In The News

Jeff Schween for The Press Democrat – The Torch Has Been Passed

The Torch Has Been Passed

The new Olympiad is underway and no doubt we shall see surprises while witnessing amazing feats of skill and desire from participants from across the globe. These athletes – all champions in their own right getting to this point – will need to overcome each other along with conditions precedent to achieve their golden dreams of taking the prize atop the podium. Similarly, players within our local real estate markets may feel like they have been training for a lifetime – as some have been in pursuit of their American Dream for several years – seeking their own feeling of accomplishment, a new home.

Our regional markets have recaptured much of the value that was lost during the Great Recession. We have seen single family homes make significant gains back to within five percent of their pre-meltdown prices and, in some submarkets, even surpass these old records. The market has also had a substantial appetite for multi-unit investment properties and land – both residential & agricultural – though nothing is being pursued as voraciously as properties within the classification of townhomes or condominiums presently. This niche of the market usually trails the single family home market at both ends of its cycle and typically represents the entry point into any submarket for many buyers.

Sonoma County, the largest in the North Bay with a population surpassing 500,000 people now, is still seeing a frenzy of activity within this market niche’. According to BAREIS MLS, Sonoma County closed out the first half of the year even hotter than in 2015. As inventory has come forward each month it continues to be met with an insatiable demand from buyers. The median price of a condo or townhome in Sonoma County skyrocketed 11 percent from a year earlier to close out last month at $334,000 – reflecting a value of $290 per square foot.

As June concluded 73 units found their way to closing, while buyers managed to place another 77 condos into contract. The markets acute desire to buy real estate was reaffirmed during the month with the absorption rate boasting a reading of 84 percent – still the highest in the North Bay – even as sellers pushed 76 new listings to the street during the same period.

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.

As the markets to the north were searing in the heat, Marin County’s condo market was sweating away with anticipation for what’s next. Having a well located condo in Marin over the last several decades has been like winning a gold medal in four consecutive Olympics – rewarding. As June concluded Marin buyers had 82 condos to select from – 14 percent more than the prior year. The vigorous demands of buyers continued as 60 units formally turned-over, while 71 more properties were captured with accepted offers. Activity managed to stay robust – even while sellers noticeably held back releasing only 50 new units for sale during the period – thereby causing more competition and a heightened absorption rate of 73 percent.

Marin’s markets are still controlled by those who own property not those seeking it. The median price of a townhome or condo in this county has fluctuated mightily each month and closed out this June at $665,000 – an upwards pop of eight percent from twelve months ago – indicating a corresponding value of $536 per square foot.

Being in pursuit of your new home may at times feel like a decathlon – daunting and exhaustive – though, like the athletes in the games at hand, you must see the accomplishment happening while you continue to push ahead, fail forward and never give up in your pursuit of the prize…in the end it will be you standing at the podium of your new front door.

Jeff Schween

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