In a year that has seen so many multiple party interest situations we typically find that buyers that have not been successful in the pursuit of a new home arrive at a fatigue level that typically pulls them out of the market to try and recharge their emotions while affirming their goals and plans. Coupled this with fewer willing sellers and we will see sales flatten out in the near term. Mind you, with the demands at hand, this shall only offer a brief moment of time to be an opportunistic buyer, though one that may represent a rewarding outcome.
According to BAREIS MLS, August’s data points indicate that Sonoma County buyers successfully contracted to purchase 537 single-family homes. An amazing feat considering property owners only delivered 451 new listings during the month – 115 percent fewer than last August. Buyers closed on 585 sales by months end – held back purely due to a lack of sellers entering the market at a time when we typically see the greatest number of homeowners electing to list their properties.
The compression within our markets is easily understood by realizing that the spike in buyer demands coupled with reluctant sellers over time creates a chasm that inevitably forces prices higher to tempt sellers to market. This prolonged immense activity has created a hurried pace causing available inventory to fly off the shelves while less is being restocked, leaving just 698 single-family homes to carry over into September and emblematic of our likely peak of inventory that we will experience this year. Steady voracious demand has driven prices upward and at each new high more homeowners get persuaded into the market, though with property owners refusing to be sellers it may take a lot more to cause new supply to appear and the inventory that has shown up is being acquired rapidly as evidenced by a steady 84 percent 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 percent and above – indicates that the supply of available homes will shrink rapidly, 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.
One of California’s hottest markets for demand, Marin County, is one of the few more vociferous locations – percentagewise - than Sonoma County. More typical of what you would see during the winter holiday low, sellers introduced just 139 new single-family offerings in August – 53 percent less than a year earlier. Buyers promptly absorbed 192 homes into consummated contracts – 20 percent fewer than the previous August though only held back by the sheer lack of available homes for sale. Sellers closed out 223 transactions during the period leaving the entire region with 211 homes available for buyers to peruse in September – a far cry from what we encounter historically during the summer months. Marin’s extreme pace indicates a blistering absorption rate of 106 percent.
Napa County’s markets are benefitting from similar trends as sellers managed to deliver just 111 new homes to market this last month – 14 percent fewer than in 2020. Buyers rushed in to grab 126 new deals while sellers closed out a remarkable 125 sales in the period – similarly, the closed sales are being hampered by an unheralded lack of available supply. This left the region with just 235 available dwellings heading into September - showcasing a 54 percent absorption rate.
Our markets will see the typical tapering of activity from here through the end of the year, though do not rest on this market as it shall awaken in force as we turn the calendar into the new year.
