Could Interest Rate Relief Fuel a New Seller’s Market?
As our markets knock on Winters’ door, buyers will get more distracted while they step aside to take in the season, re-energize and build a strategy around what they plan to accomplish in 2024.
According to BAREIS MLS, with November’s transaction pool now verified, the data points indicate that Sonoma County buyers successfully contracted to purchase 247 single-family homes – seven percent
fewer than last year. Property owners delivered 165 new offerings during the month – off 30 percent from a year earlier along with being another new historical low for this period – while buyers managed
to complete purchases on 228 dwellings – 23 percent less than the 296 units that changed hands during the same period last year.
With December now upon us, buyers will be surveying the 629 available homes remaining in Sonoma County – 11 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. November left us with this metric reading at 36 percent
as Sonoma County remains buoyant with activity, and now with mortgage lenders starting to roll back interest rates, be prepared for more buyers to re-enter the market as early as January.
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 just 66 new single-family offerings last month – 12 percent less than a year earlier – with buyers absorbing 132 homes in consummated contracts. Sellers brought finality to another 129 transactions during the period – 13 percent fewer than last year - leaving the entire region with 231 dwellings available for buyers to peruse this month – essentially flat with last year at this time. Marin’s absorption rate stabilized at 58 percent - indicating that this market has yet to cede control to buyers - and with interest rates trending more favorably for the borrowing population this may make acquiring your new home in 2024 an even more competitive task.
Napa County’s markets still trail both those mentioned above when it comes to activity. November witnessed the release of only 43 new offerings to the marketplace – 16 percent less than twelve months
earlier – leaving inventory levels in the shallows again with 254 dwellings for hopeful homeowners to peruse in December, though the third month in a row where year-over-year available listings were
modestly greater. Buyers placed 59 new deals into escrow – five percent fewer than last year – while closed transactions tipped the scales at 61 during the month pushing the absorption rate lower to 24 percent – edging towards a balanced market reading, though with a seller bias.
Open and functional marketplaces always require active participation from both Seller’s and Buyer’s while an imbalance of such creates the bias to favor one over the other. When there is too much supply,
values fall, and when there is too much demand, prices can soar. Our supply side is bottlenecked with a mass of residential properties owned outright or with such an attractive carrying cost that many
property owners simply do not choose to be sellers and since our communities have not created an easier avenue in both cost and time for new housing developments to rise, our region will more typically
exude flat to inclining price periods. This means you need a savvy, connected agent on your side to help your both navigate and negotiate your way to homeownership.
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