Market Updates: August 2023

September 6, 2023

The housing market, the mortgage market, it’s reminding us of the lyrics from a vintage Joni Mitchell song:

Sittin’ in a park in Paris, France.
Reading the news, and it’s all bad.
They won’t give peace a chance.
That was just a dream some of us had.”

The Canadian-born, singer-songwriter and musical icon was referencing the Vietnam War, so in perspective, limited housing inventory and mortgage rates at 2.5X higher than they were two years ago isn’t that much of a hardship – except perhaps for people in the market to buy a home.

Let’s recap some of the latest headlines:

“Bye, Living Rooms, Bathtubs: Homes Get Noticeably Smaller”

Since 2018, the average unit size for new housing starts decreased 10% nationally to 2,420 square feet (still on the big side for most Sonoma County housing stock), according to Livabl by Zonda, a listing platform for new construction. Meanwhile, a Zillow report found that 9.5% of new home construction features homes with fewer than three bedrooms, and more often than not, builders are excluding bathtubs and formal living rooms.

Regardless of new-home features, there is still a lack of supply, or inventory. The National Association of Realtors recently published that there were 1.1 million fewer new homes for sale or under contract in June, and that’s 14% below year-earlier levels.

“Mortgage Rates Hit 7.23%, Highest Since ‘01”

And just a week earlier… “Mortgage Rates Now Highest in More Than 20 Years”

After climbing consistently throughout 2022 from historic, sub-3% rates in late 2021, mortgage rates briefly dipped toward 6% in late 2022 and early 2023, then have risen steadily since. By August 24 of this year, the average 30-year fixed mortgage came with an interest of 7.23% — the highest since 2001. Applications for purchase mortgages nationwide dropped to their lowest level since 1995, according to the Mortgage Bankers Association.

Where rates go from here is anyone’s guess, and there is no shortage of guessing, or…. forecasting, speculating etc., from market pundits. Some think the Federal Open Market Committee (FOMC) that establishes lending rates for intra-bank borrowing and is currently at a range between 5.25% and 5.5%, may hold rates steady at their upcoming September meeting – yet have left the door open for the FOMC to bump rates upward later in the year – depending on inflation, jobs data and housing data. Some economists think the Fed could start lowering rates as early as the first quarter of 2024, while the most pessimistic forecast we’ve heard is that rates won’t begin to drop until 2025. In times like these, it’s worth recalling the saying about economic forecasting, paraphrased here: “Economists have accurately predicted recessions 9 out of the last 5 times the economy went into recession.”

Despite current market conditions, there are reasons to stay positive, and namely, a tsunami of next generation home buyers is just around the corner. That demographic is known as Millennials, or people between the ages of 22 and 39, when household formation is the strongest. In 2017, a little more than 11 million Millennials owned homes, per RentCafe’s analysis. But between 2017 and 2022, the number of Millennials who owned their homes increased 64%, to 18.2 million.

In addition to new household formation, the most common reasons for previously owned homes to come to market are of course, the three Ds – downsizing, divorce and death. We’ll save Sonoma County data from those categories for another post, another day, yet suffice it to say the three Ds happen weekly, monthly, in the nine cities and 28 census-designated places throughout our wonderful region. Buyers have to be patient, flexible and focused to buy homes from this limited inventory of available housing stock.


Ron represented me twice in recent years on the listing and sale of two investment properties. His vast knowledge and experience in real estate made for trouble free and expedient transactions. Ron’s communication and negotiation skills are top notch. Highlighting Ron’s genial personality, it was a pleasure to have him represent me.

— Glenn S.

Ron was a tremendous help during an extremely difficult transition for me after living in my house for 36 years.  He went far beyond what I expected in a RE Broker by helping to enhance the appeal of my house and by guiding me through all the challenges that came up from selling a rural property.  And he’s just a genuinely nice guy! His calm attentiveness and deep knowledge made the move bearable when I felt like giving up just from exhaustion. On top of that, he helped me acquire my current house which is so perfect for me during this new chapter of my life. A very happy ending!

— Sharon B.

Ron Welsh, the owner/broker of Sonoma County Properties Inc., has been nothing less than an angel in disguise when it came to the sale of my grandmothers property.

When my grandmother died at the age of 103, she left her only asset of a country property in Santa Rosa to her four children in equal shares. These are four senior citizen adults that did not typically see eye to eye. Ron was patient, understanding, unflappable, and made the process extremely easy. His experience in real estate transactions was evident and his experience in dealing with multiple obstreperous parties was clearly unmatched.

Ron kept the family apprised of every step in the process and was successful in selling my grandmothers (rather dilapidated) home in just a few days to the satisfaction of all parties. That was no easy feat.

I would highly recommend Ron and his team in any real estate transaction, whether that be buying or selling a home.

— Kathleen Pozzi

I found Ron to be the consummate professional. He is extremely skilled and accomplished at all phases of the sales process. His hard work and negotiating skills were the deciding factor in closing the sale of our home in less than 90 days at 97% of our asking price. That is a real accomplishment, as our home was priced at the upper end of the market where buyers were far and few between.

I would highly recommend Ron’s services for anybody looking to purchase or sell a home in this area.

— mwerneralsco

We were looking for a unique house with character. Ron took the time to understand our needs and was patient with us as we spent many months looking for the right house. He was always available to answer questions or tour properties, and didn’t push us to commit to something that wasn’t right. Ron was a calm, reassuring presence during our search. He knows both the real estate business and the local market. Ron is an experienced advocate you’ll be glad to have in your corner. He is the Realtor we would recommend to friends and family.

— MF Warren

We were able to hit our target date for listing and Ron had us priced right to get multiple offers within 48 hours. From that we were able to choose a strong buyer and close in under 3 weeks, still in October. What had seemed an impossible dream became our new reality thanks to Ron’s experience and ability to get us connected to the right people and complete our pre-sale tasks. Aside from all this Ron is simply a great person to know and work with. He is hands on (literally helping me tear down a false wall the tenants had erected) and was constantly extending offers to help in any way he can with the contractor and appliance deliveries. I strongly recommend Ron to anyone looking for a top quality real estate experience.

— Kevin E.

Ron has helped our family members buy two homes and sell another. I’ve also recommended him to several friends over the years – something I only do when I really trust someone to take good care of them. Everyone has really enjoyed working with him and they’ve become repeat customers of his now too. He knows Sonoma County so well and has a great mellow personality. except when you need him to really rally for you during price negotiations – the perfect combo you want in a realtor!

— Kelley K.

Ron negotiated our very challenging deal with multiple transacations and deadlines. This was definately the kind of situation the required experience. He went the extra mile to ensure that both our real estate sale and purchase closed on time. This was such a tricky process, I really don’t think it would have happened without Ron there to help us through!

— Nick S.

Ron Welsh, has been our real estate the past few months, He has conducted himself, very professional, has been very sincere in our needs of real estate. Dealing with past agents some were not very reliable, Ron was always on time with appointments. It has been a pleasure working with him.

— David & Linda R.

I’ve had 2 purchase and one sell experiences in my life so far; hands down Ron Welsh / Sonoma County Properties was best real estate experience I’ve had to date.

In the end, I felt like Ron was really on my side, advocating my position at every step. Thanks to him, our project is well on its way and we should have our new home for the next holidays.

— S Lietzke

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