Sonoma County Housing Inventory Plummets

By
Real Estate Agent with Healdsburg Sotheby's International Realty

Sonoma County Housing Inventory changes April 2012If you still think the real estate market is stuck in the doldrums, today's housing market might shock you. Even people who are trying to follow trends are unaware of just how dramatic the changes in the market have been. The key fact that buyers and sellers need to know about Sonoma County real estate is that well priced homes are  being bought much faster than they are coming on the market. Much faster. Did I say much faster? If you aren't prepared to fasten your buying seat belt, you may not be ready for this market.

Let's start with a simple comparison of homes added to the market with homes removed from the market. I simplified the many status changes into two columns; new and back on market in blue represents new inventory. The magenta column represents contingent, pending, and sold homes . Some people may quibble that a "contingent sale" isn't a completed sale and may end up back in inventory. That's true. Many home sale indexes (I know, indices is proper Latin...forgive me) like Case-Schiller rely on completed sales. It's more accurate, but it also misses the market inflection points when things really start to shift. That market shift is underway right now. You can wait for Case-Schiller to tell you it's okay to get back in the market, but you are already missing the big wave.

If there's only one idea you take away from this column, it should be this:

Homes are selling faster than they are coming on the market. Inventory is shrinking.

Ask any Sonoma County real estate agent working with buyers today and they will confirm the many serious real world implications of that simple fact. 

  1. Multiple offers
  2. Overbids
  3. Highest and best requests
  4. Failed appraisals
  5. Intense frustration
If you are thinking about getting into the Sonoma County housing market, you should be aware of the turmoil that already exists for buyers who have been making unsuccessful offers in April. In the REO segment alone, we have had 306 properties removed from the market via sales and only 133 new properties entered the market this month.  As of this morning, there are only 87 active REO listings, about a week's worth of sales at today's volume.  A similar story can be told about short sales where sales removed more than twice as many homes from the inventory as were added. There are a grand total of 90 short sale listings active today. That's also about a week's worth of inventory. Only in open market sales is there any semblance of balance, with 802 available homes, nearly six weeks of inventory. Given that anything less than six months of inventory is considered a seller's market, I think our one week to six week inventory might qualify as a hyper-seller's market.
 
So much for the flood of REO listings we have heard about since the foreclosure settlement. Instead we have seen the return of qualified and eager buyers with pent up demand and enough cash to buy everything priced reasonably. If you want to join this horde, be prepared to pay list price and to have to make offers on multiple homes before you are successful. The days of bottom-feeding, deep discount success are now officially over. 
 
I will be posting more specific results for the REO market on my reo.sonoma.net site.
 
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Topic:
Real Estate Market Trends
Location:
California Sonoma County
Groups:
Market Reports
REO REALTORS
Tags:
housing inventory
sonoma county

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Rainmaker
169,322
Dana Scanlon
Bethesda MD- Award-Winning Bethesda Realtor
Keller Williams Capital Properties

Glad to hear things are looking up in your part of the country - good luck with buisness in 2012!

April 29, 2012 09:36 AM
Anonymous #2
Anonymous
HHB

I think we'd both have more credibility if you were not consistently predicting a market upturn right around the corner and I wasn't always warning of further weakness. But to hell with credibility... here's the "more pain to come" side of the coin.

Interest rates continue to fall... yet remarkably housing remains incredibly weak. According to my data (Redfin) in the Parkland farms area only one house sold below $400k in 2009 (1720 Canyon Run which I wrote about on my blog). Subsequently, over the next 2 years 15 homes sold in the area, most in the $440 to $510 range. None sold at $400k or below.

Then last fall in October a home sold on Spur Ridge for $388k. Since then there have been a total of 6 sales I can see at or below $400, one as low as $340k. This demonstrates that the market is still falling. And again, this is with record low mortgage rates that surely won't last.

So housing is trending down and it will continue to do so as mortgage rates rise making housing less affordable. Furthermore, just because the shadow inventory hasn't hit the market yet doesn't mean you can dismiss it. All these NOD do have to make their way though the system Dave. They won't just disapear.

http://3.bp.blogspot.com/-TCCZ_MYjbDQ/TjCH2U-L7-I/AAAAAAAAAZI/AZAF5LGCdaU/s1600/Sonoma_Default_Foreclosure_Graph.png

Finally, there is some good news. Housing affordability is looking better every year. Out of nearly 200 metropolitan areas in the U.S. we're down to only 14 that are "Severely Overvalued" according to Societe Generale. Unfortunately for those looking to sell in the place we call home... Sonoma County is still on that list:

http://www.ritholtz.com/blog/wp-content/uploads/2012/05/US-affordability.png

Keep up the good work Dave. You keep me checking my premises and I hope I do the same.

 

May 09, 2012 08:42 AM
Rainmaker
266,762
Dave Roberts
Healdsburg Sotheby's International Realty

HHB, I wrote a nice long response, but tried posting without logging in. Basically, the AR Dog ate my homework. 

What I said boils down to:

sales are hot right now.

Really hot.

Really.

I then joked about my 27 month duration housing bottom and bemoaned your lack of accurate, real-time data on sales. It's hard to write authoritatively about trends when you are denied access to the information you need.

Thanks for commenting. I always appreciate your insight.

May 09, 2012 04:33 PM
Rainmaker
68,436
Eileen Begley
Monterey Real Estate
Coldwell Banker, DelMonte

Hi Dave; Same problem here in Monterey County - very little inventory! Have not yet compared sales to new listings but will do so. Have mostly just looked at the number of active listings and percentage in escrow. I have good, qualified buyers but no houses!!

May 15, 2012 09:09 AM
Rainmaker
330,552
Andrew Monaghan
CRS, GRI, EPro Associate Broker
Your Phoenix Home Source

this is one of my favorite parts of the world

May 18, 2012 10:42 AM
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Rainmaker
266,762

Dave Roberts

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