With many pundits trying to make a call on our country entering a recession, they keep missing the mark. In fact, this happens during every business cycle where you have so called experts continuing to call for a contraction in the economy. Eventually – when you call for something to happen for years – you will be correct, but isn’t that a reason to shrug off the naysayers? You bet it is.
The Santa Rosa metro region is shifting to accommodate the new market dynamics that have been thrust upon it as the traditional “bell curve” of activity may be in process of being reshaped while the markets work to sort out the loss of 5,334 homes along with the reemergence of these homes and the lives that once occupied them. According to BAREIS MLS, with September in our rearview mirror, we find the marketplace adding to its earlier momentum with only 382 single-family homes remaining for sale in the city and its environs – a 13 percent dip from this same time last year – coupled with a corresponding 16 percent increase in accepted offers during the month thereby giving very clear readings of a market that should be holding – if not increasing – in value compared to the prior three quarters.
The entire municipality introduced only 171 new listings to the market in September – just about one percent fewer than a year ago - while the most recent period also found Sellers handing over keys on 133 completed sales at a median value of $615,000 - leaving Santa Rosa with its’ Months’ Supply of Inventory (MSI) at 2.9 and getting tighter.
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 generally indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.
Getting down to the underlying specifics, Northeast Santa Rosa - by far the singular market most impacted by the events of October 2017 and one that will take some time to reestablish itself as the regions premier locale - saw the introduction of only 53 single-family homes in September – 28 percent fewer than in 2018. The supply of homes was met with solid absorption during the period as there were only 150 dwellings for home seekers to consider by months end. Buyers embarked on a 67 newly initiated escrows – up 22 percent from last year - while sellers received closing checks on another 51 properties – 28 percent greater than a year earlier - at a median value of $676,000 while affirming a solid MSI of 2.9, and further indicating a steady market for well-priced homes.
Southeast Santa Rosa saw the supply of available properties shrink to 77 by months end. This submarket welcomed 37 new offerings in September - while buyers captured accepted deals on 34 more abodes. This coveted corner of the city experienced 20 formal transfers of title at a median value of $575,000 – allowing MSI to rise to 3.9 – nearly a balanced reading, though one we expect to fall considering the momentum from our current period.
Oakmont saw only 13 willing sellers deliver new offerings in September, allowing total available inventory to remain steady at 48 by months end. Buyers found their way to acceptances on 17 new purchases – echoing a return to better than average activity this month - while sellers concluded another 20 transactions during the period at a median value of $557,000. The activity level indicates a market that has shifted from a balance reading to one more in favor of sellers with MSI coming in at 2.4.
Northwest Santa Rosa – the fastest paced market in the city this period – witnessed seller’s debut 48 new properties in September with buyers absorbing 41 of those into new deals. Sellers completed the sale of 30 domiciles – at a median value of $604,000 - leaving this submarket with 67 available homes to open with in October – 34 percent less than the period a year ago when there were 101 available and further affirming the broader marketplace demands with MSI hovering at 2.2.
Southwest Santa Rosa embraced the introduction of 20 new properties in September, thereby bringing the total available to 40 by months end. Buyers jumped in to gain control of 24 deals – highest volume of new pending’s in the last two years - while sellers closed out another 12 sales at a median value of $520,000 leaving this market with an MSI of 3.3.
Let’s be clear, eventually there will be a recession. That said, most recessions in our region have historically seen less than a five percent decline in home values in any given year, while the ones we remember are the most painful – like a decade ago – they are also very infrequently that severe.