Summer – More Than Ever
As many of you are doing yourselves, the greater population is spending their summer basking in lost vacations and being able to celebrate the life they had put on pause during the pandemic having affirmed that it is precious and succumbing to the principle of “if not now, then when?” This will soon end, just as Summer always does.
The Santa Rosa metro region is still working to accommodate the demands of the greater Bay Area along with its’ own, and according to BAREIS MLS – with June in the rearview mirror - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 191 single-family homes remaining for sale in the city and its environs – 25 percent less than this same time a year ago. Even with the cost of the average mortgage rising, buyers still laid claim to another 163 single-family homes during the past month – a rate 34 percent less than a year earlier and still truly remarkable considering that our markets remain at a 30 year low with regards to available inventory.
The entire municipality introduced merely 144 new listings to the market over the last month – 51 percent fewer than in 2021. The most recent period also found Seller’s handing over keys on 163 completed sales – 36 percent behind last year and held back due to the lack of homes for buyers to select from and their adversity to paying the higher costs associated with a new mortgage. With the lack of a credible supply, 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 – this will eventually point to a false reading of sales shrinking as when sales fall due to lack of supply it is a totally different story than when they fall when inventories are bountiful.
This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) at 1.2 – a slight, though expected, bump higher over the previous period. This can be attributed to the fundamental shift in population migration from the greater Bay Area along with the cost of money – for now - in our current economy coupled with a lack of property owners interested in relinquishing their current homes.
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 45 single-family homes in June - 56 percent fewer than this same period a year ago. The supply of homes was met with active demand during the period as there were only 84 dwellings for home seekers to consider by months end – 21 percent fewer than the depths we were experiencing at this time last year. Buyers still managed to absorb 56 homes into contracts while sellers received closing checks on another 57 properties – resulting in an MSI of 1.5 along with a new all-time high median sale price of $1,000,000.
Southeast Santa Rosa saw the supply of listed properties rest at 33 by the end of last month. This submarket debuted 29 new homes in the period while buyers garnered accepted offers on 32 additional dwellings. This coveted corner of the city experienced 31 formal transfers in June culminating in an MSI reading of 1.1.
Oakmont is still seeing Intense buyer activity that has left this region with only 18 homes available for sale as June concluded. Property owners launched 18 new offerings in the period while buyers inked out another 18 new deals. Sellers completed another 25 transactions during the month – 31 percent fewer than the prior year - leaving this niche market with an MSI of 0.7.
Northwest Santa Rosa saw buyers swoop in to gain control of 42 more deals, leaving 46 single-family homes available for sale at months end – the first period in the last year where inventory has exceeded that of the prior year. Sellers committed 40 additional offerings to the markets while another 37 homes completed the closing process. Steady, intense activity has been holding MSI under a one-month supply for well over year and, as of this month, it has finally crept up to 1.2.
Southwest Santa Rosa sellers managed to deliver just 12 new offerings to the market this past month only to see consumers place 15 more dwellings into contract. Newly minted homeowners captured keys on 13 closings, leaving just 10 homes available for buyers to peruse in July while establishing an MSI of 0.8.
As interest rates start to stabilize over the next few months buyers will recalibrate and may find a window to refinance to a lower mortgage cost provided the Federal Reserve becomes satisfied with its war on inflation, thereby allowing lenders to roll some costs off the table. That said, you can only take advantage of any pull-back in interest rates if you already have a property or are currently in the process of completing a purchase at that time.
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