As our world begins to phase into action, we are likely to encounter both anecdotal and data driven events that will start to shape our new normal and the behaviors that will arrive with it. We will likely encounter both positive and negative situations that cast doubts as well as give rise to new hopes and beginnings – let’s remember to give each other grace, as well as ourselves, along the way.
As our markets open, though with new protocols in place, we continue to expect data points to find a new rhythm. According to BAREIS MLS, April’s metrics of measure indicate that Sonoma County buyers successfully contracted to purchase 196 single-family homes with property owners also only delivering 196 new listings to the market during the period – both off significantly from the prior year as expected with the limited market activity due to COVID-19. The County saw 222 sales reach fruition by months end leaving 777 single-family homes available to carry over into May – establishing a rather high absorption rate of 29 percent, even with limitation on activity. This tells us that we are likely to see trends get back to where we were in February which bodes for more of a “V” type correction in our residential markets.
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.
Marin County’s marketplace is confirming a similar path. April showcased just 77 fresh single-family offerings – a hefty 74 percent fewer than last year – with buyers quickly latching onto 97 newly consummated deals. Sellers closed out 76 transactions during the period leaving the entire region with 231 homes – 47 percent less than a year earlier - as offerings for buyers to select from this month. This establishes an absorption rate of 33 percent which further suggests our residential markets did not crater and in fact will likely bounce back to the heightened activity levels of more familiar times.
Napa County’s markets exhibited the less of everything model reported above as well with sellers releasing just 72 new homes to the market in April. Buyers jumped in to secure 69 ratified contracts while sellers completed 61 sales during the period leaving this region with 311 homes available to the marketplace as we open the doors to the month of May. This stint of activity showcased a 20 percent absorption rate which is still indicative of a liquid market, just not a quick paced as Sonoma and Marin.
Eventually we will get back to where we most recently remember being and this process - as well as the time to “return to normal” - will evolve and look differently for all of us depending on our businesses and individual lives. Some will snap back more quickly to normal. Others will experience a more elongated path. I suggest we continue to be kind and helpful with each other as a community typically is only as strong as its weakest link.