Where Will the Markets Take Us?
Will rising interest rates, supply chain disruption, inflationary pressures or the war in Ukraine temper our enthusiastic real estate markets? Only time will tell the full story, but this is where we are now.
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 – now with March in the rearview mirror - the data points to a marketplace still absorbing homes at higher than typical seasonal level with only 122 single-family homes remaining for sale in the city and its environs – 39 percent less than this same time a year ago. Exacerbated buyer activity has claimed another 189 single-family homes during the past month – a rate just 16 percent less than a year earlier – truly remarkable considering the shrinkage of inventory available for purchasing and demonstrating the percentage of sales in relation to inventory is significantly higher than last year at this time.
The entire municipality introduced 149 new listings to the market over the last month – 40 percent fewer than in 2021. The most recent period also found Seller’s handing over keys on 149 completed sales – 21 percent behind last year and held back due to the lack of homes 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 properties 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 0.8 – which is still hovering near the all-time tightest reading 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 53 single-family homes in March - 44 percent fewer than this same period a year ago and 10 percent less than just last month. The supply of homes was met with enhanced demands during the period as there were only 57 dwellings for home seekers to consider by months end – 35 percent fewer than the depths we were experiencing at this time last year. Buyers still managed to absorb 64 homes into contracts while sellers received closing checks on another 56 properties – resulting in an MSI of 1.0.
Southeast Santa Rosa saw the supply of listed properties rest at 30 by the end of last month. This submarket debuted 31 new homes in the period while buyers garnered accepted offers on 37 additional dwellings. This coveted corner of the city experienced 26 formal transfers in March culminating in an MSI reading of 1.2.
Oakmont is officially the tightest submarket in all of Sonoma County and now being measured in days. Intense buyer activity has left this region with only four homes available for sale as March concluded – hovering near the historical low. Owners launched 19 new offerings in the period while buyers inked out 22 new deals. Sellers concluded another 20 transactions during the month – 67 percent more than the prior year - leaving this niche market with an MSI of 0.2 – a six-day supply of inventory.
Northwest Santa Rosa saw buyers swoop in to gain control of 40 more deals, leaving just 28 single-family homes available for sale at months end. Sellers committed 35 additional offerings to the markets while another 28 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 rests at exactly 1.0.
On par with the activity levels noted in Oakmont, Southwest Santa Rosa sellers managed to deliver 11 new offerings to the market this past month only to see consumers place 26 more dwellings into contract. Newly minted homeowners captured keys on 19 closings, leaving just three homes available for buyers to peruse in April while establishing an MSI of 0.2.
With the consumer being responsible for 70 percent of commerce within our country, it will be up to all of us, and our collective will, to determine the future of the marketplace and what the future holds - sounds exciting to me!
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