A Departure from the Past?
For as long as I have been tracking the statistics on this – 29 years now – the month of August usually showcases a hiatus in our markets as buyers become distracted by a multitude of events: summer vacations, back to school activities, and attractions like the County Fair. That said, and it may be too early to say at this point, this year feels different.
As we near the second anniversary of the firestorms that besieged the North Bay, we anticipate there will be a significant shift in local consumers demands and the actions they will take. Some – about 2200 homeowners - who have not dipped their toes into the arena to initiate a rebuilding effort will be faced with decisions thrust upon them by insurance companies looking to close out their claims. Do I rebuild? Do I buy a new home? Do I move away and sell my lot? The choices made - due to the sheer volume – may dictate some unusual market dynamics this year.
As our markets are handily shrugging off the continuous compressions that have hampered it over the prior seven years, Sonoma County sellers continued their return in July – though still at a decelerating rate from just the prior year. The region typically sees definitive growth in inventory as each new year unfolds with peaks typically showing in spring and summer months while valleys appear in fall and winter.
According to BAREIS MLS, July data points indicate that Sonoma County buyers successfully contracted to purchase 444 single-family homes – well above the 421 that went into contract just a year earlier.
Property owners provided 412 new listings to the market during the period, coming off a year earlier where a whopping 584 new listings came available.
Transactions were completed on 416 dwellings over the last 30 days – eight percent more than the 387 that sold a year ago – leaving 1162 dwellings to carry over into August and representing a healthy 10 percent climb in inventory from July 2018. The cumulative effect is still indicative of a market strengthening from last Summer’s doldrums with a steady and resurgent absorption rate of 36 percent – further affirming the sluggishness witnessed this last year has been abated by lowered interest rates, a pull-back in prices and renewed requirements from buyers.
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 of time. Conversely, an absorption rate below 15 percent is indicative of a buyer’s market, meaning homes are selling more slowly.
With a greater amount of newly pended deals and less new inventory coming available, Marin County’s marketplace is indicating a similar yet more seller favored trend than their neighbor to the North. July showcased 127 new offerings – 34 percent fewer than last year – with buyers quickly latching onto 182 newly consummated deals – five percent greater than in 2018. Sellers closed out 207 transactions during the period leaving the entire region with 407 homes as offerings for buyers to select from in August and further encouraging home seekers – now with an elevated absorption rate topping 50 percent - to gain control of their new home ahead of further price increases.
In a similar trend - though at a less intensive rate - Napa County’s markets which were technically in balance six months ago have crawled their way back to favor sellers once again. July brought 115 new listings to market – 18 percent less than the prior year - with buyers promptly absorbing 117 properties into new deals during the month. Napa sellers managed to complete the sale of another 121 single family homes, leaving 438 more for the markets to ponder in August and causing the absorption rate to steady at 28 percent – not necessarily indicating a rally mode though certainly pointing towards a market supportive of current pricing.
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