The Local Lowdown: July 2024

Michelle Kim | July 26, 2024

The Local Lowdown

Quick Take:

Median home prices are slightly below peak levels across the North Bay. As more new listings come to market, we expect prices across most of the North Bay to continue rising and to reach new highs in July.
Active listings, sales, and new listings declined in the North Bay month over month, which is a little early. This is likely an early sign that inventory will remain tight for the rest of the year.
Months of Supply Inventory is increasing, especially for condos, which is a shift that favors buyers. MSI still implies a sellers’ market for single-family homes, however, in most of the North Bay.

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

Median single-family home prices near record highs in the North Bay

In the North Bay, low inventory and high demand have more than offset the downward price pressure from higher mortgage rates, and prices generally haven’t experienced larger drops due to higher mortgage rates. Year to date, in June, the median single-family home price rose across the North Bay. Year over year, prices increased most significantly in Napa, up 21% for single-family homes and 47% for condos. The median single-family home prices in the North Bay are fairly close to their all-time highs, especially close in Napa. Prices in Solano and Sonoma could easily reach new highs in July; Marin could do the same, but we view that as less likely at this time. Additionally, inventory is so low that it will create price support as supply declines in the second half of the year.

High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are near 7% again, sales are slowing during the time of the year when sales tend to be at their highest. This phenomenon isn’t great for the market, but it isn’t terrible, either, as it may allow inventory to build in a massively undersupplied market.

Inventory, sales, and new listings declined month over month

In 2023, single-family home inventory 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. Last year, new listings peaked in May, sales peaked in June, and inventory peaked in September. New listings were exceptionally low, so the little inventory growth in 2023 was driven by softening demand. In January 2024, single-family home and condo inventory and sales dropped, but more new listings came to the market, which drove a higher number of sales in February. Sales continued to climb higher in March, April, and May, along with new listings. This year, inventory growth looks much healthier than last year, but sales and new listings may have peaked a month early — a sign that supply will remain tight in the second half of the year.

With the current inventory levels, the number of new listings coming to market is a significant predictor of sales. New listings declined 22% month over month, and sales followed suit, falling 2%. Year over year, inventory is up 20%.

Months of Supply Inventory in June 2024 indicated a sellers’ market

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 trended higher in the second half of 2023, hovering between a balanced market and a sellers’ market. MSI in the North Bay market has trended horizontally for the past nine months. In June, MSI indicated the housing market favored sellers.