California Homeowner Slashes Asking Price By Half as Housing Market Struggles

Newsweek

5 days ago

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
A California home which was listed for sale at more than $3.5 million at the height of the pandemic finally sold for half its original asking price, as the country faces dwindling demand due to historically high mortgage rates and rising prices.
The property in Sonoma, one of the country's most important wine regions, sold for $1.9 million at the end of last month, according to Zillow, after the buyer apparently succeeded in negotiating a discount from the seller.
Why It Matters
The U.S. housing market has reached a breaking point, according to experts. Thanks to pent-up demand and lingering low inventory, home prices are still rising—but that is unlikely to go on for much longer.
Historically high mortgage rates—which are still hovering around the 7 percent mark—and growing economic uncertainty are discouraging buyers at the same time as more sellers are finally approaching the market, creating a mismatch between the two which experts say will finally cause prices to drop across the country.
This imbalance is particularly evident in Sonoma, which has experienced significant population declines since the pandemic—though the loss of residents has slowed down over the past year, according to recent data. Sonoma County's population peaked in 2015 at 141,530 people and declined by 194 in the past year, according to the California Department of Finance.
What To Know
The property, a single-family home with three bedrooms and four bathrooms sitting on 3,834 square feet of land in Sonoma, California, was built in 1973 and sold in 1994 for only $40,000—or about $10 per square foot.
Home values and prices have skyrocketed since then, especially in the years following the COVID-19 pandemic outbreak, when many Americans moved from bigger, more expensive cities to smaller towns with a better quality of life and more affordable housing. Historically low mortgage rates sparked a homebuying frenzy, but a supply shortage in the U.S. housing market meant that buyers had to fight for a limited number of homes and agree to much higher prices to get the properties they wanted.
It is during this time, in April 2022, that the owners of the Sonoma home tried to sell the property for a staggering $3,545,000—a price tag nearly 9,000 percent higher than in 1994. The listing was removed a couple of months later and the property was relisted for a neat $3,500,000. But still it did not sell: the listing was removed and the price changed multiple times between 2022 and 2024, eventually settling for a sum below $2 million.
On May 27, according to Zillow, the Sonoma home sold for $1,860,000, or $485 per square foot. Records show that the price was 6.8 percent lower than the one asked originally by the seller in April, at $1,995,000, showing that the buyer managed to negotiate a lower price during the sale.
It is not a unique situation in the Sonoma market. According to Redfin, 22.7 percent of homes sold in Sonoma in April had price discounts, up 2.7 percent from a year earlier, while none sold above list price—down 16.7 percent from a year earlier.
A general view of a home advertised for sale in a residential neighborhood on August 15, 2024, in San Jose, California.
A general view of a home advertised for sale in a residential neighborhood on August 15, 2024, in San Jose, California.Only nine homes were sold in Sonoma that month, down 25 percent from a year earlier, after spending an average 56 days on the market before going under contract—19 days longer than they did in April 2024.
The median sale price of a home in Sonoma, according to Zillow, was $1,434,000 in April, up 12.7 percent from a year earlier.
What is happening in Sonoma is happening, with some local variations, all across the U.S. Inventory is growing, but buyers are either too cautious to get in the market or they cannot afford to.
According to BruingtonHargreaves, which helps people sell, buy or build homes in Sonoma County, inventory rose by a staggering 55.7 percent year-over-year in the first quarter of 2025 in the county, jumping from 490 to 764 average listings.
The increase was more significant in the market for homes under $2 million (64.1 percent) than over $2 million (31.2 percent). Despite these increases, the under $2m Sonoma County market is still in favor of sellers, BruingtonHargreaves said, while the market for over $2m homes is a strong buyers' market based on current demand.
What People Are Saying
Redfin Senior Economist Asad Khan said in a recent press release: "The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall. Many are still holding out hope that their home is the exception and will fetch top dollar
"But as sellers see their homes sit longer on the market and notice fewer buyers coming through on tour, more of them will realize that the market has adjusted and reset their expectations accordingly."
What Happens Next
The growth in inventory and the drop in sales reported across the country suggest that prices might come down this year as sellers across the country are forced to offer discounts and adjust their expectations to lure in reluctant buyers. But in order for affordability to significantly improve for buyers, mortgage rates will have to come down—something that experts do not expect to happen before throughout 2025 and 2026.