The Beat of the Marketplace

The Beat of the Marketplace

An appreciating market rarely feels good when it is decelerating. Think of it like a race car entering a turn, having to apply its brakes – not come to a halt or go backwards - but to safely navigate around it before what lies ahead next on the track.

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 – now with April in the rearview mirror - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 125 single-family homes remaining for sale in the city and its environs – 45 percent less than this same time a year ago. Exacerbated buyer activity has claimed another 172 single-family homes during the past month – a rate 27 percent less than a year earlier – truly remarkable considering the shrinkage of inventory available for purchasing and demonstrating the percentage of sales in relation to inventory is still significantly higher than last year at this time.

The entire municipality introduced 120 new listings to the market over the last month – 53 percent fewer than in 2021. The most recent period also found Seller’s handing over keys on 184 completed sales – 26 percent behind last year and held back due to the lack of homes for buyers to select from. 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 0.7 – which is still hovering near the all-time tightest reading recorded. This can be 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 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 just 39 single-family homes in April - 56 percent fewer than this same period a year ago and 36 percent less than just last month. The supply of homes was met with enhanced demands during the period as there were only 57 dwellings for home seekers to consider by months end – 41 percent fewer than the depths we were experiencing at this time last year. Buyers still managed to absorb 54 homes into contracts while sellers received closing checks on another 55 properties – resulting in an MSI of 1.0.

Southeast Santa Rosa saw the supply of listed properties rest at 26 by the end of last month. This submarket debuted 27 new homes in the period while buyers garnered accepted offers on 42 additional dwellings. This coveted corner of the city experienced 39 formal transfers in April culminating in an MSI reading of 0.7.

Oakmont is officially the tightest submarket in all of Sonoma County and now being measured in days. Intense buyer activity has left this region with only 10 homes available for sale as April concluded. Property owners launched 16 new offerings in the period while buyers inked out 21 new deals. Sellers completed another 23 transactions during the month – 28 percent fewer than the prior year - leaving this niche market with an MSI of 0.4 – a twelve-day supply of inventory.

Northwest Santa Rosa saw buyers swoop in to gain control of 42 more deals, leaving just 24 single-family homes available for sale at months end. Sellers committed 29 additional offerings to the markets while another 46 homes completed the closing process. This steady, intense activity has been holding MSI under a one-month supply for well over year and, as of this month, it rests at exactly 0.5 – a 16-day supply of inventory.

Again, very much on par with the activity levels noted in Oakmont, Southwest Santa Rosa sellers managed to deliver just nine new offerings to the market this past month only to see consumers place 13 more dwellings into contract. Newly minted homeowners captured keys on 21 closings, leaving just eight homes available for buyers to peruse in May while establishing an MSI of 0.4.

Realtors collaborating with buyers and sellers innately understand that when the tempo of the marketplace transitions it can be challenging in a different way than what we have been experiencing for the last several years and 90 days from now the data will reflect what I am expressing in this week’s article. Its always best to be able to see around the corner before fully committing to the turn.