Marin County, CA. Real Estate Update — August 2009 (Homes For Sale & Price Ranges)

Marin real estate has, it appears, survived the worst of the downturn. While prices are down across the board no matter how you slice it, the road to recovery is in view. Yet, virtually every call I get from potential buyers, at some point in the conversation, eventually turns to short sales and foreclosures — distressed sales remain featured on many buyers’ dance cards. In fact, distressed sales are very competitive and often receive multiple offers. In Northern Marin (a.k.a Novato), 82% of homes priced under $500,000 are in escrow (that’s 40 out of 49 homes!). In San Rafael, 84% of homes priced at or below $600,000 are in escrow (that’s 32 out of 38!). These sales are propelled by value, the $8,000 tax credit, and the increased FHA loan limits which went into effect in April 2009.

Early in the year, buyers were ALL talking about how they anticipated interest rates would go down to 3% (and some buyers were insisting that rates would go even lower). I would just nod my head and concede that was a possibility. After all, what do I know about the unknowable? But, I always pointed out that whatever rates fell to, you could never know the bottom until it was gone. And that rates would surely go back up again — I was not going out on a limb; every economist on Earth is saying the same thing (most believe this will occur by the end of Q1 2010). Sure enough, it seems buyers are picking up on this inevitability and they are out in droves. 

Inventory has dipped to 772 single family homes for sale (we had about 810 last month) in the Highway 101 corridor (this number excludes Western Marin inventory and condos). Open houses have been slower — as expected during Summer months. There is definitely a sense that with a little positive media and some further anecdotal evidence (and actual closings) that buyers are jumping because they believe the bottom is here or near, the market will surge with pent up demand. Certainly, well priced, updated homes in great locations are selling promptly. 

The following graph breaks down the current number of homes for sale and price ranges in Marin County’s HWY 101 corridor (e.g., Marin’s coastal communites are not included) in March 2009, along with the price ranges for each town and/or city.

On the buyer side we are noticing a shift in the selection and valuation of homes. From 1998 – 2008 buyers place a high “prestige” value on certain neighborhoods and were very focused on “I want to live in Sycamore Park”. Now we see buyers seeking “value”. They are comparing like priced listings in multiple Marin communities and seeing what value they can get for their dollar. Essentially, a buyer shift in focus from “prestige” to “value”. Sellers must be priced for perceived value.

Two other clear messages from buyers are: 1) A trend away from major remodels. This is likely a result of the changing credit markets and the loss of capital buyers experienced in the stock market meltdown. 2) A lack of willingness to write an offer on a property that is not priced in appropriate “strike zone”. Buyers seem to wait for appropriate pricing before coming forward with an offer vs. writing a low, more competitive offer. The rationale seems to be, “what if I write an offer and the seller accepts it? We will clearly have paid too much”. 3 – 5 counter offers are not unusual. These dynamics are not easy to anticipate much less manage. We manage these issues every day. 

If you are selling in Fall ’09, time on the market is not your friend. The “perfect home” for the “right price” should trade in its first 30-45 days. For a detailed executive summary providing statistics and trends relating to the Marin real estate market (or any specific zip code), please call me any time (I am Kyle Frazier, Marin Realtor & CRS, Morgan Lane Marin Real Estate) at (415) 350-9440 or e-mail me at [email protected] . It is always my pleasure to be of service.

Below is a sampling of recent media coverage relating to real estate. Note that most of these stories are positive. The theory of social proof suggests that a continued volley of positive news stories will likely influence other qualified buyers to buy. We will see.

More Americans Move to Improve
A growing number of Americans are changing residences in an effort to move into a bigger home or a better neighborhood, according to a recentstudy by Relocation.com. The most important reason people move is to live in a bigger or better home (26 percent), followed by living in a better neighborhood (24 percent); to be closer to family and friends (12 percent); to live in an area with a lower cost of living (9 percent); or because of a change in marital status (6 percent). A similar survey Relocation.com conducted in March found that people were more likely to move because of recession-related reasons. The shift in customer attitudes between the two surveys indicates that consumer confidence and optimism are improving, the company says.

Remodeling Activity on the Upswing
Residential remodeling activity rose during the second quarter of 2009, according to NAHB’s Remodeling Market Index, which measures remodeler perceptions of market demand for current and future residential remodeling projects. Indicators for future expectations and current market conditions rose nearly four points during the quarter. NAHB chief economist David Crowe says conditions have returned to near the levels of this time a year ago. “While remodelers remain cautious, they report business is looking a little better after several challenging quarters. The uptick in the expectations component suggests this trend will continue as the entire housing market begins its recovery,” Crowe says.

Pending Sales Rise for Fifth Straight Month
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in June, rose 3.6 percent over the previous month and is 6.7 percent above June 2008, NAR reported this morning. This is the fifth consecutive month that the pending sales index rose. 

In the Northeast, the index edged higher by 0.4 percent in June and is 5.8 percent above a year ago. In the Midwest, the index increased 0.8 percent for the month and is 11.6 percent above June 2008. The index in the South climbed 7.1 percent in June and is 8.9 percent higher than a year ago. In the West, it rose 2.9 percent but is 0.2 percent below June 2008. NAR chief economist Lawrence Yun attributes the rising index to a combination of market factors. “Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines."