We usually refer to markets as a whole and often forget that there are segments of the markets that work differently than the whole. Sonoma County’s real estate markets have a distinctly different mood at the higher end — homes priced above $1 million — than the balance of the marketplace.

Today’s million-dollar homes, at least in California, aren’t filled with movie stars and Wall Street fat cats, nor are they adorned with gold-plated chandeliers or flanked by tennis courts and Bentley-filled garages. They are occupied by hard working people trying to enjoy life and want a better environment for themselves when they can relax at home with family and friends. When we take a look at the niche known as affordable luxury – homes valued in the $1 million to $3 million range – we discover a marketplace that is very different from homes priced below this threshold.

Sonoma County, the largest county in the North Bay by population, saw October end with 19% greater inventory of homes in this niche than just a year earlier, while the sub-million dollar market saw inventory levels 28% above year-ago levels.

According to BAREIS MLS, Sonoma County finished the month with 340 homes in the $1 to $3 million range available for sale. During the period, buyers negotiated to purchase 84 new properties while only 61 properties were newly introduced to the market – 23% less than in 2023. Sellers were able to complete a further 95 deals in October, giving rise to an absorption rate of 28%. This affordable luxury segment of the market has seen this rate fluctuate between 25% to 46% over the past two years, meaning the markets are more controlled by sellers than buyers and haven’t even sniffed a balanced reading at any point in the past two years.

The absorption rate is calculated by dividing the total number of homes sold during a month by the total number of homes available for sale at the end of the same month. A high absorption rate – 20% and above – indicates that the supply of available housing will shrink rapidly, increasing the odds that an owner will sell a property in less time. Conversely, an absorption rate below 15% is indicative of a buyer’s market, meaning homes are selling more slowly.

This segment of the market typically sees a higher price per square foot (PSF) for a home than the sub-million dollar market, as the properties tend to be more embellished with features such as designer pools, larger manicured yards, views, and uniformly more desirable, custom finishes at the same time as they are located in the most preferred neighborhoods in the county. In Sonoma County, as of the end of October, the average sale took place at $615 psf for a home in the $1 million to $3 million range, compared to a countywide report of $462 psf. That’s a 33 percent premium that buyers pay to access the equipment available at this level of the market.

At the time of this writing, the median price in this segment of the market was $1,325,000 while the average price paid was $1,428,000. Quite a contrast to the sub-million dollar market where the median was $727,000 while the average home sold for $703,000.

Are you trying to find more home in the house you are looking for? This niche in the market requires you to understand and notice the simplest details to be more capable of appreciating what is really in front of your eyes. Notice these details and you’ll see why there is such a wide difference in price per square foot between these segments of our marketplace.

Jeff Schween, a “top 1% Realtor at Compass,” provides market insights for The Press Democrat in this weekly column. You can reach him via his website at SantaRosaFineHomes.com.