Trends Developing in the Marketplace
Disrupting a trend of activity happens in two ways, gradually through running its course or artificially by changing the rules of engagement.
According to BAREIS MLS, Sonoma County had exactly 504 single-family homes left for sale at May’s conclusion – 25 percent fewer than this same period last year. Sellers delivered 416 new listings to the market during the month – 40 percent less than in 2021 - while buyers gained control of another 492 new deals – 22 percent off from a year earlier and, in part, due to available inventory being 30 percent off what it was last year at this time. In support of these metrics, completed sales tipped the scales at 396 this last month – 30 percent fewer than the prior year. The data reveals a marketplace still selling a greater percentage of available inventory than last year.
The continued pace of the markets can be measured by the months’ supply of inventory (MSI) and, with the Federal Reserve aggressively trying to dampen demand by raising the cost of money MSI has risen from the depths to 1.3 as of last month. This display of liquidity and activity is still among the highest in the seven Bay Area counties we track and, in part, due to the native demands of households, unique to our region, who are still replacing the 6000 plus homes they lost in the Tubbs, Nuns, Kincade, Glass and Wallbridge Fire calamities.
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.
Getting down to the details in the town of Sonoma, which submarket includes the hamlets of Kenwood and Glen Ellen, there were 76 homes reported for sale as May ended – 31 percent less than this same period a year ago. This region experienced the addition of 37 new listings during the period – 51 percent fewer than last year - while buyers garnered accepted contracts on 48 more properties. Sellers in the valley awarded keys to another 41 new homeowners – 21 percent off a year earlier - holding the MSI at 1.9.
Healdsburg witnessed just 17 new listings arrive to the market last month – 60 percent fewer than in 2021. Buyers absorbed 23 homes in new deals while sellers closed out another 16 transactions leaving this submarket with 63 homes for presentation to buyers in June, along with an MSI of 3.9 – teetering into a balanced reading.
Petaluma’s Westside attracted 19 new sellers in May which allowed available inventory to begin the new month with 24 homes for buyers to select from. Home seekers grabbed 24 new deals in the period while sellers closed out 23 purchases causing the MSI to expand to 1.0.
In West County, Sebastopol’s supply of inventory had a real turnabout. May wrapped up with 49 available homes for buyers to consider inclusive of the 23 additional offerings unveiled during the period. Home shoppers placed 31 more dwellings into contract while sellers completed 21 sales. With MSI rising to 2.3, expect to see this move an early sign of fewer buyers showing up to the table to contend for each new offering.
Windsor property owners delivered 34 new listings in May while buyers captured another 34 deals during the period. Sellers closed out 19 more transactions leaving 27 single-family homes available for buyers to peruse in June while highlighting an MSI moving up to 1.4.
The Federal Reserve is working ferociously to curb demand by pushing rates upward aggressively and we expect this to show up in all sectors where the cost of money is critical. The goal at hand is to jolt the marketplace into submission as promptly as possible to avert a repeat of what we experienced in the 1970’s with a strategy towards helping the economy get through this period of rampant demand by taking its medicine in shortened cycle to get us into a more normalized functional state.
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