Mid-year market mania

The North Bay markets started off the year with an incredible lack of inventory. Despite that, the markets have somehow managed to produce impressive sales results coupled with gains in the median price paid for single family homes.

Sonoma County, the largest in the North Bay by population as well as transactions, saw June close with a measurable 15-percent decline in inventory of available single-family homes from the prior year. According to BAREIS MLS, Sonoma County finished June with 765 single family homes on the market. That's 130 less homes than were available during the mid-point last year which may forebode additional pressure on prices to rise. The median price of a home in Sonoma County climbed 11 percent from the same time last year to settle at $550,000. The median sales price is a value that represents the midpoint in the range of all prices paid.

The marketplace typically sees definitive growth in inventory as the summer unfolds. In June, Sonoma County buyers successfully contracted to purchase 545 homes – the most in any month over the last year. This has further expanded the absorption rate to 65 percent from the markets year ago peak of 53 percent—suggesting that the rate of sales and demand is still extremely high and that the only thing holding up more sales is the unfashionably light supply of available properties for purchase.

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 checks in with very similar dynamics. With buyer demand as strong as it has been, the typical rise in summer inventory did not occur this year as it has so commonly over the last several decades. The month of June saw 216 new single-family homes come to market while 271 homes were put under contract, thereby compressing the available inventory from the prior year to 357 units available for sale. The lack of summer inventory surge has left Marin with an absorption rate on par with this same time last year of 65 percent—a market clearly in favor of sellers. The median price for a home in Marin is now $1,170,000—a significant 11-percent increase from the mid-point last year.

As the mid-year in Napa County came to a close, buyers executed 143 new contracts during the month of June, while 144 new listings made their way to market allowing the number of available homes for sale to rest at 359 total units—a noteworthy seven-percent increase from last year's mid-point. With consistent activity the absorption steadied at 35-percent, indicating that the pace of sales in Napa continues to be brisk. The county's median price jumped to $609,000 from the prior year as it managed a gain of 13-percent.

As we continue through the days of our mid-year heat, we may experience a 'summer pause' once again. This phenomenon is hard to explain—just think of it as multiple distractions coming together at once thereby creating a lessened level of activity within the marketplace. This could bode well for buyers while also making sellers nervous. Stay vigilant at this time and make it work to your advantage.