Spring Market has Sprung Back
It has been a weary road for those involved in the real estate markets due to the interest rate hike moves made by the Federal reserve a year ago this month. And though our markets surrendered nine
percent of value from the median price over the final seven months of 2022, this year has seen these same markets claw their way back to within two percent of this prior all-time high.
According to BAREIS MLS, with May in the rearview mirror, the data points indicate that Sonoma County buyers successfully contracted to purchase 359 single-family homes – 25 percent fewer than the prior
year. Property owners delivered 353 new offerings during the month – off 34 percent from a year earlier along with being another new historical low for this period – while buyers managed to complete
purchases on 338 dwellings – 24 percent less than a year ago.
With May now upon us, buyers will be surveying the 585 available homes remaining in Sonoma County – 29 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. May left us with this metric reading at 58 percent in Sonoma County – six percent
higher than last year at this time – indicating buyers are putting last year’s perfect storm of challenges behind them now and determined that the retrenching in prices locally, coupled with long-term interest
rates anticipated to trend lower, are the sign to jump back into the process of acquiring their new home – if only there were more available to acquire.
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 142 new single-family offerings last month – 49 percent less than a year earlier – with buyers absorbing 190 homes in consummated contracts. Sellers brought finality to another 193 transactions during the period – 25 percent fewer than in 2022 - leaving the entire region with just 235 dwellings available for buyers to peruse this month – 40 percent lower than last year at
this time along with being another new all-time low inventory mark for the period. Marin’s absorption rate rose further in May to 82 percent - indicating that this market may be poised for recapturing even
more of its value lost over the course of last year. With the median value of sold homes bouncing back to $1,845,000.
Napa County’s markets are trailing both those mentioned above. May witnessed the release of only 85 new offerings to the marketplace – 43 percent less than twelve months earlier – leaving inventory levels in the shallows once more with merely 213 homes for home seekers to peruse in June – off 27 percent from the depths experienced at this same time last year as well as being an all-time low for the month. Buyers placed 87 new deals into escrow – 26 percent less than last year – while closed transactions tipped the scales at 83 during the month allowing the absorption rate to climb upwards to 35 percent – indicating that this market is more in favor of sellers as well - just not at the same voracity as its North Bay neighbors. When real estate markets experience the supply chain woes – lack of willing sellers – as we are enduring now, you will typically still see a preponderance of value gains across the board – at least where the most active pool of buyers are. Thus, the trick for practitioners like myself to perform at present is to pull the proverbial rabbit out of the hat – the off-market, though available new listing - to showcase to the plethora of buyers we are serving thereby allowing commerce to still take place…double espresso’s in need of again!
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