold for $4.1m 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 $5m+.
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.
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 can 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. Over the past few years, this percentage has increased steadily since I first looked at the data in 2019 when 37 percent 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 a lot of local investors as well. In fact, local investors represent 39 per cent of these purchases with 25 per cent being from Healdsburg and the remainder from elsewhere in Sonoma County. With 31 per cent of the non-owner occupied properties being purchased by Bay Area residents, it is local residents who represent the largest share of Healdsburg real estate investment buyers.
What does all this mean for 2024? The investment that has come into Healdsburg from all over the country and its continued development as a destination for food, wine, and outdoor lifestyle lovers as well as maintaining its 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.
This article on the Healdsburg Real Estate Market 2023, first appeared in the Healdsburg Tribune, Jan 2024. For the original article see here.
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