The markets are smokin'

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

As the Northbay deals with the pressure and fallout from tragic wildfires, our real estate markets are being attacked on all sides as well. Those choosing or relegated to renting are experiencing extreme pressure with rising rents and shrinking vacancy rates. Those seeking to purchase are reeling from the low availability of properties to select from, competitive bid situations and rising prices. Being able to assess the market conditions to put yourself in the best situation will demand of you to create your own personal strategy.

To be successful at the endeavor of buying real estate in Sonoma County, you must first understand local inventory trends. In doing so, you will fill the void left by macro analysis of the nation, state and region – thereby unlocking a key portion in valuing this commodity. According to BAREIS MLS, there were exactly 851 single-family homes for sale as July concluded. This is typically the peak of inventory during the year, but sadly this number is eight percent less than last year. The county welcomed 468 new listings to the market in July – 20 percent less than this same time last year – while 519 units garnered accepted offers during the month. This was a remarkable eight percent spike from the prior July, especially considering the drop in available supply. Buyers managed to formally acquire 533 homes by the end of the month, leaving the county with a month's supply of inventory (MSI) of 1.6 – 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.

As the population of the Santa Rosa marketplace now approximates 170,000 people, it is no wonder why the largest volume of transactions in the North Bay occur here every year. This gateway to wine country is comprised of five distinct regions, each with numerous communities within their boundaries.

The submarket of northeast Santa Rosa consists of rolling hills and valleys along with some of the communities most expensive properties. July saw the introduction of 59 new homes to this sub-market which held the inventory steady at months end with 133 units for sale – 14 percent more than a year ago. Buyers and sellers came to agreement on 77 new contracts – five percent more than the prior July. Meanwhile, sellers were able to complete the sale of an additional 75 properties during the month, allowing the MSI to remain static at 1.8 – foreshadowing scarcer availability of homes for this coming autumn.

Comparatively in southeast Santa Rosa, where the sun rises on the trails of Annadel State Park and sets on Taylor Mountain, there were 57 homes available as July concluded – 31 of those being new to the market during the month. Buyers garnered accepted offers on 40 homes while another 38 properties cleared title in formal transfers to new owners indicating a stabilized MSI of 1.5 – showcasing a market in compression with the further possibility of higher prices coming.

Oakmont is an active adult community located on Santa Rosa's extreme eastern boundary nestled in the Valley of the Moon. Constrained property conditions remain the story in this submarket which has seen a strong current of activity as the active supply of homes dipped again in July leaving only 22 properties available for home seekers. Buyers took notice as 15 homes were newly introduced to the market, while sellers continued to find themselves busy as they negotiated 16 new contracts. July brought the sale of an additional 21 homes further compressing the MSI to 1.0 – indicating a scant supply of available homes for the market, thereby adding pressure to the going price of properties here.

Turning our attention across the highway to northwest Santa Rosa, this region welcomed 48 new listings to market. Waiting buyers who successfully ratified 62 new contracts during the same period promptly absorbed these listings. July delivered 50 closed sales, leaving a sanguine 50 units available by months end and an MSI of 1.0. Homes here are being absorbed even faster than new supplies have been able to handle, causing mounting pressure in this region of our markets.

As July's final numbers were tallied, southwest Santa Rosa residents could select from 23 remaining homes for purchase consideration. That number includes 19 that were newly introduced during the month as well. Buyers continued to set the pace by gaining acceptance on 19 new offers by months end. And sellers handed over keys on another 21 properties allowing the MSI to throttle forward at 1.4.

The peak of our summer wave of inventory may be behind us now. With demand still requiring more of our markets than supplies have been able to provide, this could indicate a period of steadily rising prices. This may also encourage builders to start bringing new construction to our already hot markets. Either way, something will have to give.