Will the Fed Temper Consumer Enthusiasm?
As interest rates surge to retard inflation, will buyers still find their moxie to rise to the occasion or will it take yet another Federal Reserve move to dampen demand?
According to the most recent data collected by Compass, a current overview of Sonoma County shows an average sold price per-square-foot (psf) of $590 being paid for a single-family home – 14 percent greater than last year at this time. This climb in values is supported by broader metrics too, as the median sold price for a home has risen to $866,000 while the average price paid was confirmed at $1,095,000 – both new all-time highs.
Within the sub-markets of Sonoma County, Cloverdale conquered all gainers in the region as it surged ahead 46 percent from just twelve months earlier registering an average sold value for a single-family home at $569psf. Nipping at its heels was Petaluma’s Westside with prices climbing 43 percent to $688psf while Southwest Santa Rosa captured a 38 percent jump to $517psf. Accelerating 29 percent was our summer haven, the Russian River region, reporting closing values at $631psf while our fabled Coastal communities rallied 25 percent to $870psf.
Experiencing robust activity, Sebastopol accumulated a 21 percent gain wrapping up the period at $684psf while Oakmont joined the party with a 19 percent spike to $444psf. The tony town of Sonoma reigned supreme as the most expensive niche’ where sold properties averaged $905psf, a 17 percent jump over just a year earlier while Northwest Santa Rosa ascended 14 percent to close the month at $488psf.
Still delivering double-digit gains, both Healdsburg and the coalesced markets of Cotati and Rohnert Park touted 12 percent rises to $777psf and $452psf, respectively. By months end, Windsor chimed in to claim an 11 percent improvement to $495psf.
With spring sales in swing, Southeast Santa Rosa clocked a nine percent gain to close at $477psf while Northeast Santa Rosa saw values ring the register at $509psf for the period. Staying just this side of positive, Petaluma’s Eastside bettered itself by two percent with the average home selling at $504psf.
Since the Federal Reserve has no way of creating more supply of housing, its’ primary tool of raising the cost of money is intended to abate excess demand – at least to the point where supply seems more in balance with the consumer. The trick in such a diverse and broad economy as ours is to be able to read the warning signs of recession – which is two quarters of negative growth - to avert a more protracted shrinking of the overall economy in order to “land us softly” with eyes towards more measured growth and appreciation while supply chains catch up and restore balance.
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