Eyes & Wallets Look Towards New Year
With prices in all niches of the marketplace off from their peak in May of this year, we must keep in mind the growth in values experienced over the prior three years – let alone the last decade - to put this into perspective.
According to BAREIS MLS – with November in the rearview mirror - the data points to a marketplace in the process of establishing its new cadence with only 199 single-family homes remaining for sale in the city and its environs – 12 percent less than this same time a year ago. Buyers laid claim to 114 single-family homes during the past month – a rate 34 percent less than a year earlier - while the entire municipality introduced just 83 new listings to the market over the last month – 33 percent fewer than in 2021 and a new all-time monthly low. The most recent period also found Seller’s handing over keys on another 110 completed sales – 50 percent behind last year.
This measurable contraction is affirmed by Santa Rosa recording a Months’ Supply of Inventory (MSI) level at 1.8 – a reversal of October’s expansion further foreboding of the lower levels of inventory being made available within the marketplace and as markets wade through their seasonal slumber, expect this to remain tight and the true market temperament to reveal itself this next Spring.
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.
Within the city, Northeast Santa Rosa – the North Bay’s most active submarket - saw the introduction of merely 32 single-family homes in November – 26 percent fewer than this same period a year ago while also establishing a new all-time low inventory level. The supply of homes was met with more active demand during the period as there were just 76 dwellings for home seekers to consider by months end – 31 percent lower than the depths we were experiencing at this time last year while concurrently confirming another new low. Buyers still managed to absorb 44 homes into new contracts – unusual as it was more than in both September and October, which we have never experienced either at this time of year. Sellers received closing checks on another 38 properties – resulting in MSI reversing the prior two-months trend as it tightened to 2.0.
Southeast Santa Rosa saw the supply of listed properties rest at 35 by the end of last month. This submarket debuted just 12 new homes in the period while buyers garnered accepted offers on 18 additional dwellings. This coveted corner of the city experienced 21 formal transfers in November culminating in a MSI reading of 1.7.
Similarly, activity in Oakmont rebounded in November from the prior two-months as well. Active inventory levels stood at 23 homes available for sale at the end of the month as property owners launched 11 new offerings during the period. Buyers inked out another 14 new deals while sellers completed 14 more transactions during the month leaving this niche market with an MSI holding at 1.6.
Still the only niche that has recorded higher inventory levels than last year at this time, Northwest Santa Rosa buyers made advances to gain control of 23 more deals leaving 42 single-family homes available for sale at months end. Sellers committed 23 additional offerings to the market while another 29 homes completed the closing process. Steady buying activity levels lead MSI to a tighter reading of 1.4.
Southwest Santa Rosa sellers delivered just five new offerings to the market – echoing the all-time lows noted above - while consumers placed 15 more dwellings into contract during the period. Newly minted homeowners captured keys on eight closings, leaving 23 homes available for buyers to peruse in December while establishing an MSI retreating downward to 2.9.
As mortgage rates abate their rapid climb and adjust to what our financial markets believe long term interest rates will be we are likely to see more stable rates for home loans, especially the larger ones, as these markets point to a period next year where they believe our mortgage rates will come further off their recent highs. This will bring stability to the real estate markets and create a new baseline for growth – all with the caveat that if the Federal Reserve does not get overzealous at it attempts to retard inflation and takes the economic data they are seeing each month as having accomplished the goal intended thereby preventing a deep recession – which nobody wants to happen.
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