New Record Lows…of Inventory
Without inventory, it is hard to have sales let alone value erosion. This is not true across North America though it is our regional state of the union and has been for the entire last year.
According to BAREIS MLS, Sonoma County had exactly 402 single-family homes left for sale at the close of last year – 20 percent fewer than this same period twelve months ago. Sellers delivered merely 84 new listings to the market during the month – 61 percent less than in 2021 as well as being an all-time low for any one month of any year historically. Buyers garnered control of another 192 new deals – 26 percent off from a year earlier due to higher interest rates, lower inventory levels and the time of year in general. In support of these metrics, completed sales tipped the scales at 235 in December – 44 percent fewer than the prior year.
The continued pace of the markets can be measured by the months’ supply of inventory (MSI) and, with the Federal Reserve aggressively trying to dampen demand by raising the cost of money MSI has risen from its depths of 1.2 in December of last year to 2.2 in July and tightened once again to 1.7 as of last month – still indicative of a seller’s market though with buyers being able to effect greater influence on the terms of a sale.
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 46 homes reported for sale as December ended – 32 percent less than this same period a year ago. This region experienced the addition of five new listings during the period – a new all-time low influx of just listed homes - while buyers garnered accepted contracts on 21 more properties. Sellers in the valley awarded keys to 16 new homeowners – 48 percent off from a year earlier – allowing MSI to tighten to 2.9 from its softer 5.2 reading as recently as October.
Healdsburg witnessed just four new listings arrive to the market last month – 56 percent fewer than just a year earlier. Buyers absorbed 10 homes in new deals while sellers closed out another 12 transactions leaving this submarket with 23 homes for presentation to buyers in January, along with an MSI retreating further to 1.9 – which is tighter than any one month’s reading over the prior year.
Petaluma’s Westside attracted only four new sellers in December – setting this region’s all-time low for newly introduced single-family dwellings - which allowed available inventory to kick-off the new year with merely 27 homes for buyers to select from. Home seekers grabbed 10 new deals in the period while sellers closed out 11 purchases letting MSI steady at 2.5.
Sebastopol wrapped up the period with 23 available homes for buyers to consider inclusive of the four additional offerings unveiled during the period – setting a new record low here as well. Home shoppers placed 10 more dwellings into contract while sellers completed 10 sales causing MSI to move towards a softer 2.3, though still not close to a balanced reading.
Windsor property owners delivered only four more new listings in December while buyers captured 13 deals during the period. Sellers closed out 11 more transactions leaving 17 single-family homes available for buyers to peruse in the New Year while highlighting an MSI of 1.5.
Of course, we will see new inventory come into the market as 2023 opens up. The question will remain to see if we hit higher levels than all last year or continue to set new record low housing opportunities. The supply and demand dynamics will once again take-over our markets now that it appears the genre of rising interest rates has been eclipsed and we expect mortgage rates to be in a trading range with a downward bias. Let’s find out what you can do today to make your year what you want it to be.
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