Summer Sizzling with Buyer Demands
New Homeowners to be are encountering bigger challenges than before as the level of active inventory continues to shrink year over year.
According to BAREIS MLS, with June in the rearview mirror, the data points indicate that Sonoma County buyers successfully contracted to purchase 344 single-family homes – 14 percent fewer than the prior year. Property owners delivered 292 new offerings during the month – off 39 percent from a year earlier along with being another new historical low for this period – while buyers managed to complete
purchases on 341 dwellings – 27 percent less than a year ago.
With July now upon us, buyers will be surveying the 651 available homes remaining in Sonoma County – 22 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. June left us with this metric reading at 52 percent in Sonoma County – just three
percent less 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 105 new single-family offerings last month – 62 percent less than a year earlier – with buyers absorbing 199 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 199 dwellings available for buyers to peruse this month – 50 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 June to 97 percent - indicating that this market is gaining strength with regard to property values moving higher along with establishing an even more competitive environment for buyers.
Napa County’s markets are trailing both those mentioned above. June witnessed the release of only 71 new offerings to the marketplace – 56 percent less than twelve months earlier – leaving inventory levels in the shallows once more with merely 267 dwellings for home seekers to peruse in July – off 13 percent from the depths experienced at this same time last year as well as being an all-time low for the month.
Buyers placed 75 new deals into escrow – 21 percent less than the 95 abodes that went into pending status last year – while closed transactions tipped the scales at 73 during the month allowing the
absorption rate to rest at 27 percent – indicating that this market is more in favor of sellers as well - just not at the same voracity as its North Bay neighbors.
Looks like the recession in real estate values experienced last year has been abated by the escalation in prices that started tracking higher in January of this year and have continued to gain momentum. The next big thing to watch will be the trends in activity over the ensuing few months to see if it looks like last year – a flat to decreasing line never seen before – or if it returns to the historical “bell curve” our markets have demonstrated routinely for over a century now. Keep your fingers crossed that seller’s will join the market in greater volume than in 2022 or be prepared for further value increases.
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