In Sonoma County, our inventory is running a little over half of what it is in a “normal market”, something we haven’t seen since March of 2020.  Normally running somewhere in the listing count of  1100 plus homes on the market, as of June 21, 2021, we have 687 active listings in Sonoma County of single family residences and 315 of these are in the $1,000,000 plus range, creating a surplus of luxury priced homes on the market.

Though our inventory is running lower than our average, especially with rate of home purchases closing, it is growing roughly around 5 – 7% per week.  As things open up, some people are moving forward with listing their homes, hoping to capture the buying surge we have been in this past year.  As we approach summer, we may expect to see inventory increase, and as it does, it could possibly help balance the market a bit.

The Shifting Psychology of the Housing Market

The most important thing, when it comes to selling a home, whether in this market or any other, is the pricing, presentation and marketing. This becomes even more important in this market, regardless of the inventory.  Bottom line, these three components are key to selling anything, with the exception of selling yourself, which requires the investment of your heart, connection to others and the building of relationships.

The shift in this market will directly follow the shift in people.  The reason I say this is that collectively, as a whole, we have been through something so tremendous with the pandemic.  In some ways, this event has permeated each and every one of us to some degree, which invariably will continue to shift our personal trajectories.  What is different about this market compared to previously heated markets may be that this one is truly about what ultimately serves our well being and not just about money. I don’t know this one for sure, but it’s not a bad thing to hope for.

I always like to look at the psychology of markets as this is usually a good way to read how market trends move.  If we go back to 2008, that time period was fueled by a psychology of the “easiness of making money”, directly thinking this correlates with our ultimate happiness,  which we inherently know not always to be true.  But that didn’t stop that market from heating up, being egregiously perpetuated by the financial industry as well, being driven by the same motive….money.  But we all know what happened with that market…and unfortunately, it needed to change.  It was way out of balance.

Lifestyle Desire – The Driving Force

As I wrote that heading, I was running in my thoughts about the clients I have been working with, all of which have a desire for something.  With families, it could be a bigger home for the growing children.  For empty nesters, it is downsizing and many times, retiring to whole new location.  For builders, they see the value in the beautiful land here in Sonoma County, whether to build for themselves or a beautiful spec home to sell to someone else.

Desire, is something I believe came into great focus this past year. We were relegated to shift our lives, most grudgingly, to only, hopefully realize how important this particular step was in the overall 2020 process was.  We were forced to slowdown and take a close look at our lives, something perhaps we don’t always do. Always running towards something, perhaps we needed to really take a close look at what our aim really was…

But out of this time of retreat, we have seen a surge of movement like no other. This movement really has been more or less grounded in lifestyle choices.  Where to live, how to work, and what people inherently want their lives to be like.  You couple this desire with the low interest rates and you have a very heated seller’s market, especially in Sonoma County.  We offer a lifestyle here that speaks to many that want something different, something grounded in country living, community and beautiful wine country.  The same can be said for the other states, where people are migrating to, such as Oregon, Washington and the ever fast growing state of Idaho.  All these moves are being made for a more conducive lifestyle.

How Will 2021 Finish Up?

I love these questions…as it is very difficult to predict the future of markets.  You can read the trends, but after this past year, it’s a crap shoot.  The biggest indicator for a market shift NOW, would be the rise of interest rates, significantly coupled with a big shift or drop in the stock market.  Here is where the Fed has got itself in quite a position.  Even with inflation looming and thoughts it may be transitory, they have to be very careful with the rise of interest rates, otherwise they could turn the housing market on a dime, especially if the rise again is coupled with a stock market downturn.

We have seen a slow down from the 2020 home purchase surge, due to the pandemic.  As we move through the second half of 2021, time will tell how this housing market will adjust.  My thought is that the demand may slow down as we adjust back into some sense of normal in our lives, and hopefully the elevated housing market will follow suit.  Again, people will directly determine the flow of this housing market.

The Fed will eventually have to raise the interest rates as we move towards the end of 2021.  But I also believe they will do so methodically, carefully watching the effects.  Just my thoughts though.  As far as the “all cash buyers” that seem to be everywhere, a significant change in the stock market could have an effect on the amount of cash coming to the table in these housing purchase transactions.

One thing is for sure….we are in different times that are truly unpredictable and don’t seem to be following any charts.  Though this too may be transitory, 2020 did change everything.

Holly Young – Coldwell Banker Realty