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The Local Lowdown: June 2024

The Local Lowdown: June 2024

The Local Lowdown

Quick Take:
  • Median home prices are slightly below peak levels across the North Bay with the exception of single-family home prices in Sonoma, which reached an all-time high. 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 June.
  • Active listings, sales, and new listings rose in the North Bay month over month, which are all beneficial for the housing market. We expect inventory to increase into the summer and return to a more normal market after the slowdown experienced over the past year and a half.
  • Months of Supply Inventory has declined in 2024, indicating that buyer competition is increasing. MSI implies a sellers’ market in the North Bay.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
 

The median single-family home price rose month over month across 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. Month over month, in May, the median single-family home price rose across the North Bay. Year over year, prices increased most significantly in Napa, up 13% for single-family homes and 19% for condos. The median single-family home prices in the North Bay are fairly close to their all-time highs, and Sonoma prices reached an all-time high. Prices in Solano and Sonoma could easily reach new highs in June; Marin and Napa could do the same, but we view that as less likely at this time. Low, but rising inventory is only increasing prices as buyers are better able to find the best match.
 
High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are above 7%, sales could slow once again during the time of the year when sales tend to be at their highest.
 

Inventory, sales, and new listings rose 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.
 
With the current inventory levels, the number of new listings coming to market is a significant predictor of sales. New listings rose 4% month over month, and sales followed suit, increasing 9%. Year over year, inventory is up 21%.
 

Months of Supply Inventory in May 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 May, MSI indicated the housing market favored sellers. The only exceptions are single-family homes in Napa.
 

Local Lowdown Data

 


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