The Local Lowdown: December 2024

Michelle Kim | January 1, 2025

The Local Lowdown

Quick Take:

The median single-family home prices fell in November but are still near their record highs with the exception of Marin, which peaked at over $2.2 million back in 2022. We expect prices to contract through January 2025.
Total inventory fell 56.3% month over month, a massive and surprising drop, which isn’t accounted for by fewer new listings or more sales. We expect inventory data to correct next month as more agents enter their listings into the MLS.
Months of Supply Inventory fell across the North Bay in November, implying a shift that favors sellers. MSI indicated a sellers’ market in Marin, Solano, and Sonoma and a buyers’ market in Napa.

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

The median single-family home price fell slightly month over month, typical for November

Single-family home prices are near record highs across most of the North Bay, with the exception of Marin. Persistently low, but rising inventory relative to the high demand in the area has more than offset the downward price pressure from higher mortgage rates. Prices in the North Bay generally haven’t experienced larger drops due to higher mortgage rates. Year to date, in November, the median single-family home price rose across the North Bay with the exception of Napa. Year over year, Marin is down and the rest of the North Bay markets are up. Prices typically peak in the summer months, and the mild contraction after the post-summer peak has fallen in line with expectations. Home prices will likely continue to decline slightly for the next two months.

High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates near 6% much more than around 7%. Mortgage rates fell significantly from May through September, but rose significantly in October. Now, rates are far closer to 7% than 6%, so we expect sales to slow further.

Single-family home inventory plummeted in November

In 2024, the housing market had looked progressively healthier with each passing month. Then November happened, and inventory dropped by over 50%, more than erasing the large gains from the first half of the year. Even though sales volume this year was similar to last, far more new listings came to the market, which allowed inventory to grow significantly. Typically, inventory begins to increase in January or February, peaking in July or August before declining once again from the summer months to the winter. The precipitous fall in November was unexpected and unusual. For now, it’s possible that sellers simply took their homes off the market after seeing that interest rates would stay elevated for longer, or it’s possibly a database error from our data provider. We will dive more into this next month as more data comes out.

In terms of sales and new listings in November 2024, the number of homes for sale was slightly higher than last year, and new listings did fall — but not at the level it would take to account for the massive drop in inventory. The North Bay housing market is notably responsive to mortgage rates, and as rates increased in November, it likely gave buyers and sellers pause.

Months of Supply Inventory in November 2024 indicates a sellers’ market in Marin, Solano, and Sonoma and a buyers’ market in Napa

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). MSI in the North Bay markets trended higher throughout most of 2024. However, in October and November, MSI fell across markets, implying the market shifted more favorably toward sellers. Currently, single-family home MSI indicates a sellers’ market in Marin, Solano, and Sonoma and a buyers’ market in Napa.