What Message Did the Election Send to Our Marketplace?

What Message Did the Election Send to Our Marketplace?

Within the trades of real estate and the construction industry a shift towards the policies being anticipated with this change in political climate will likely be seen as a positive in most instances with a more commerce friendly, less regulated marketplace being anticipated.

According to BAREIS MLS, with October’s data now being tabulated, we find our markets still reporting better activity and results as each new month turns over. The data points indicate that Sonoma County buyers successfully entered agreements to purchase 350 single-family homes in October – a significant 25 percent ahead of last year at this time. Property owners delivered 285 new offerings during the month – just five fewer than a year earlier along with being another new historical low for the period – while buyers managed to complete purchases on 381 dwellings – 14 percent greater than the 333 units that transferred ownership last year at this time.

With November in play now, buyers will be surveying the 874 available homes remaining in Sonoma County – an abundant 24 percent bounce above the 30+year low we experienced last year at this time. As the year continues to take shape, buyers will be making determinations on these offerings, along with the debut of new ones, as to purchasing now, or not, and this will show up in a common market measure - the absorption rate. October’s activity left us with a heightened reading of 44 percent - meaning that if the trend in this metric continues that buyers may be facing more competition for homes in the ensuing months. 

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.

Similarly, Marin property owners introduced 101 new single-family offerings in October – another all-time monthly low and 29 percent less than a year earlier. These woefully lacking inventory levels may continue to create a more competitive environment for both new and existing buyers in pursuit of making Marin their home this coming season. Buyers absorbed 178 homes in consummated contracts while sellers completed sales on 210 dwellings during the period – 19 percent ahead of last year - leaving the entire region with 370 dwellings available for buyers to peruse this November. Marin’s absorption rate for the month gained momentum and closed the month at 57 percent – which indicates buyers will be encountering greater competition for homes they are pursuing.

Nearby, a different story line in Napa County where markets remain balanced for the fifth month in a row. October brought the release of 68 new offerings to the marketplace – 10 percent less than last year – leaving 393 homes available for buyers to peruse in November. Buyers placed 76 new deals into escrow – three more than last year – while closed transactions tipped the scales at 77 during the month – 13 percent fewer closings than in 2023. The combination of new releases coupled with buyer activity has allowed the absorption rate to steady at nearly 20 percent – demonstrating that this market is exhibiting a more balanced playing field between buyers and sellers these days.

Our region will start to react to the changes a foot now, though don’t expect that to show up in our real estate metrics until March or April, as this marketplace does not move as swiftly as stock or bond markets when it comes to news. At the same time, unless we have a new major national or international event take place, we expect our real estate market values to move in a more upward direction as we break into 2025.