Changes Have Arrived

Changes Have Arrived

As mentioned over the last few months, with the Federal Reserve working to squeeze the life out of people trying to buy anything, this condition has now abated. Yes, that means the government has awoken to what we all have been experiencing on main street for some time now – jobs being lost and runaway price increases on anything and everything.

In our real estate marketplace, experiencing interest rates go from two percent to eight percent took the motivation out of the buying side of the equation and inhibited much of our market activity while also pushing prices down across the board about eight percent from their most recent highs. 

According to Compass, Sonoma County had exactly 893 single-family homes left for sale at the close of August – 27 percent greater than this same period a year earlier. Sellers delivered 294 new listings to the market during the month – 23 percent less than in 2023 and another all-time monthly low infusion of inventory - while buyers garnered control of another 388 new deals – 30 percent greater than a year ago. In support of these metrics, completed sales stood at 370 for the period – nine percent more than this same time last year while the median price for a Sonoma County home settled to $807,000 – eight percent off the peak price achieved in May of this year.

The continued pace of the markets can be measured by the months’ supply of inventory (MSI) and, with the Federal Reserve having lowered interest rates already with indications of more measured adjustments to come we expect this to result in far greater demands and, eventually sales, in our local real estate markets. At August’s conclusion, the MSI for Sonoma County registered 2.4 – indicating sellers remain in control - which has not changed since 2011.

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.

Getting down to the details within the town of Sonoma, which submarket includes the hamlets of Kenwood and Glen Ellen, there were 123 homes reported for sale as August wrapped up – 13 percent higher than last year. This region experienced the addition of 29 new listings during the month – 20 percent less than twelve months earlier as well as another historical low. Buyers garnered accepted contracts on 35 more properties, five more than in 2023, while sellers in the valley awarded keys to 38 new homeowners allowing MSI to fall to 3.2 – essentially swinging more towards favoring sellers after teetering near a balanced reading over the prior 90 days.

Healdsburg witnessed 16 new listings debuting in the market last month – 27 percent fewer than a year ago. Buyers absorbed seven homes in new deals while sellers closed out another 14 transactions leaving this submarket with 105 dwellings for presentation to buyers in September – 44 percent above year ago levels - culminating in an MSI reading of 7.5 – thereby holding this market out of balance and still favoring buyers as it has been over the last 120 days. 

Petaluma’s Westside attracted just nine new sellers in August – another all-time low for the period - leaving available inventory at 44 homes for buyers to react to by month’s end. Home seekers grabbed 23 new deals in the period while sellers closed out another 22 purchases allowing MSI to tighten further to 2.0 for the month.

Sebastopol wrapped up the period with 37 available homes for buyers to consider, which included the 20 new offerings from property owners in August. Home shoppers placed 22 more abodes into contract while sellers completed 19 sales, allowing MSI to drift to 1.9 - steadily favoring sellers even more so now.

Even tighter than Sebastopol, the Windsor market saw available dwellings steady at 29, which included the eight new listings that showed up during the month. Buyers captured 20 deals in August while sellers closed out 18 more transactions holding MSI at 1.6.

We are seeing the marketplace awaken to the relief being experienced with mortgage rates now obtainable in the 4.75-5.5 percent range – depending on your loan – but this engine of commerce that we know as the real estate market takes time to build momentum and establish trends. So, yes, much more activity on the street. With the pending election and holiday season arriving, just don’t expect it to feel much different until we reach next Spring!