The Gates of Spring Have Opened
…So, where have all the sellers gone?
According to BAREIS MLS, March’s data points indicate that Sonoma County buyers successfully contracted to purchase 480 single-family homes – 17 percent fewer than a year earlier. A remarkable feat considering inventory was off 27 percent from the prior year – which means more homes are being sold on a percentage basis in comparison to 2021. Couple this with property owners delivering just 346 new offerings in the month – 45 percent fewer than last March - and you find a recipe for values to press higher. Buyers managed to complete purchases on 382 dwellings – 14 percent less than a year ago and primarily due to the lack of available inventory.
The compression within our markets is easily understood by realizing that the spike in buyer demands coupled with reluctant sellers over time creates a chasm that inevitably forces prices higher to tempt sellers to market. This prolonged immense activity has created a hurried pace causing available inventory to sell promptly while less new offerings have been showing up in each of the preceding 12 months, thereby leaving us with 357 single-family homes to carry over into April compared to the 491 units available for sale during this same period last year while leaving the Sonoma County market staring at an absorption rate of 107 percent.
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 rapidly, 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.
One of smallest of the seven Bay Area Counties, Marin, is still one of the few hotter locations - at least on a percentage basis - than Sonoma County. With March behind us, we should see sellers awakening to participate once again - though it appears it will be at a lesser rate each month than the year before – which means it will take price increases to encourage more sellers to consider relinquishing their homes. Marin property owners introduced 159 new single-family offerings in the period – 46 percent less than a year earlier – with buyers promptly absorbing 209 homes in consummated contracts. Sellers brought finality to another 186 transactions during the period leaving the entire region with just 127 homes available for buyers to peruse in April – 26 percent less than last year at this time. Marin’s pace highlights one of the Bay Area’s most hurried markets with the absorption rate now at 147 percent.
Napa County’s markets are following suit – though still at a lesser pace - with available monthly inventory closing out March at 169 units – six Percent less than this same time last year. Sellers managed to deliver 113 new offerings to the market in the period while buyers placed 123 new deals into escrow. Home sellers closed out another 106 sales during the month establishing a 63 percent absorption rate.
With the national media headlining “sales are down” this is really disinformation and a mischaracterization of our marketplace while misleading to the consumer. With depleted inventories and the volume of available properties slipping further it would be impossible to have sales figures up. What is not being stated is the truth, that on a percentage of inventory basis sales are wildly higher – now that’s the real story!
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