In The News

Jeff Schween for The Press Democrat – Blame It On Rio

Blame It On Rio

The spirit of competition is alive on a global stage in Brazil this summer. Along with it come controversy, cohesiveness and commerce as cultures and their respective markets are fused together during this world wide spectacle. What comes after this Olympiad could be anybody’s guess, but one thing is sure to continue – commerce. This event extracts and deposits fortunes throughout the globe and we find it hard not to at least give it some of our attention. This year it becomes a part of the “summer pause” we experience within our real estate markets with buyers in the pursuit of real estate and sellers looking to move onward from it. As we bridge into the later stages of summer we know the markets will feel sporadic with fits and starts until early September when focus returns as distractions wane. Sonoma County, the largest in the North Bay by population and transactions, witnessed its’ median price for a single-family home scale back five percent from just the month before to close July at $575,000 as a greater percentage of lower priced homes sold during the period. According to BAREIS MLS, Sonoma County finished July with 832 single-family homes on the open market for sale. The marketplace typically sees definitive growth in inventory as each new year unfolds with peaks typically showing in spring and summer months while valleys appear in fall and winter. In July, Sonoma County buyers successfully contracted to purchase 480 homes – two percent less than a year ago and perhaps a function of the fact that sellers brought only 367 new listings to the market – a staggering 37 percent less than in July 2015. Transactions were completed on 439 homes during the period causing the absorption rate to steady at 52 percent – indicating continued pressure on prices as the market still lies well out of balance. 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 rapidly, thereby increasing the odds that an owner will sell a property in a shorter period of time. Conversely, an absorption rate below 15 percent is indicative of a buyer’s market, meaning homes are selling more slowly. Marin County is encountering very similar conditions as its neighbor to the north. The month of July brought a mere 161 new single-family homes to market – 23 percent fewer than twelve months prior – while buyers managed to contract for 177 new deals, leaving 361 units available by months end. This statistical bump in inventory seems truly like a paper gain as buyers remain in heated pursuit of their next home with Marin reporting an absorption rate of 54 percent – and likely getting higher – with the lack of inventory to replenish what has been accumulated. Napa County buyers negotiated 128 new contracts during the month of July, while another 140 new listings made their way to market – affirming the trends throughout the North Bay. Inventory comparisons to the prior year indicate that the active supply of homes is actually up 15 percent from a year ago – though may shrink promptly without a heightened level of new listings making their way to the market. Napa buyers were left with only 397 homes to select from as the month concluded leaving the county with an absorption rate of 33 percent. For sellers who feel the activity on their homes is “off” its pace from earlier in the year you may want to blame it on Rio…and summer vacations, back to school distraction or even the county fair. In addition this is a good time to truly evaluate the actual market price you are trying to extract from home seekers. On the other side of the equation, provided buyers themselves can manage their level of distractions, opportunity exists should you strike swiftly and reasonably.

Jeff Schween

By Jeff Schween, of Pacific Union International’s Santa Rosa office.