Could Home Prices Accelerate in 2024?
Buyers are making the last big push of the year just ahead of tempering their activity levels as we roll into the Holiday season. According to BAREIS MLS, with October now complete, the data points indicate that Sonoma County buyers successfully contracted to purchase 293 single-family homes – three percent fewer than last year. Property owners delivered 236 new offerings during the month – off 25 percent from a year earlier along with being another new historical low for this period – while buyers managed to complete purchases on 326 dwellings – one percent more than a year ago.
With November now upon us, buyers will be surveying the 708 available homes remaining in Sonoma County – seven percent more than in 2022. Home seekers 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. October left us with this metric reading at 46 percent as
Sonoma County remains strong with activity, even with rates at their short-term pinnacle, buyers are still determined to acquire their new home.
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 106 new single- family offerings last month – 27 percent less than a year earlier – with buyers absorbing 153 homes in
consummated contracts. Sellers brought finality to another 173 transactions during the period – essentially on par with last year - leaving the entire region with 320 dwellings available for buyers to
peruse this month – three percent lower than last year at this time along with being another new all- time low inventory mark for the period. Marin’s absorption rate gained momentum from the prior
month to close out October at 54 percent - indicating that this market is gaining strength with regard to property values moving higher along with establishing an even more competitive environment for
buyers, even with interest rates elevated.
Napa County’s markets are trailing activity levels of both those mentioned above. October witnessed the release of only 64 new offerings to the marketplace – 30 percent less than twelve months earlier –
leaving inventory levels in the shallows once more with 299 dwellings for hopeful homeowners to peruse in November – the second month in the last three years where year-over-year available listings
were greater. Buyers placed 78 new deals into escrow – seven percent more than last year – while closed transactions tipped the scales at 88 during the month allowing the absorption rate to expand to
29 percent – continuing to indicate that this market is still more in favor of sellers.
Over the next two months property owners will be determining if they will be sellers in 2024 then show their hands as we move into the Spring. Conversely, Buyers will claim holiday distraction and high
interest rates are keeping them on the sidelines or in a holding pattern. With all this in mind, we are expecting next year to deliver fewer new listings than this year has, along with interest rates plateauing
and making likely adjustments in favor of buyers that will, in turn, heat up the demand for more homes. If this tale follows through, then expect home prices to rise modestly in 2024.
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