Are Sonoma, Marin and Napa real estate markets recovering?

While sales volume in national, regional and local real estate markets remains at 30-year lows, there are signs that some North Bay residents are finally ready to buy into real estate. back to buying a housepartly inspired by falling interest rates.

Real estate markets are greatly influenced by interest rates, the supply of available homes, and buyer sentiment or confidence. When these are in harmony, our markets can have incredible pace, leading to long growth cycles. If not, our markets are exhibiting the stagnation of the last 24 months. The latest sales data suggests a change could be coming as we move past winter and into spring.

Accordingly BAREIS MLSSonoma County buyers successfully entered into deals to purchase 374 single-family homes in September; This figure increased by 14 percent compared to last year. Owners submitted 295 new offers during the month; This marked a new historical low for the period, down 15% from 2023. Buyers managed to complete the purchase of 327 homes; This number was 13 percent more than the 289 houses whose ownership was transferred in this period last year.

As October kicks in, buyers will be searching the remaining 897 available homes in Sonoma County – a significant 23% jump over the 30-plus year low we experienced at this time last year.

As the year continues to take shape, buyers will weigh in on these offers as well as new offers and decide whether to buy now or wait to buy. This will show up in the absorption rate, a common market measure.

The absorption rate is calculated by dividing the total number of houses sold in a month by the total number of houses offered 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 decrease, making the owner more likely to sell a property sooner. Conversely, an absorption rate below 15 percent is indicative of a buyer’s market, meaning homes are selling more slowly.

September activity in Sonoma County left us with a high absorption rate of 37%; This shows that buyers are still working harder than historically normal to find the home they want at the interest rate they want. That should also mean they’ll be more likely to pursue purchases lined up this month, with loan interest rates falling to the lowest levels since the Federal Reserve’s last interest rate cut. Interest rates are now once again in the range of 6% to 6.75%, depending on the loan product chosen.

Marin County property owners submitted 175 new single-family offers this September; This is the lowest monthly figure of all time and is 10% lower than a year ago. These woefully lacking inventory levels may continue to create a more competitive environment for both new and existing buyers looking to make Marin their home this year. Buyers purchased 198 homes with completed contracts, while sellers completed the sale of 149 homes during this period – just 2 more than last year – leaving the entire region with 391 homes available for inspection by buyers in October.

Marin’s absorption rate for the month ended the period at 38%, giving up some momentum; which is more compatible with neighboring markets.

In the east, there is a slightly different situation; Napa County markets remain balanced for the fourth straight month. 103 new offers were introduced to the market in September; There are 397 homes left for buyers to view this October, just 1 unit less than last year. Buyers placed 75 new deals in escrow (nine fewer than last year) and closed transactions tipped the scales at 73 for the month; That is, 12% more closings compared to the same period of the previous year.

The combination of new releases with buyer activity showed that the market had stabilized, with Napa’s absorption rate holding steady at 19%. This means that now that the playing field is leveled, both buyers and sellers need to be open to thoughtful negotiations.

Jeff Schween is among the “top 1% Realtors on Compass.” You can reach him through his website. SantaRosaFineHomes.com.