The Local Lowdown: December 2023

Michelle Kim | January 1, 2024

The Local Lowdown

Quick Take:

The median single-family home prices declined across the North Bay in November, which is normal this time of year. Year over year, median single-family home prices were mixed, with Marin and Solano prices increasing since last year, while Napa and Sonoma prices declined.
Active listings, sales, and new listings fell month over month for single-family homes. However, condo inventory rose slightly in November. Rising inventory is definitely good for the housing market, which is likely to experience much higher demand in 2024.
Months of Supply Inventory indicates the market is shifting toward balance, but it is still a sellers’ market in most of the North Bay. It’s common for MSI to trend higher in the fall and winter, when fewer buyers are in the market and sales slow.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Single-family home prices declined across the North Bay, in line with seasonal expectations

In the North Bay, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from April 2022 to January 2023. Month over month, in November, the median single-family home price declined 7% in Marin, 26% in Napa, and 7% in Solano and Sonoma. However, year over year, Marin and Solano prices are up 6% and 2%, respectively, while prices in Napa are down 25% and down 5% in Sonoma. We expect prices to remain fairly stable in the winter months, but as interest rates decline and more sellers come to the market, prices will almost certainly rise in the first half of 2024. More homes must come to the market in the spring and summer to get anything close to a healthy market.

High mortgage rates soften both supply and demand, so ideally, as rates fall, far more sellers will come to the market. Rising demand can only do so much for the market if there isn’t supply to meet it. Unlike 2023, 2024 inventory has a much better chance of following more typical seasonal patterns.

Inventory, sales, and new listings declined month over month

Since the start of 2023, single-family home inventory has followed fairly typical seasonal trends, but at significantly depressed levels. Low inventory and fewer new listings have slowed the market considerably. Typically, inventory peaks in July or August and declines through December or January, but the lack of new listings prevented meaningful inventory growth. This year, sales and new listings peaked in May, while inventory peaked in September. New listings have been exceptionally low, so the little inventory growth this year was driven by softening demand. In November, inventory, sales, and new listings dropped, which is normal this time of year. With the current low inventory levels, the number of new listings coming to market is a significant predictor of sales. Month over month, new listings fell 30% and sales declined 25%. Year over year, sales and new listings are down 17% and 8%, respectively.

As demand slows, buyers are gaining slightly more negotiating power and paying less than asking price on average. The average seller received 93% of list in January, which grew to 101% by May. The average amount received by sellers slowly declined to 96% of list from May to November 2023. Inventory will almost certainly remain historically low for the next few months, and buyer competition will ramp up meaningfully in the spring, which will create price support.

Months of Supply Inventory indicates the market is trending toward balance, but it is still a sellers’ market in most of the North Bay

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The North Bay market tends to favor sellers, which is reflected in its low MSI. MSI fell sharply in the first quarter this year before gently trending higher starting in May. In November, MSI remained below three months of supply, indicating the market still favors sellers. The only exceptions are single-family homes and condos in Napa and condos in Solano, which shifted into a buyers’ market.

Local Lowdown Data

Chart of monthly median single-family home prices in Marin, Napa, Solano, and Sonoma counties, November 2021–November 2023. Chart of year-over-year North Bay single-family home median price changes by county, December 2022 to November 2023. Chart of monthly median condo prices in Marin, Napa, Solano, and Sonoma from November 2021 to November 2023. Chart of monthly year-over-year median condo price changes in Marin, Napa, Solano, and Sonoma counties, December 2022–November 2023. Chart of North Bay single-family home inventory, new listings, and sales by month from November 2021 to November 2023. Chart of North Bay condo inventory, new listings, and sales from November 2021 to November 2023. Line chart compares monthly days on market for North Bay single-family homes and condos, November 2022–November 2023. November 2023 days-on-market chart comparing single-family homes and condos across four North Bay counties. Chart comparing monthly North Bay housing inventory for single-family homes and condos, November 2022–November 2023. November 2023 MSI by county: single-family homes and condos, with values for Marin, Napa, Solano, and Sonoma.