The typical Spring activity levels we experience have pushed themselves much earlier into the year. Seeing buyer demands overload a market is a common occurrence, though not to the depth we are witnessing at present.
The Santa Rosa metro region is working to accommodate the demands of the greater Bay Area along with its’ own, and according to BAREIS MLS, having just wrapped up February the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 205 single-family homes remaining for sale in the city and its environs – 21 percent less than this same time a year ago and fewer than last month’s all-time low. Exacerbated buyer activity has claimed another 183 single-family homes during the past month – 51 percent ahead of last year.
The entire municipality introduced 148 new listings to the market over the last month – 14 percent less than a year ago - while the most recent period also found Sellers handing over keys on 122 completed sales – we expect these metrics to continue to compress and, as long as there is a lack of credible new inventory, the statistics will be artificially hampered due to a significant portion of unsatiated demand going unmet each month as more homes continue to be absorbed while fewer sellers enter the “open” market. This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) standing at 1.7 – attributed in good part due to the fundamental shift in population migration from the greater Bay Area along with the cost of money in our current economy coupled with the sellers remaining on the sidelines.
MSI is the metric that indicates the number of months it would take to sell the current inventory at the current rate of sales. An MSI ranging from 4.0 to 6.0 is generally indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.
Getting down to the underlying specifics, Northeast Santa Rosa saw the introduction of 60 single-family homes in February with a significant number of these homes being offered for sale that are in the waning months of construction, thus making them hard to transact on due to their unfinished status. The supply of homes was met with enhanced demands in February as there were only 93 dwellings – another consecutive all-time low - for home seekers to consider by months end. Buyers embarked on 74 newly initiated escrows – 76 percent ahead of last year - while sellers received closing checks on another 51 properties – 42 percent more than in 2020 - culminating in an MSI of 1.8 and getting tighter.
Similarly, Southeast Santa Rosa saw the supply of available properties drop to 25 by the end of last month – 34 percent less than a year earlier. This submarket debuted just 23 new homes in February while buyers garnered accepted offers on 35 additional dwellings – a stunning 133 percent above last year’s newly pended deals. This coveted corner of the city experienced 23 formal transfers in the period placing additional pressure on an already tight market with MSI dipping further to 1.1 with expectations for this to get harder on buyers.
Oakmont is the one market, that due to its’ composition of buyers and sellers all being over the age of 55, moves independently at times in relation to the greater Santa Rosa marketplace. The active adult retirement community witnessed 16 new sellers debuting their offerings in February while buyers showed up in force putting 22 deals under contract. Sellers concluded 11 transactions during the month leaving this niche market with 44 available homes to open with in March along with an MSI working its way tighter now at 4.0.
Northwest Santa Rosa saw buyers swoop in to gain control of 31 more deals this month leaving just 25 available single-family homes to carry over into March – 39 percent fewer than last year. Sellers committed 35 additional new offerings to the markets while another 31 homes completed the closing process. This intense activity has left the MSI near its all-time low at 0.8 – not even a month’s supply of homes!
Very similarly tight like a year earlier, Southwest Santa Rosa buyers completed six more deals in February, leaving just 18 homes available for home seekers to peruse this month. Sellers submitted 14 new listings into the public domain during the period while buyers pledged their paychecks towards 21 accepted contracts causing this submarkets MSI to rise to 3.0 - though this is a whipsaw-type market and looks to be getting extremely tighter by the end of March.
As buyers move in from points South, we are seeing sellers exit out to regions to our North and East. This exchange of population bases is significantly impacting our marketplace and hugely relevant to the pricing pressure being experienced locally. With markets forces at play, we anticipate a year of significant appreciation ahead – the amount of this will only be known later when we can harvest the data and extrapolate its meaning.