Markets Move from Couch Potato to Work Out Mode
Coming off two years of essentially flat sales volumes that were akin to where they were over 30 years ago when our North Bay population totaled 757,000, we see behaviors changing and an appetite to get back to normal…but that takes time, consistent affirming data points and an understanding that as market conditions improve there will be setbacks or misses along the way.
According to BAREIS MLS, with March’s data now tabulated, we see further affirmation of trends taking hold. The information points indicate that Sonoma County buyers successfully entered agreements to purchase 358 single-family homes in March – 21% ahead of last year at this time. Property owners delivered 312 new offerings during the month – 30% fewer than a year earlier along with being another new historical low for the period. Buyers managed to complete purchases on 252 dwellings – 13% behind the 290 units that transferred ownership in 2024.
With Spring in full bloom, so is the marketplace. Buyers will be surveying the 780 available homes remaining in Sonoma County – a welcomed 58% bounce above the 30+year low we experienced last year at this time. As the new year continues to open, buyers have reignited the home buying process once again and will be assessing the current offerings, as well as new ones, and determining whether to purchase now or not. This will show up in a common market measure - the absorption rate. March’s activity left us once again with an elevated reading of 32% - meaning that unless a robust amount of new inventory shows up without buyers jumping on it, this could lead to market forces that cause prices to experience an uptick as our year pushes forward – and if interest rates move lower into the 5-6% range, then lookout!
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, 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 property owners introduced 155 new single-family offerings in March – another all-time monthly low and 29% less than a year earlier. These very weak new delivery numbers will continue to compound the challenges for buyers in Marin County and will continue to create a more competitive environment for both new and existing buyers in pursuit of making Marin their home in 2025. Buyers absorbed 207 homes in consummated contracts -20% ahead of last year - while sellers completed sales on 166 dwellings during the period – 35% ahead of a year earlier - leaving the entire region with 291 dwellings available for buyers to peruse this April. Marin’s absorption rate for the month shot upwards from the prior to two months to 57% - indicative of a sellers’ market that is gaining steam and perpetuating the continuity of such since 2011.
Napa County is playing to a different tune than its neighbors in Sonoma and Marin County and this month, once again, is a market in balance. March brought the release of 103 new offerings to the marketplace – 20% less than last year – leaving 380 homes available for buyers to peruse at the outset of April. Buyers placed 76 new deals into escrow – 17% less than in 2024 – while closed transactions tipped the scales at 64 during the period – 5% fewer than last year. The combination of new releases coupled with buyer activity has pushed and pulled Napa County from seller favor to a balance market then back over the last 12 months and as of March stood at 17% - a balanced reading for a third month in a row.
Now with a population base in 2025 in the North Bay of 111,000 more residents totaling 866,000 people that call Marin, Sonoma & Napa County’s home, sales are poised to expand this year and likely for several years to come. Just be prepared that every month will not necessarily be better. Improvement or betterment looks like 30 out of 52 weeks or 7 out of 12 months and in the end, you realize you have grown in a positive direction…just like when you create a healthier diet or fitness plan.
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