Where and When Will the New Inventory Emerge?
We have hit the depths of inventory for what we will see at any time for at least the next six months. Each day forward we should experience incrementally larger introductions of new offerings and the story will be told with how voraciously buyers pursue these as to what the tempo of our new year will be.
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 2021 in the rearview mirror - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 86 single-family homes remaining for sale in the city and its environs – 61 percent less than this same time a year ago and another new all-time low. Exacerbated buyer activity has claimed another 122 single-family homes during the past month – a rate 15 percent less than a year earlier – still an astounding feat especially considering buyers had so much less choose from.
The entire municipality introduced just 71 new listings to the market over the last month – 39 percent fewer than in 2020, as well as being the least ever for this municipality. The most recent period also found Seller’s handing over keys on 171 completed sales – four percent ahead of last year and held back 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 inventories are bountiful.
This compression is affirmed by Santa Rosa recording its’ Months’ Supply of Inventory (MSI) at 0.5 – the tightest market this metro has ever historically 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 29 single-family homes in December - 39 percent fewer than this same period a year ago. The supply of homes was met with enhanced demands during the period as there were only 47 dwellings for home seekers to consider by months end – 57 percent fewer than the depths we were experiencing at this time last year. Buyers still managed to absorb 52 homes into contracts while sellers received closing checks on another 60 properties – resulting in an MSI of 0.8.
An even tighter market, Southeast Santa Rosa saw the supply of listed properties rest at 15 by the end of last month. This submarket debuted just nine new homes in the period while buyers garnered accepted offers on 13 additional dwellings. This coveted corner of the city experienced 24 formal transfers in December steadying this region at an MSI level of 0.6.
The whipsaw of change is no more evident than in Oakmont where, last year at this time, the market was awakening and working to catch-up with the rhythm being experienced in all adjacent regions. Fervent buyer activity has left this sub-market with only nine homes available for sale as December concluded – by far the fewest at any time historically. Owners launched just eight new offerings in the period while buyers inked out 16 new deals - 178 percent ahead of last year. Sellers concluded another 28 transactions during the month – 133 percent more than the prior year - leaving this niche market with an MSI of 0.3 – a 10-day supply of inventory.
The tightest sub-market in the entire North Bay, Northwest Santa Rosa, saw buyers swoop in to gain control of 26 more deals, leaving just eight available single-family homes for sale at months end. Sellers committed only 14 additional offerings to the markets while another 39 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 now rests at 0.2 – less than a one-week supply of homes.
Southwest sellers managed to deliver 11 new offerings to the market this past month only to see consumers place 15 more dwellings into contract. Newly minted homeowners captured keys on 20 closings, leaving seven homes available for buyers to peruse in January while establishing an MSI of 0.4.
As a practitioner you can feel the energy of demand well before there are recorded data points to affirm it, and this is where we are now. This means deals - similar to last year at this time which set records for the number of “off-market” contracts that were consummated - are getting done just as much through relationships as they are in the “open-market” and undoubtedly requires the guidance of a highly skilled professional, committed to their craft, for consumer to accomplish their goals of a successful sale or purchase.
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