Seasons Change – Market Sentiment Shifts

Seasons Change – Market Sentiment Shifts

September came in stronger than what we experienced during the “Great American Summer” and now we are starting to see our new normal show up statistically within the real estate marketplace.

The Santa Rosa metro region is feeling the impacts from the Federal Reserve’s interest rate hikes coupled with American’s taking an extended summer with both sellers and buyers stealing time away to celebrate the lives they have. According to BAREIS MLS – with September in the rearview mirror - the data points to a marketplace in the early days of establishing its new cadence with only 246 single-family homes remaining for sale in the city and its environs – 40 percent less than this same time a year ago. Buyers laid claim to 124 single-family homes during the past month – a rate 52 percent less than a year earlier which was expected as the markets recover from the long episodic summer.

The entire municipality introduced just 130 new listings to the market over the last month – 48 percent fewer than in 2021. The most recent period also found Seller’s handing over keys on another 151 completed sales – 45 percent behind last year though higher than August for the first time in our history. As our market continues to deal with historically low inventory, the statistics will be artificially hampered since a significant portion of unsatiated demand is going unmet each month as more properties continue to be absorbed while fewer sellers enter the “open” market with fresh inventory.

This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) at 1.6 – a slight retrenching from last month and very much on par with last year during this same period. This can be attributed to the fundamental shift in population migration from the greater Bay Area and the lack of sellers interested in participating with new offerings.

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.

Within the city, Northeast Santa Rosa – the North Bay’s most active submarket - saw the introduction of merely 42 single-family homes in September – 48 percent fewer than this same period a year ago while also approximating the all-time low realized in December. The supply of homes was met with active demand during the period as there were just 100 dwellings for home seekers to consider by months end – 44 percent lower than the depths we were experiencing at this time last year. Buyers still managed to absorb 41 homes into contracts while sellers received closing checks on another 55 properties – resulting in MSI tightening back to 1.7.

Very similar to last year at this time, Southeast Santa Rosa saw the supply of listed properties rest at 38 by the end of last month. This submarket debuted 24 new homes in the period while buyers garnered accepted offers on 28 additional dwellings. This coveted corner of the city experienced 28 formal transfers in September culminating in a more compressed MSI reading of 1.4.

Oakmont experienced a surge in buyer activity in September leaving only 20 homes available for sale at the end of the month. Property owners launched just eight new offerings in the period – 67 percent fewer than last year - while buyers inked out another six new deals. Sellers closed out 15 more transactions during the month – 58 percent fewer than the prior year - leaving this niche market with an MSI of 1.3 – tighter than the 1.5 reading a year ago.

In Northwest Santa Rosa, buyers swooped in to gain control of 37 more deals leaving 55 single-family homes available for sale at months end. Sellers committed 37 additional offerings to the market while another 29 homes completed the closing process. Steady, but lower activity levels lead MSI to grow to 1.9 this month.

Southwest Santa Rosa sellers delivered 19 new offerings to the market this past month while consumers placed 12 more dwellings into contract. Newly minted homeowners captured keys on 21 closings, leaving 33 homes available for buyers to peruse in October while establishing an MSI of 1.6 – interestingly, much tighter than last year when this metric weighed in at 2.1.

Real estate markets are hyper-regional when it comes to market dynamics, which means one has to be cautious at putting too much reliance on national news and fear mongers that make general statements about the marketplace. Sure, things are shifting all around and when they do it takes market participants a reasonable period of time to recalibrate their positions and the direction they take, but calamity is not in the data we are harvesting. We do believe that we will see interest rates climb further before they flatten out and whether or not they even return to the levels they are today is all the more reason to not let the cost of money be a deterrent. Remember an old saying, “you date the rate, but you more the home.”