Char’s August 2024 Blog – Market Update

Charleen Price

3 months ago

Stay Up-To-Date on Industry Trends & Forecasts

Did You Know?

There is a vast difference between reacting and acting. Herds react. Smart individuals act. Those who observe ALL the headlines and data and calmly evaluate a full, detailed, thorough inventory of things are always much better served in their ability to act instead of react. Reactions are usually quick responses triggered by emotion. ACTIONS are the result of hard work, careful thought and strategic thinking.
Builders are cutting prices as the number of homes available for sale rises. 31% of builders cut prices in July, by an average of 6%, while 61% of builders used other incentives to boost sales. 94% of 50 US metropolitan areas saw an uptick in for-sale listings with price cuts compared with a year ago. Tampa and Jacksonville, Fla., and Denver, saw the biggest increases in price cuts. (Barrons)

Between May 2022 and May 2023, home insurance prices rose an average of 21% at renewal time. A rise in catastrophic severe weather events contributed to this jump and the rate of price increases is not expected to slow. As insurers face higher costs, they pass those along to consumers in the form of pricier premiums. However, insurers don’t share data on individual homeowners’ premiums and risks, so it’s difficult to calculate just how climate risk is factored into the price of policies.
Insurers are demanding that homes in parts of the US must now be constructed with wildfires in mind, or they most likely will not be insured, which would mean they can’t be bought with a mortgage. After Hurricane Andrew devastated part of South Florida in 1992, pressure from the insurance industry compelled homeowners and builders in the state to switch to stronger windows and roof ties. The industry is applying a similar kind of pressure now in response to growing wildfire risk. A recent wildfire-resistant building test had a 5-foot “moat” of pavement around it. On one side was a fence made of a noncombustible metal made to resemble wood, and the house had protective coverings to stop burning embers from getting into roof vents and eaves. 10ft away, the other building was ringed by shrubs and mulch, resembling a home typical of any number of suburbs across the country. It had a wooden fence to one side. The new standards worked as advertised: After a blaze started by local firefighters, all that remained of the conventionally built structure was a single, smoldering plank. The fire-resistant building stood untouched.

Market Trends & Forecasts

The Value Of Your Listing Agent (PDF)
Mortgage Rates Decline to Lowest Level in Over a Year
Home Purchase Sentiment Retreats in July amid Affordability Concerns
NAR Practice Changes to Take Effect Aug. 17
July Monthly Housing Market Trends Report
National Market Trends Flipbook
Sonoma County Market Trends Flipbook

Market Update

While economists, consumers and Realtors were holding out hope (and their collective breaths) to see if the Fed would actually drop interest rates this month, the Fed left its benchmark rate unchanged at its 7/31 meeting. But based on comments made by the Fed chief and recent economic data, most analysts believe a September rate cut is (finally) coming. In anticipation of that rate cut, interest rates have been softening slightly. Of course, those rates depend on so many factors so providing quotes or averages can be very misleading. Providers of interest rate averages use different methodologies as to exactly what types of mortgage rates they are measuring – but the trends are always similar.

Inflation rates – both general and “core” readings – just dropped to their lowest points in over 3 years (though still above the Fed’s target rate of 2%). Stock markets have been having a rockier time of it since mid-July, though still far up since the year began, and consumer confidence has not yet really rebounded, remaining flat over the past 3 months.

“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said NAR Chief Economist Lawrence Yun on national dynamics. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers [with more contingencies, and] inventory is definitively rising.” It appears Sonoma Valley may be following suit as we found that the number of listings year over year was up about 8%, however, the median list price jumped a full 27% from $1,575,000 in 2023 to $1,995,000 in July of this year. Number of sales were unchanged year over year, but the median sales price was lower by 10% and days on market bumped up by 15%.

Looking ahead, we generally anticipate an increase in activity from mid-August, after school is back in session and most vacations are over, until holidays begin in late October. A September interest rate drop will help boost that activity from buyers that have been sitting on the fence, waiting.

Please note, all information is for single family residences in the Sonoma Valley as reported to BAREIS, the local multiple listing service through Broker Metrics.

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