New Year…New Market?
Yes. Our regional markets are always changing - just with varying degrees of dynamics that over a series of months can unearth trends. ccording to BAREIS MLS, with 2023’s transaction pool now verified, the data points indicate that Sonoma County buyers successfully contracted to purchase 192 single-family homes – seven percent fewer than a year earlier. Property owners delivered just 87 new offerings during the month – off 43 percent from last year along with being another new historical low for the period – buyers managed to complete purchases on 228 dwellings – 10 percent less than the 253 units that changed hands in December just a year ago.
With the new year now upon us, buyers will be surveying the 431 available homes remaining in Sonoma County – six percent greater than in 2023. Home seekers will be making determinations on these
offerings, along with the debut of new ones, as to purchasing now, or not, and this will show up in a common market measure - the absorption rate. December left us with this metric at 53 percent as
Sonoma County remains buoyant with activity, and now with mortgage lenders starting to roll back interest rates, be prepared for more buyers to re-enter the market as 2024 marches forward.
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 just 19 new single-family offerings in December – 62 percent less than the 50 units that debuted during the same period last year, which was an all-time low record then.
This woefully lacking inventory introduction could exacerbate a staunchly more competitive environment for both new and existing buyers in pursuit of making Marin their home in 2024. Buyers
absorbed 71 homes in consummated contracts while sellers brought finality to another 110 transactions during the period – three percent fewer than the prior year - leaving the entire region with 126
dwellings available for buyers to peruse as we break into 2024, another all-time low reading. Marin’s absorption rate surged to 87 percent - indicating that this market may experience price escalations as
more suitors become available for each prospective offering, and with interest rates trending more favorably for the borrowing population, this could certainly make acquiring your new home in 2024 an
even more competitive task while pushing even more buyers northward into Sonoma County.
Napa County’s markets still trail both those mentioned above when it comes to activity. December witnessed the release of only 25 new offerings to the marketplace – 19 percent less than twelve months
earlier along with being another record low. The lack of willing sellers is leaving inventory levels in the shallows once again with 187 dwellings for home seekers to peruse this January. Buyers placed 44 new
deals into escrow – 10 percent more than the prior year – while closed transactions tipped the scales at 49 during the month, steadying the absorption rate at 26 percent – creeping towards a balanced
market, though still with a seller bias.
As predictions run rampant, you may as well understand what we believe we will experience in our regional marketplace as 2024 unfolds. Inventory will remain tight early in the year and rise to a peak
around August – the Presidential election will exert influence on this as well as how buyers respond to the rhetoric being bantered about. We expect interest rates to improve modestly as the year opens up,
though if rates dip below six percent, then this will bring innumerous more buyers off the sidelines looking to consummate new deals on homes and investment properties. We expect the commercial
office market to be the most challenging market this year, and for the next few, while properties with commercial loans reset at uncomfortably higher debt carrying costs coupled with higher vacancy rates.
The residential market, with an overall lack of “for sale” new construction, will keep a lid on available inventory which will make each home being offered to market typically over pursued with the driver of
price escalations being the quantity of wants coupled with the cost of mortgage debt.
For a more detailed analysis specific to your situation, just reach out!
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