Northern California - along with the greater Western United States - has been setting records in heat as well as the lack of rainfall, so why not the housing market as well?
The Santa Rosa metro region is working to accommodate the demands of the greater Bay Area along with its’ own, and according to BAREIS MLS - with May in the rearview mirror - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 262 single-family homes remaining for sale in the city and its environs – 28 percent less than this same time a year ago. Exacerbated buyer activity has claimed another 253 single-family homes during the past month – a 51 percent increase from last year and the most in any month since the Great Recession!
The entire municipality introduced 227 new listings to the market over the last month while the most recent period also found Sellers handing over keys on 214 completed sales – 189 percent ahead of last year - and we expect these metrics to continue to compress. With the lack of a credible supply of new inventory, the statistics will be artificially hampered due to a significant portion of unsatiated demand going unmet each month as more homes continue to be absorbed while fewer sellers enter the “open” market. This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) hovering around 1.2 – this is very much attributed to the fundamental shift in population migration from the greater Bay Area along with the cost of money in our current economy coupled with a lack of property owners interested in leaving the area.
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.
More specifically, Northeast Santa Rosa saw the introduction of 86 single-family homes in May – 18 percent less than in 2020 - with a significant number of these homes being offered for sale that are in the waning months of construction, thus making them hard to transact on due to their unfinished status. The supply of homes was met with enhanced demands during the period as there were only 101 dwellings for home seekers to consider by months end – 42 percent fewer than last year. Buyers embarked on 104 newly initiated escrows – 100 percent ahead of last year - while sellers received closing checks on another 64 properties – also 100 percent more than the prior May - culminating in an MSI of 1.6 and getting tighter.
Similarly, Southeast Santa Rosa saw the supply of available properties rest at 42 by the end of last month – 14 percent less than a year earlier. This submarket debuted just 36 new homes in May while buyers garnered accepted offers on 40 additional dwellings. This coveted corner of the city experienced 30 formal transfers in the period – 58 percent more than last year and held back primarily from having available inventory to sell while registering an MSI 1.4.
Oakmont followed through on sales activity as it built on the prior months momentum and looks to be getting in line with the balance of the Santa Rosa metro markets – meaning if you are a buyer then you better get your purchase done ahead of pressure that typically ensues when this type of demand activity kicks in. The active adult retirement community witnessed 40 new sellers debuting their offerings in May while buyers showed up in force putting 41 deals under contract – 173 percent ahead of last year. Sellers concluded 44 transactions during the month – a historic volume of sales never reached in this submarket before - leaving this niche market with 57 available homes to open with in June along with MSI registering at 1.3 – indicative of heavier buyer demand continuing to show up in this market as well now.
Northwest Santa Rosa – suffering from too many buyers and too few sellers - saw buyers swoop in to gain control of 49 more deals this month leaving just 42 available single-family homes to carry over into June – 30 percent fewer than last year. Sellers committed 47 additional new offerings to the markets while another 54 homes completed the closing process. This intense activity is holding the MSI under a one-month supply as it hovers at 0.8.
Similarly, Southwest Santa Rosa buyers completed 22 more deals in May, leaving just 20 homes available for those seeking new dwellings this month. Sellers submitted 18 new listings into the public domain during the period while buyers pledged their paychecks towards 19 accepted contracts causing this submarkets MSI to settle at 0.9 – thereby confirming the heightened demands of the rest of our region.
As most markets nationally and locally have failed to produce enough newly constructed homes for a growing population we are seeing hyper-demand overwhelm marketplaces causing the price spikes at hand. It may be time for municipalities like ours to become more builder friendly and expand their boundaries while cutting the red tape that has stood in the way of building for decades if we are going to ever abate rampant price increases.