What it typically takes for a market to satiate buying demand is robust new construction along with a plethora of sellers looking for a change...and we have neither!
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 August in the books - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 245 single-family homes remaining for sale in the city and its environs – 12 percent less than this same time a year ago. Exacerbated buyer activity has claimed another 231 single-family homes during the past month – which is amazing as we have continued to see less available new inventory arrive month over month during this past year.
The entire municipality introduced 189 new listings to the market over the last month – rivaling the trough we typically experience in the depths of winter - while the most recent period also found Sellers handing over keys on 246 completed sales – the most in any period over the preceding 12 months and held back precisely due to the lack of inventory for buyers to select from. With the lack of a credible supply, 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 will eventually point to a false reading of sales shrinking as when sales fall due to lack of supply is a totally different story than when they fall when supplies are bountiful. This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) hovering at 1.0 – on par with the tightest markets this metro has ever historically endured. 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 saw the introduction of merely 72 single-family homes in August. The supply of homes was met with enhanced demands during the period as there were only 105 dwellings for home seekers to consider by months end – 10 percent fewer than the depths we were experiencing at this time last year. Buyers still managed to absorb 75 homes into contract while sellers received closing checks on another 86 properties - culminating in an MSI of 1.2.
An even tighter market, Southeast Santa Rosa saw the supply of listed properties rest at 35 by the end of last month – 29 percent less than a year earlier. This submarket debuted just 33 new homes in August while buyers garnered accepted offers on 50 additional dwellings. This coveted corner of the city experienced 43 formal transfers in the period thereby establishing an MSI of 0.8 – a new record reading for this region.
Oakmont – where proportionately there have been more sellers than the balance of the Santa Rosa metro region - witnessed 26 new offerings entering the market in August while buyers inked out 32 new deals, 88 percent ahead of last year. Sellers concluded 33 transactions during the month leaving this niche market with 49 available homes to open with in September along with MSI down to 1.5 – continuing to indicate that those migrating to the area are finding strong value in this submarket.
Northwest Santa Rosa saw buyers swoop in to gain control of 59 more deals this month leaving just 36 available single-family homes for sale. Sellers committed a paltry 43 additional new offerings to the markets while another 59 homes completed the closing process. This intense activity is holding the MSI at 0.6 and this sub-one-month metric of availability has been present for the entire last year as well.
In the throes of tightness, Southwest sellers managed to deliver just 15 new offerings to the market this past month only to see consumers place 15 more homes into new contracts. Newly minted homeowners captured keys on 25 closings, leaving just 20 homes available for buyers to peruse in September while establishing an MSI of 0.8.
Homeowners become sellers when they either cannot believe the price they can get for their home or have a fervent desire to make a change themselves in what they really want. This pandemic has caused many to reflect on that, while seeing even more act upon it.