Big second home real estate markets like Tahoe, Monterey County and Palm Springs have all seen an unprecedented year in terms of growth. Inventory is low, demand is high and people who have the funds to move out of cities and snatch up some acreage are doing so.
For nearby Sonoma County, inventory has been low since 2017 due to year after year of raging wildfires. First, it was the Tubbs Fire in 2017, which decimated more than 5,643 structures. In 2019, the Kincade Fire destroyed 374 structures in the county.
This year, it's still early in the fire season and Compass real estate agent Peter Colbert listed a home on the market in Guerneville just two days before it burned to the ground in the LNU Lightning Complex.
Wildfires aren't new to the region, but agents say this unending destruction has made it hard to keep up with demand, even if the buyers looking aren't scared by the natural disasters. "Inventory is a problem. It's been a problem. Now it's just exacerbated because the demand is so high." Colbert said. "Then our market just falls off the cliff because of the fires. The smoke doesn't help."
Colbert said he's already sold more than $50 million worth of property this year. In an average year, he'd sell about $60 million, and it's only Sept. He predicts he'll far surpass that this year.
Redfin agent Starling Scholz said her business is also booming. "Last season, I had about three closings in this quarter," she said. "This quarter, I've had 11 plus I have four [homes] in escrow and I'm prepping four listings. The business for me has quadrupled at the very least."
The number of pending sales in the county was up 27% from June through August 2020 versus the same period in 2019, according to Redfin, and the percentage of properties that went off the market within two weeks was up 8% in the same period in 2020 versus 2019.
"Inventory is really slim," Scholz said. "I'd say there's almost nothing available. It's almost difficult to help buyers. We have to rush out totally prepared if there's something." Scholz said.
Redfin data show active listings were down an average of 11% from May to August 2020 compared to 2019.
Both Colbert and Scholz said most of their buyers are coming from San Francisco and Silicon Valley, and are looking for second homes. Colbert said the majority of them aren't getting rid of their city homes.
"This year, they want it to be a second home but it also could become permanent," Scholz said. "They're confused. They're trying to find a weekend home, but think 'we may be here for six months and then do weekends.' They're doing their best to make the best choice, but they don't know what will happen with work."
Oftentimes these buyers assume that once the pandemic is over, they'll be able to put their house on short-term rental sites like Airbnb. Since many are getting into the second home market in the area for the first time, they may be unaware of the strict vacation rental market restrictions put on a large swath of the county. Scholz said some have learned this and had to reconsider their search.
Meanwhile, she's had several sellers offloading investment properties they'd typically list on Airbnb.
Colbert said prior to the pandemic, it wasn't common to have buyers who were almost exclusively local. Typically, he said he'd see buyers come in from New York and Texas who fall in love with wine country on a trip. Since those buyers aren't traveling, he's not seeing much outside the Bay Area beyond the occasional L.A. buyer.
While the market has always been heavy in cash offers, Colbert said, now it's almost required to make offers competitive, along with over-asking prices and short contingency periods. "There's always been cash in this market but it was mostly for specific properties that were unique," he said. "Now you just have to do it no matter what."
But with the recent fire season, Scholz said she is seeing people start to take a break or reassess the locations they were targeting. Just in the first week of September, she said she'd had more interest in coastal Bodega Bay than ever before.
But even faced with yearly fire seasons and recurring flooding near Russian River, the market is still busier than ever. "It's unbelievable. You see things go on the market and they go into escrow within 24 hours." Scholz said.
