Jeff Schween on the North Bay fire’s effects on the housing market
November 19, 2017
No Fire Sale Here
The epicenter of heightened activity is clearly in Santa Rosa. The typical seasonality of markets nearest this have been put on pause while those most impacted by the recent events strive to sort out order to their lives. Thereby creating a ripple effect throughout the adjacent markets of Marin and Napa as well. Numerous participants in the region have encountered situations and moved on deals that merely four weeks ago would have been unheard of. This first responders approach to what has transpired shall be vetted out over the next few years while for now we assimilate the data points to find the true course of our future.
According to BAREIS MLS, Sonoma County is now incurring a cataclysmic shift within in its real estate market. The supply of homes for sale plunged 18 percent from the prior year leaving just 585 single-family homes available by months end. 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 – though the recent firestorm has certainly shifted dynamics. This October, Sonoma County buyers successfully contracted to purchase 477 homes -21 percent more than the prior year. Remarkable events considering sellers only introduced 287 new properties during the month – an 18 percent decrease from last October. Transactions were completed on 348 dwellings during the period – amazing with respect to so many transactions being postponed into November due to the Tubbs and Nunn’s fires. The cumulative effect has led to an exacerbated absorption rate of 60 percent – placing more heartache in the air for buyers to ingest. Sonoma County – with a dramatic boost in activity – saw prices climb to a new all-time high of $655,000 for a single-family dwelling.
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 found itself catching a bit of a reverse wave from its neighbor to the north as sellers sought to capture buyers interest by unseasonably launching 134 new homes during the month. As the period concluded, Marin had 311 · available homes for buyers to select from – merely three percent fewer than in 2016. Buyers managed to place contracts on 212 existing homes – catching numerous Sonoma residents as they scour to find interim housing – while sellers handed over the keys to 170 new owners. Marin’s absorption rate steadied at 55 percent though its median price edged lower to $1,270,000 – still almost twice that of Sonoma’s.
Napa County saw its’ enthusiasm curbed by the Atlas and Nunn’s fires as well. October brought more than autumn with it this time as only 87 new homes made their way to market. Buyers managed to contract for 110 new deals while sellers crossed the finish line with 79 sales leaving this market with 306 available single-family homes to open November. Inventory comparisons to the prior year indicate that the active supply of homes continues to hover at 12 percent less than a year ago leaving the county with a heightened absorption rate of 26 percent along with a median price of $650,000.
So, it turns out that a fire sale really means homes just got more expensive – not cheaper.
Jeff Schween, Pacific Union International
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