Wall Street can garner too much attention at times while it often looks past the immediate and towards the future, seemingly without regard as to how Main Street is feeling or performing. That said, the wave that a mighty Main Street movement can create at times is something no institution can hold back.
As our markets resume, though still with new protocols in place, we are seeing amazing activity lead to noteworthy trend line moves. According to BAREIS MLS, May’s data points indicate that Sonoma County buyers successfully contracted to purchase 463 single-family homes – four percent greater than a year earlier - with property owners delivering just 401 new listings to the market during the period – 35 percent fewer than the prior May. The County saw just 190 sales reach fruition by months end leaving 948 single-family homes available to carry over into June – establishing the Bay Area’s highest absorption rate of 49 percent, even with limitations on activity. This affirms 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 – with a little more emphasis on the upward stroke of the “V” than forecasted months ago.
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. May showcased just 193 new single-family offerings – 24 percent fewer than last year – with buyers quickly latching onto 234 newly consummated deals – a bit more than twelve months ago. Sellers closed out 124 transactions during the period leaving the entire region with 368 homes available for sale – 26 percent less than last May. This continues the pre-established absorption rate of 34 percent and further suggests our residential markets did not crater, and in fact, have bounced back to the heightened activity levels of more familiar times and maybe more so as we continue to feel the pressure of homeowners deurbanizing from major metro markets.
Similarly, Napa County’s markets are benefitting from the trends expressed above with just 98 new homes making their way to market during the period. Buyers jumped in to secure 109 ratified contracts while sellers completed 57 sales during the period leaving this region with 357 homes available to the marketplace as we open the doors to June. This stint of activity showcased a 16 percent absorption rate – though accelerating upwards - which is still indicative of a liquid market, just not a quick paced as Sonoma and Marin.
First there was the prognostication, then came anticipation and now realization is here. Yes, we all must manage our contacts, guard against a viral resurgence and plan for our futures – though we must go on living, we are human after all.