With the volume of sales within national, regional and local real estate markets stalled at 30-year lows, there are signs some North Bay residents finally appear to be poised to get back into buying homes, in part inspired by falling interest rates.
Real estate markets are extensively influenced by interest rates, the supply of available homes and buyers’ sentiment or confidence. When these things are in concert our markets can have an incredible cadence that leads to long cycles of growth. If they are not, then our markets exhibit the stagnant nature they’ve had over the prior 24 months. Recent sales data indicates a change might be coming as we roll through winter and into spring.
According to BAREIS MLS, Sonoma County buyers successfully entered agreements to purchase 374 single-family homes in September — 14 percent ahead of last year at this time. Property owners delivered 295 new offerings during the month — down 15% from 2023 along with being another new historical low for the period. Buyers managed to complete purchases on 327 dwellings — 13 percent greater than the 289 units that transferred ownership last year at this time.
With October in play now, buyers will be surveying the 897 available homes remaining in Sonoma County — a significant 23% bounce above the 30-plus year low we experienced last year at this time.
As the year continues to take shape, buyers will be making determinations on these offerings, along with the debut of new ones, and decide whether to buy now, or wait to buy. This will show up in a common market measure — the absorption rate.
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% 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.
In Sonoma County, September’s activity left us with a heightened absorption rate of 37%, highlighting that buyers are still working harder than historically normal to find the home they want — at an interest rate they like. This also should mean they’ll be more likely to follow through this month on purchases they line up, with interest rates on loans coming off their lows since the last Federal Reserve rate decrease. Rates are now now in the 6% to 6.75% range once again, depending on the loan product selected.
Marin County property owners introduced 175 new single-family offerings this September — another all-time monthly low and 10% 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 this year. Buyers absorbed 198 homes in consummated contracts, while sellers completed sales on 149 dwellings during the period — just 2 more than last year — leaving the entire region with 391 dwellings available for buyers to peruse in October.
Marin’s absorption rate for the month relinquished some momentum to close the period at 38% — more in line with neighboring markets.
A slightly different story to the east, Napa County’s markets remain balanced for the fourth month in a row. September brought the release of 103 new offerings to the marketplace — just 1 unit less than last year, leaving 397 homes available for buyers to peruse this October. Buyers placed 75 new deals into escrow — nine fewer than last year — while closed transactions tipped the scales at 73 during the month — 12% more closings than this same period a year ago.
This combination of new releases coupled with buyer activity has allowed the Napa absorption rate to steady at 19%, demonstrating that this market is stabilizing. This means that both buyers and sellers must be open to thoughtful negotiation now that the field of play has adjusted.
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