Bubble Sitters Jumping In

In Marin County, over the past few weeks and back as far as mid-November, more and more buyers have made their move and written offers on homes they feel represent good value. Many of them are bubble sitters who stood back over the past year to see where the chips were going to fall (e.g., hoping prices would fall precipitously).

Over the past two weeks, anecdotal evidence shows that buyers are confident that prices have found their bottom. Two modest homes in Tiburon, which were priced to sell, got multiple offers (3 and 5 offers, respectively). This trend is also being seen in Belvedere, Mill Valley, Larkspur, Greenbrae, Ross, and San Rafael. Same thing goes for Northern Marin. In Novato last week there were several homes (well priced at both the high and low ends of the spectrum) that went into escrow within a few short days of being put on the market.

In addition to the apparent slack tide of home prices, buyers are also pointing to recent indicators from the Fed that interest rate hikes are likely in the 3rd quarter. And indeed, rates are very low. Until two weeks ago, rates had been falling or remaining constant for months, resulting in the best buying atmosphere Marin County has seen for 12 years. When one looks at interest rate trends over the past 35 years, it is startling to see just how low rates are in relation to the past (please call me at (415) 897-4075 or e-mail me for a complimetary pdf version of a graph illustrating this point).

This savvy new crop of home buyers, many of whom have cash in hand from the sale of their home last year (or even the year before) and are capable of quick closes, knows value when they see it. They tend to be well-educated real estate veterans armed with lots of information and who have also learned that the tax incentives of home ownership are unrivaled. We shall see if the anecdotal evidence stands up once the numbers start coming in relating to sales and prices for January.