Year over year statistical data for Sonoma County ending November 20, 2020
Each month we look at our most recent past months’ activity and compare it to a year ago and devise an overview of how the housing market is moving. What all of us will remember as the COVID-19 Pandemic year has actually produced some extraordinary housing statistics. You probably know a REALTOR or two who are crazy busy. This is true for most agents who have been in business for 7+ years. The flip side is there are many REALTORS not having such a great year. The reason behind the 7+ year assessment is those agents who have been in business for longer than 7 years have a tremendous amount of past clients to pull from. We live in a world of distrust. It seems everyone is skeptical about everything. Our elections are questioned, the pandemic we are in is questioned and it seems as though the trust has become a very big issue. Newer agents rely heavily on open houses, lead generation, and gaining trust from new prospects. Today that is challenging because consumers have such distrust they are tuning to referrals and recommendations more than ever. As one of the largest and most successful real estate teams in the county, we see our fair share of the market.
The first statistics we look at is our monthly pricing trends. The pending stats are what we consider the most important because they can give us insight as to where the market is heading. Since July 2020 we have seen a steady decrease in pending sales. This is in part a natural seasonal adjustment and well above our pending numbers from a year ago. Our current pending properties as of November 20, 2020, is 492. For the same month a year ago we see a pending number of 330. This is a +49.1% increase in sales.
The next number we look at is the new listings number. this is the number of new properties listed for sale during a given month. Here the trend is even more concerning since we are in a listing drought. Look at the number of new listings in November of 2020 (779) and compare this number to the same month a year ago with (985) in new listings. That’s a decrease in -20% inventory. If we peek back to October, September 2019 we can see substantial drops in inventory compared to a year ago. You can see a consistent decline since the announcement of the COVID-19 pandemic and the lock-down.
In fact, if we go all the way back to February 2019 we see a normal increase in inventory and a normal seasonal decrease monthly until we hit April 2020. While the bars look similar the numbers are not. From April 2020 through today we consistently have listed 20% to as much as 40% fewer homes. Is this the reason for such strong demand from buyers? It is certainly contributing to it. There are two other very strong factors bringing in buyers.
First, let’s look at our final set of numbers. Sold properties. We already know that if it says pending we can count it as a future sold. This is why we don’t put as much weight into what has already sold vs. what is pending. That being said a trend of sold properties moving one way or another can predict market expectations as well.
Here we see our November sold number at 478. But wait you say! Why is this number different than the October pending number of 522? This is because not all the pending sales in a month will close the same month. Many of the pending sales tail into the coming months which is why sold properties are a real indicator of the true market. It’s where you are at right now. The good news for us REALTORS is this number is up big time compared to November 2019 with only 405 closed sales. In fact, our sold properties outnumber their year over year numbers consistently from June 2020 through today. We did experience a slight slump when the pandemic was announced in March, April, and May. But things started to take off in June.
Our average Days On Market (DOM) is at 12 months low of 48. This is at a time when we usually see a lull in the market and our days on market grow as the seasonal period for real estate sets in. A low DOM number usually produces a higher offering price on homes as the fewer the homes, the stronger the demand, and the more offers coming in above asking. Here you can see we have grown to 99% average offering price from the listed for sale price and the sold price. Setting the right expectation. When you list your home this chart tells you to expect 99% of the price in an offer. Certainly, some will be more and some will be less but right now measuring the entire county (Because this can vary greatly from city to city. See below for city specif live statistic for the city you live in). This is also a good measuring stat for buyers looking for deals. You are not going to get much off if any on a home priced right in this market. With the exception of Solano, all other Bay area counties are very similar. We keep hearing about all the multiple offers and homes selling way over the list but the reality is there are lots of homes that do not get multiple offers and sell right at the listed price and or just a tick lower. No agent ever wants to promote how they just sold their “Hot New Listing “for below the listed price. So we don’t hear about those. But our statistics don’t lie.
The good news is if you purchased your home back in November 2015 you have seen a 44.7% county-wide increase in your value. You read that right! 44.7% increase. 9.2% in the last 12 months. Reason number two buyers are flooding the market and buying up all our inventory. Check out the case study below that gives reason to sell and buy.
Case Study: Robin and Sam purchased their first home back in 2015, The paid $463,000 (44.7% less than today) for a nice 3 bedroom and 2 bath starter home. They financed the home with 3% down with an interest rate of around 4.5% (historical rates from 2015 fluctuated from 3.8% to as much as 4.75%) they have a current house payment of $2,482. Flash forward to November 2020, and Robin and Sam’s home is now worth $839,000 which gives them $462,300 (This includes their original downpayment and payments for the 5 years they have lived in the home) for a down payment and closing costs on a new home. If Robin and Sam put $400,000 down on a $1,000,000 4 bedroom, 3 bath home (Their Dream Home) They can finance this home at 2.65% giving them a payment of $2,940. Can you see why everyone wants to buy a new home? This isn’t the only reason buying a home is hot right now.
Another reason is the pandemic itself. What has transformed in the last year has been a significant change in our work-style. Commuting to work, to the city, having to live close by for both convenience and necessity did not allow urban dwellers much opportunity to seek the suburban life they always wanted. That has changed. Imagine you work in San Francisco and to be close your choices are the East Bay Berkely etc or Marin. Both very expensive home values and very expensive rental markets. Imagine you are renting a 2 bedroom, 1 bath condo in the city for $6,500 a month, or Marin for $4,500 a month, or Berkely $3,500 or more. Now you can live anywhere you wish as long as it is within reason and ok with your employer. You work from home and or occasionally go to an office. The opportunities are wide open. You can buy anywhere in Sonoma County for the price of rent where they live. The point is we have a pool of buyers looking to settle down and plant some life roots in our community and they are excited they can own a nice home for less or for as much as they have been renting. The American Dream
While we always experience a seasonal slowdown this time of the year having only 7 weeks of supply is a bit scary. The charts below show us that year over year from November 2019 to November 2020 our monthly supply of homes to sell has dwindled 32.9%. If things stay the way they are and we continue to list 20 to 40% fewer homes than we sell each month we will run out of available homes sometime next year. Attention all sellers. Now Is The Time!
The opinions expressed in this report are those of Don McDonald, Founding partner, and REALTOR with RE/MAX Elite Partners brokered through RE/MAX Gold. They are not in any way intended to express what RE/MAX, RE/MAX Gold or any other agent or brokerage may think. It is my honest analysis backed but some market data. Check back each month around the 25th or so for an update as we continue down this path.
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