50 shades of gray in analyzing real estate market

This article is reprinted from Wine Country Real Estate, a special advertising section of The Press Democrat.

'Fifty Shades of Grey' may turn you red, but this also speaks to the inability of always finding a clear direction to so many questions that very rarely lead you to a simple black or white answer. The inevitable quest to be right or find the only answer that exists when it comes to analyzing real estate truly requires that you operate in the abstract or 'gray area' to see a compilation of answers to any single analysis. In trying to make savvy decisions in the realm of real estate you will need to sort out the facts from fiction while still allowing for additional perspectives.

Understanding inventory trends in Sonoma County submarkets may fill the void left by macro analysis of the nation, state, and region as you remember, in the details lies your answers. According to BAREIS MLS, there were exactly 444 single-family homes for sale as January came to a rest, 258 of which were new to the market. Sonoma County saw 308 units receive accepted offers during the month while 222 homes formally traded hands, leaving the county with a months' supply of inventory (MSI) of 2.0 – good macro information. MSI is the metric that indicates the number of months it would take to sell the current inventory at the current rate of sales. An MSI ranging from 4.0 to 6.0 is generally indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.

Getting down to the details in the town of Sonoma, which submarket includes the hamlets of Kenwood and Glen Ellen, there were still 60 homes reported for sale as January came to a close – 15 percent more than the same period a year ago. This region saw the addition of only 22 new properties during the month as buyers moved forward on contracting with sellers on 27 new purchases while 23 homes formally traded ownership. With the typical seasonal dip in completed transactions seen in most January's, the MSI slid back up to 2.6 in this corner of the county.

As January's data filled in the charts, Healdsburg stood steady with 36 homes being offered for sale. Properties just listed on the market accounted for nine of these – just like the month before - while buyers weighed in and picked up another nine new deals as well – 56 percent less than the 16 deals done just the year before. This submarket formally granted new ownership on just eight homes thereby allowing the MSI to surge up to 4.5 – teasing the markets with a false balance that really doesn't exist.

As the first month of the year closed in Petaluma, residents of the city's west side were limited to only 20 available homes on the market – 12 of which were just introduced to the market during this same period. Buyers managed to place contracts on 15 homes, while sellers were able to conclude sales on 9 properties causing a jump in the MSI to 2.2 – showing that seasonality has truly returned to our markets.

On the east side of Petaluma, inventory was absorbed even more rapidly and by months end there were only 21 single-family homes in play which included 25 new properties that made their way to market in January. Eastside sellers inked 24 new contracts with buyers, and this submarket had 21 homes complete the transfer of ownership thereby holding the MSI steady at 1.0 – even with seasonality factors in place, this indicates heightened levels of activity in this submarket.

Traveling up the Highway 101 corridor, the combined markets of Rohnert Park and Cotati ended January with only 12 single family homes for sale, which included 20 properties that were newly introduced to the market during the month. Buyers came to terms with sellers on 25 homes while sales were completed on 18 more, leaving this submarket with an MSI of 0.7 – thereby making it the most challenging submarket in the county for buyers to acquire their new home.

Sebastopol checked in with an availability of now just 21 single family homes, of which nine were listings new to the market in the same month. Sellers in Sebastopol ratified 10 new contracts with buyers as eight sales concluded allowing a bit of loftiness in the MSI which now sits at 2.6.

Windsor wrapped up January with just 21 homes available to anxious buyers which included the introduction of 11 new properties to market during the same period. Buyers in the market snapped up 16 new deals while sales came to fruition on another 17 properties allowing the MSI to rise slightly to 1.2 – emphasizing the continued demand for homes from buyers in the marketplace.

How do you make the 'right' decision for yourself? I would suggest making the 'best' decision for your situation as you will have to sift through mountains of data and hills of emotions to come to your own final answer. Keep in mind that just because you made a real estate decision today does not necessarily mean you won't make a better decision later as you continue on your journey of home ownership and investing throughout your time here in this world.