Building New, While Losing Old Homes to Disasters

Building New, While Losing Old Homes to Disasters

While in the midst of housing shortage - call it a crisis - the housing universe in California has once again reclaimed thousands of homes from us. As we try to bring on new homes and apartments across the state, this recent calamity really upsets the supply side of the equation and more than likely will impact construction costs – mostly in Southern California – though the demands put on some home building items like appliances, windows & roofing will be felt in our region for sure. These forces will likely lead to an escalation in home prices and construction costs due to the thousands of homeowners entering the marketplace in pursuit of where to live.

Within the metropolis of Santa Rosa, according to BAREIS MLS with 2024 now in the history books, Decembers’ data points to a marketplace executing on expected trend line levels. Sellers debuted just 44 new single-family homes – 29% fewer than last year and an all-time monthly low while the inventory of available homes in the greater Santa Rosa metro region rose 9% to 179 by year end. Home seekers laid claim to 72 single-family homes during this holiday month – 7% fewer than last year at this same time – while sellers handed over keys on another 92 completed sales – 7% more than the 99 abodes in 2023. 

Santa Rosa recorded a Months’ Supply of Inventory (MSI) level of 1.9 – continuing to affirm that sellers are exerting more influence on the marketplace than buyers as the year closed out. 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 indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.

Northeast Santa Rosa – the North Bay’s broadest submarket - saw the introduction of merely 13 new single-family homes last month – astonishingly 48% fewer than this same period a year ago. The supply of homes was met with increased demands from last year as there were only 66 dwellings for house hunters to consider as January got underway – 18% less than in 2023. Buyers managed to absorb 27 homes into new contracts – 16% behind last year - with sellers receiving closing checks on another 32 properties – 27% fewer than a year earlier, highlighting an MSI of 2.1. Keep in mind that in this submarket some of the new listings posted are offerings for homes under construction, which adds some unrealistic carryover inventory to what is actually available to purchase now, unlike most other sub-markets throughout Sonoma County.

Southeast Santa Rosa saw the supply of listed properties rest at 24 as January opened – 14% less than just a year earlier. This submarket saw the launch of merely four new listings in December – 64% fewer than last year’s figures - while buyers garnered accepted offers on nine additional dwellings – 31% behind where pending contracts were in 2023. Sellers experienced 13 closings in the period resulting in MSI tightening abruptly to 1.8.

Oakmont, which has experienced exacerbated demands from buyers steadily throughout the year, found sellers chipping in with only three new offerings in December. Buyers contracted to purchase three more homes while property owners received closing checks on 11 more sales leaving this region with 19 available homes for buyers to pursue in January along with an MSI hovering at 1.7.

Northwest Santa Rosa remained extremely active by all accounts. In December, buyers advanced to control 26 more deals while leaving 42 single-family homes available for sale at the beginning of January. Sellers committed just 13 new offerings to the market in the period while 26 additional homes crossed the finish line, causing MSI to tighten to 1.6 – definitely a sellers’ market.

Southwest Santa Rosa’s activity kept moving along as consumers placed seven dwellings into contract during the period - just as sellers handed over the keys to 10 new homeowners - leaving 28 homes for buyers to view at the outset of the new year and an MSI now of 2.8.

Certainly, the new homes brought forth from the carnage will be fire hardened unlike the ones that were taken, and this will prove out over time to be better – but that is a long road ahead…think 10 years or more to recover just the homes that have been lost. In the meanwhile, those who have lost will be entering the home buying market, the home rebuilding market and even the rental market thereby driving up the demand side of the equation – primarily in that region though you can count on a solid swath of those to be considering moving into other markets both near and far.