Anticipating a Robust Season Ahead
National, state and regional economists have been projecting that this autumn will be the busiest season of the current year when it comes to real estate market activity. They are predicating this on the anticipated interest rate adjustments coupled with the Presidential election year coming to a finality along with sellers deciding to bring much needed new inventory to the marketplace so that the buoyed level of buyers entering it after Labor Day will have something to feast upon.
According to BAREIS MLS, as July has been put to rest, we find our markets reporting a mixed bag of results depending on the price niche of the home in question. The data points indicate that Sonoma County buyers successfully entered agreements to purchase 390 single-family homes in July – seven percent ahead of last year at this time. Property owners delivered 332 new offerings during the month – off 13 percent from 2023 along with being another new historical low for the period – while buyers managed to complete purchases on 382 dwellings – 16 percent greater than the 330 units that transferred ownership last year at this time.
With August in play now, buyers will be surveying the 892 available homes remaining in Sonoma County – a significant 38 percent bounce above the 30+year low we experienced last year at this time though a far cry from nearly 20 years ago when we were trading out more than twice this volume of sales each month. As the year continues to take shape, buyers will be making determinations on these offerings, along with the debut of new ones, as to purchasing now, or not, and this will show up in a common market measure - the absorption rate. July’s activity left us with a heightened reading of 43 percent as buyers worked harder to find the home they want - at an interest rate they like – and remain more encouraged to make concerted efforts to follow through on their purchases with rates in the 5.75 -6.25 percent range once again.
The absorption rate is calculated by dividing the total number of homes sold in a month by the total number of homes available for sale at the end of the same month. A high absorption rate – 20 percent and above – indicates that the supply of available homes will shrink, thereby increasing the odds that an owner will sell a property in a shorter period. Conversely, an absorption rate below 15 percent is indicative of a buyer’s market, meaning homes are selling more slowly.
Marin property owners introduced 90 new single-family offerings this July – another all-time monthly low and 39 percent less than a year earlier. These woefully lacking inventory levels may continue to create a more competitive environment for both new and existing buyers in pursuit of making Marin their home in 2024. Buyers absorbed 146 homes in consummated contracts while sellers completed sales on another 200 dwellings during the period – 23 more than last year - leaving the entire region with 283 dwellings available for buyers to peruse in August. Marin’s absorption rate for the month jumped to 71 percent once again - indicating that this market should still experience price escalations coupled with multiple offers.
A slightly different story to the east, Napa County’s markets hail near a balanced reading. July brought the release of 112 new offerings to the marketplace – 16 percent above last year’s new listings – leaving 350 homes available for buyers to peruse as we kick off this August. Buyers placed 95 new deals into escrow – 13 more than last year – while closed transactions tipped the scales at 76 during the month – just four off the pace we saw a year earlier. The combination of new releases coupled with buyer activity has the absorption rate steady from the month prior at 22 percent – demonstrating that this market keeps tipping its toes towards a more neutral or balanced field of play – though still one with a bias towards sellers holding the advantage.
For now, August will likely bring about the end of the summering market we have been experiencing over the last 3 years and Labor Day should signal return to the cadence we are used to seeing in the first half of most years and, if the pundits are correct, we will set records for sales during the months of September, October and November that we have not seen for a while… So, rest up while you can, get those last kids off to school, wrap up that last vacation for the summer and order a double espresso!
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