Most North Bay residential real estate markets off in January from a year ago
Inventory of homes for sale in the North Bay was lower in January 2023 compared to last year and is still declining, but real estate industry optimism is growing in expectation of new listings and higher sales volumes leading up to the May–June peak sales period, based on seasonal industry forecasts and projections.
At the same time, mortgage rates have been rising gradually for the average Federal benchmark rate, the rate commercial banks charge each other. The Fed rate on a 30-year fixed mortgage was 7.02% Thursday, according to Bankrate.com and Forbes Advisor, with these rate percentages changing daily.
On that day, the average rate on a 15-year mortgage was 6.26%, a 30-year jumbo mortgage average rate was 7.05%, and the average rate on an adjustable-rate mortgage (ARM) was 5.60%. The prime rate consumers pay is typically 3 percentage points higher, meaning that when the Fed raises interest rates, the prime rate also goes up.
“It’s been a tough market until recently, but people are adjusting to higher costs due to Fed rate increases, rising material costs, and inflationary effects that have not gone away,” said Tierney Muscatell, an agent with Century 21 Valley of the Moon in Sonoma County.
“Real estate markets are hot in Oakmont, Petaluma and in downtown Santa Rosa and especially in ZIP code area 95409 (Rincon Valley) and elsewhere. Homes will sell fast if priced right.”
Even with a lower inventory, he has seen a lot more buyers in the market over the past two months, chiefly among those moving here from the San Francisco Bay Area who can — and want to — work from home.
“Some tell me with rents at $3,500 a month or more, it can be cheaper to buy a home, even with the prospects for a mild recession, but I don’t see a crash coming this year,” Muscatell said.
Jill Levy, an agent with Napa Valley Homes & Estates, said supply-side housing inventories for estates is low, but demand is high, as owners holding on and not anxious to sell.
“All of my listings are in escrow and already sold right now. Property must be priced correctly, and asking prices have dropped a bit. I’m ready to see more activity this spring,” Levy said.
According to Garrett Snedaker, “The inventory of homes for sale is low on a year-over-year basis across the North Bay and is still declining.”
He is a broker and partner of Better Homes and Gardens Real Estate/Wine Country Group based in Santa Rosa. He also authors a monthly blog covering Wine Country and North Bay Real Estate Trends. This group has 10 North Bay offices in Sonoma, Napa, Mendocino, and Lake counties.
“We expect new listings to start coming in the next few weeks to kick-start the Spring market surge. Pending sales volumes have picked up,” Snedaker said.
“The appreciation rate for homes is expected to moderate this year and be essentially flat, however, a decline in values is not expected.”
Snedaker said for all the areas covered by the BAREIS multiple listing service, which includes Marin, Mendocino, Napa, Solano and Sonoma counties, there was an inventory of 1,605 homes and condominiums for sale at the end of January.
Sales for the month of January totaled 721. This number is 23% below a year ago (940) and 8% above December’s pace (693).
Here’s what’s going on in each North Bay county.
Sonoma County
“It’s been a tough market until recently, but people are adjusting to higher Fed prime rate and mortgage increases, rising material costs, and other inflationary effects that have not gone away,” Muscatell said.
Even with a lower inventory, he started to see a lot more buyers in the market over the past two months, especially among those moving here from the Bay Area who can work from home.
“With some rents as high as $3,500 a month or more, it can be cheaper to buy a home, even with the prospects for a mild recession, but I don’t see a crash coming this year.”
The inventory of homes and condominiums available in Sonoma County at the end of January stands at 402 homes. This is 35% below the inventory in January 2022 (622) and 12% below the inventory in December (456). Forty-five percent of the available homes for sale in Sonoma County (182) are currently priced at $1,000,000 or more.
New sales (203) in Sonoma County in January were 31% below the pace of January 2022 (296) and were 7% below the December level (219).
Over the past four months, Sonoma County homes are selling at 95% of their original list price. In January, 21% of the homes in Sonoma County sold at a price higher than the original asking price and 37% of the homes had a reduction in price before they sold.
