Honing-in on Housing
As shelter remains a bare essential for all of us, when a population outgrows the supply of new housing options a market lopes into a long-term continuous stream of price appreciation occurring – classic supply and demand economics.
According to BAREIS MLS, Sonoma County had exactly 559 single-family homes left for sale as October concluded – 24 percent fewer than this same period last year. Sellers delivered just 319 new listings to the market during the month – 40 percent less than in 2020 - and, if this trend continues, sales will have no choice but to fall as inventories continue to be depleted and options dry up for purchasing. This October, buyers gained control of another 456 new deals – 10 percent ahead of a year earlier. In support of these metrics, completed sales tipped the scales at 477 this last month – with all that is going on to consider that sales are even one percent greater than in 2020 is testament to the underlying strength of demand within our marketplace.
The continued pace of the markets can be measured by the months’ supply of inventory (MSI) and, with vastly growing demands from buyers in our region along with extremely attractive interest rates driving our markets, the data shows MSI hovering at 1.2 as of last month – with forecasting for steadiness at this level. This display of liquidity and activity is among the highest in the seven Bay Area counties we track and, in some part, due to the native demands of households, unique to our region, who are still replacing the 6000 plus homes they lost in the Tubbs, Nuns, Kincade, Glass and Wallbridge Fire calamities.
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 in the town of Sonoma, which submarket includes the hamlets of Kenwood and Glen Ellen, there were 70 homes reported for sale as October ended – 28 percent less than this same period a year ago. This region experienced the addition of just 27 new listings during the period – 55 percent fewer than last year - while buyers garnered accepted contracts on 42 more properties. Sellers awarded keys to another 39 new homeowners thereby delivering a steady MSI reading of 1.8.
Healdsburg witnessed 23 new listings arrive to the market last month – the fewest since last November. Buyers absorbed 27 homes in new deals while sellers closed out another 27 transactions leaving this submarket with 77 homes for presentation to buyers in November, along with an MSI of 2.9.
Petaluma’s Westside only attracted 17 new sellers in October which allowed available inventory to steady at 24 homes remaining for sale by month’s end. Buyers grabbed 22 new deals in the period while sellers closed out 32 purchases causing MSI to tighten further to 0.8.
Across town, Petaluma’s Eastside supply of inventory is still being measured in weeks not months - to be precise two weeks! October wrapped up with merely 15 available homes for buyers to consider - inclusive of the 17 additional offerings unveiled during the period. Home shoppers placed 29 more dwellings into contract while sellers also completed 32 transactions. With less than a single month’s supply of homes being available – MSI at 0.5 – continue to expect values to rise to encourage more sellers into the market.
Constricted by the availability of new supply, Sebastopol sellers delivered just 14 new listings in October - falling significantly short of demand as buyers captured another 22 deals during the period. Sellers closed out 24 more sales leaving 34 single-family homes available for buyers to peruse in November while showcasing an MSI now at 1.4.
Unless we add a significant amount of new housing or see a population flight then we should expect the long-term appreciation curve to continue to trend upwards…get yours while you can!