As Fed lowers interest rates, ‘staggering low’ inventory of homes available in northeast Santa Rosa

Once again, The Federal Reserve has decided to ease interest rates as it tries to manage a soft economic landing while keeping inflation in check.

“The Federal Reserve announced Wednesday that it will lower its benchmark rate by another quarter point, or 25 basis points,” CNBC reported this week. “For consumers struggling under the weight of high borrowing costs after a string of 11 rate increases between March 2022 and July 2023, this move comes as good news — although it may still be a while before lower rates noticeably affect household budgets.”

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For now, mortgage rates are holding steady, with 30-year-fixed rates remaining in the 6% to 7% range.

“Because 15- and 30-year mortgage rates are fixed and mostly tied to Treasury yields and the economy, they are not falling in step with Fed policy,” according to CNBC. “As of the latest tally, the average rate for a 30-year, fixed-rate mortgage increased to 6.75% from 6.67% for the week ended Dec. 13, according to Mortgage Bankers Association.”

So as home buyers and sellers stay on the lookout for lower borrowing costs in 2025, November’s BAREIS MLS data in the Santa Rosa market points to a marketplace executing on expected trend line levels as we anticipate the typical slower turn during the weeks ahead.

Sellers debuted merely 64 new single-family homes in November – 50% fewer than last year and another all-time monthly low while the inventory of available homes in the greater Santa Rosa metro region stayed on par with last year at exactly 251 dwellings in December – meaning that the available supply of offerings has contracted from the levels it has been running at all year to fall in line with where it was just twelve months ago. Home seekers laid claim to 100 single-family homes during the past month – 19% fewer than last year at this same time – while sellers handed over keys on another 105 completed sales – just 2% less than the 107 abodes in 2023.

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Santa Rosa recorded a Months’ Supply of Inventory (MSI) level of 2.4 – continuing to affirm that sellers are exerting more influence on the marketplace than buyers. MSI is the metric that indicates the number of months it would take to sell the current inventory at the current rate of sales. An MSI ranging from 4.0 to 6.0 is indicative of a balanced market, with lower numbers increasingly favoring sellers and vice versa.

Northeast Santa Rosa – the North Bay’s broadest submarket – saw the introduction of only 21 new single-family homes in November – a staggering 56% fewer than this same period a year ago. The supply of homes was met with increased demands from last year, as there were 108 dwellings for house hunters to consider by months end – 12% less than in 2023. Buyers managed to absorb 31 homes into new contracts – 24% behind last year – with sellers receiving closing checks on another 36 properties – 5% fewer than a year earlier, highlighting an MSI of 3.0 once again. Keep in mind that in this submarket, some of the new listings posted are offerings for homes under construction, which adds some unrealistic carryover inventory to what is actually available to purchase now, unlike most other sub-markets throughout Sonoma County.

Southeast Santa Rosa saw the supply of listed properties rest at 37 as December opened – 12% less than just a year earlier. This submarket saw the launch of only seven new listings in November – 71% fewer than last year’s figures – while buyers garnered accepted offers on 15 additional dwellings – 31% behind where pending contracts were in 2023 while witnessing 11 closings in the period resulting in MSI rising to 3.4.

Oakmont, which has experienced exacerbated demands from buyers steadily throughout the year, found sellers responding with a meager five new offerings in November. Buyers jumped in and grabbed 17 new deals while property owners collected 13 more closing checks leaving this region with 22 available homes for buyers to pursue in December along with an MSI steadying at 1.7.

Jeff Schween, a “top 1% Realtor at Compass,” provides market insights for The Press Democrat in this weekly column. You can reach him through his website at SantaRosaFineHomes.com.