In The News

Jeff Schween for The Press Democrat – Hearths On Fire

Hearts On Fire

Love is in the air – again. Let’s face it, has it ever really left? The love we find in relationships is not so much unlike the joy and connection we find in our homes. A dwelling often has a deep impact on those who live within its shelter. A home provides a foundation along with an opportunity to grow, to laugh, to imagine and dream. It can be a source of physical safety, emotional security and even wealth. It can be a place of strength that allows you to go out and do remarkable things you may not have considered if it weren’t for such. Owning a home or even pursuing one to live in requires much of anyone with market conditions as they are currently. Discerning your next move is not always clear and wrestling the ambiguity of priorities and choices is riddled with decision trees.

With sellers seemingly still in control of the markets there is significant weight being placed upon the shoulders of buyers to discern what an appropriate and successful offer may look like. In doing so buyers are called upon to understand facts and trends at a high level in order to succeed on their journey to homeownership.

Sonoma County, the largest in the North Bay with a population exceeding 500,000 residents, saw the first month of our new year close with six percent greater inventory of available single-family homes than the prior year. According to BAREIS MLS, Sonoma County finished January with 470 single family homes on the open market. The median price of a home in Sonoma County climbed just over 15 percent from the same time last year to settle at $553,000 – its highest registered value since the Great Recession.

The median sales price is a value that represents the midpoint in the range of all prices paid.

The marketplace typically experiences its trough of both homes available and sales consummated during the depths of winter. In January, Sonoma County buyers successfully contracted to purchase 278 homes – essentially on par with a year earlier – while only 226 properties found their way to market during the same period – a staggering 34 percent less than in 2015. Confident buyers were able to complete purchases on another 254 single family homes during the month waging additional pressure on the markets – 11 percent more than the prior January.

Absorption rates, when compared to the prior year, have continued to show stabile, but heightened, demand as January recorded a 54 percent rate – suggesting another tight year of supply for buyers to select from and possibly foreboding that the significant portion of 2016’s appreciation will occur in the first half of the year.

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 checked in with a modest bump in the supply of available homes from just the prior month – though still 21 percent less than even just a year ago. With buyer demand as strong as it has been, the rally of inventory seen in September and October did not bolster the markets with enough supply to break the trends that have been in place for the last five years. The month of January showcased scant offerings of supply as only 70 new properties were introduced to the markets – 63 percent less than last year – while buyers gained control of another 86 properties through newly ratified agreements with sellers.

As the El Nino runs its course, and can sometimes be temporarily disruptive to market activity, this year does not seem to be indicating any early signs of buyer fatigue as Marin buyers made their way to closing on another 90 homes – seven percent more than last January. The intense demand has left Marin with an absorption rate of 56 percent – 33 percent more robust than this same time last year – while the median price for a home in Marin slipped backwards for the month to $938,000.

As the vines are being pruned, Napa County buyers are fully engaged in achieving their goals. Undaunted by the duress in the financial markets, 81 new purchase contracts were consummated during the month, while a meager 69 new listings made their way to market – 26 percent less than in January 2015 – allowing the number of available homes for sale to cascade downwards to 228 total units. The consistent demand being felt was echoed by a 34 percent absorption rate – indicating that the pace of sales in Napa continues to be brisk. The county’s median price moderated from the prior month to close at $581,000 – though still 17 percent greater than last year.

Even though the markets seem only constricted by the lack of supply many are wondering what the future holds for them within our region. Just remember to think with your head and listen with your heart for the answers, after all…

Puppies, teddy bears
Roses and wine
This time next year
Will buyers still be in line?

Jeff Schween

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