Red Hot, Get Your Houses Here, Good homes for Good People
Anecdotally, as practitioners, we are both seeing and feeling an increased energy within the marketplace decidedly different than the last seven months of 2022. As this unfolds the cadence of our markets for 2023 will be revealed.
According to BAREIS MLS, as we said goodbye to the first month of the new year, the data points indicate that Sonoma County buyers successfully contracted to purchase 183 single-family homes – 33 percent fewer than the prior January. Property owners delivered 157 new offerings during the month – off 60 percent from a year earlier along with being another new historical low for this period – while buyers managed to complete purchases on 162 dwellings – 37 percent less than a year ago.
With February now upon us, buyers will be surveying the 342 available homes remaining in Sonoma County – 41 percent fewer than in 2022 - along with the debut of new ones, and making determinations for themselves as to purchasing now, or not, and this will show up in a common market measure - the absorption rate. January left us with this metric reading at 47 percent in Sonoma County – a nudge more active than in 2022 at this time – indicating buyers may have shrugged off last year’s real estate recession and determined that the 10 percent retrenching in prices locally, coupled with lower interest rates are the sign to jump back into the process of acquiring their new home.
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 52 new single-family offerings last month – 73 percent less than a year earlier – with buyers absorbing 66 homes in consummated contracts. Sellers brought finality to just 48 transactions during the period – 52 percent fewer than in 2022 - leaving the entire region with only 121 homes available for buyers to peruse this month – 52 percent lower than last year at this time along with being another new all-time low inventory mark. Marin’s absorption rate fell to 40 percent in January on a historically low number of closings indicating that this county may suffer like many others in the region from the lack of available inventory over the coming year. Napa County’s markets are following suit with those above just in a lagging fashion as they move away from balance towards a stronger “seller’s market” reading. January witnessed the release of 58 new
offerings to the marketplace – 48 percent less than twelve months earlier – leaving inventory levels in the shallows with merely 155 homes for home seekers to peruse in February. Buyers placed 59 new deals into escrow – just one percent less than last year – while closed transactions tipped the scales at 38 during the month allowing the absorption rate to slip back to 25 percent – still indicative of a sellers’ market. We are witnessing a high level of engagement from home buyers at present and with the lack of a robust level of newly built single-family homes being produced, this marketplace could see an early bounce back in values, not necessarily reclaiming the 10 percent loss in value over the last half of last
year but certainly not a further decline either. Like the Hot Dog man at the ballpark says, “get them while they are hot"
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