Over the past year, my reports have continually pointed to simple supply and demand indicators in an effort to define a “normal” Marin County real estate market. As noted a year ago, “recovery to a normal market will require stability in financial markets, a strong local employment trend, affordable interest rates and strengthening consumer confidence.”  

Reflecting on the past twelve months, Marin County real estate markets experienced the most difficult and unpredictable dynamics. The financial markets imploded, unemployment trends accelerated and consumer confidence was shattered. And while we benefit from historically low interest rates, credit requirements, approval guidelines, and loan to value ratios are as stringent as in recent memory.

The good news is that over 1,100 single family homes have sold in Marin County in the first nine months of 2009. Successful sellers have processed market dynamics, followed their real estate advisors recommendations and successfully made housing decisions to support their lifestyle. Buyers continue to seek opportunity and will write offers only on the homes that have balanced the best pricing in relation to the relevant and recent neighborhood comparables.

Over 70% of the 1,100 single family homes sold in 2009 closed for under $1 million. Approximately 50% of these 1,100 homes closed in San Rafael or Novato. The velocity of the market under $1 million and in San Rafael and Novato may be the only growth sector in Marin County real estate. The chart below illustrates summary market trends by price point.

YTD Sep ’09 v YTD Sep ‘08

Jan 1 – Sep 30, ‘09	$500K – $1M	$1 Million and Up	$1 – $3 Million	$3 Million +
Volume	+12.15%	-50.23%	-48.05%	-56.64%
Units Sold	+12.99%	-47.18%	-46.47%	-53.62%
Average Price	-0.81%	-5.82%	-2.95%	-6.51%
Median Price	-1.89%	-2.70%	-1.06%	-21.71%
Days on Market	+25.00%	+43.66%	+49.25%	+12.00%

 

The average number of days on market has trended over 100 days for 2009. This trend is indicative of sellers’ “hoping” to get a specific price for their home — these hopes are often based on what they paid for it or what they “need” to sell it for in order to maintain lifestyle choices.

Unfortunately “days on the market” is not a seller’s friend. Homes that sell within the first 90 days of a listing enjoy pricing within 7% of the list price. Homes that sell between 90 – 120 days on the market close at a 15% discount and those over 120 days on average are discounted 22% at closing. At Morgan Lane we pride ourselves by providing our clients with balanced advice and recommendations. Indeed, our approach and counseling this year has delivered Marin County’s finest average days on market results — just 64 days.

For home prices over $1 million in Marin County, Sellers need to be exceptionally realistic and sensitive to our market conditions. Volume (units and dollars) is off approximately 50% YTD as compared with 2008 and over 60% from 2007. Buyers enjoy a fabulous selection of listings in all neighborhoods and are extremely discerning. Collectively, we are finding that buyers only act with a sense of urgency if a home is “one of a kind” (where the market sees one such home every few years or if the price is perceived to be below market value). In light of the above, days on the market analysis, why would a buyer act with urgency if time on the market generally translates into a 7% to 22% discount?

We are experiencing a modest increase in activity in the high-end of the market (over $3 million). In Q1 & Q2 2009 we closed eight and nine homes over $3 million respectively. This activity increased to 15 closings over $3 million in Q3 ’09. There are nearly 110 listings in Marin over $3 million and only 5 are in contract. Once again, a seller must be most realistic in pricing to attract "real buyers."

The chart below shows a 90-day rolling average of Mill Valley’s new listings and absorbed listings (e.g., sales), comparing current numbers with those of last year. Note that the while the numbers for new listings are about the same, the number of absorbed listings is a fraction higher than this time last year. If you would like to review a similar chart for any other town or city in Marin or San Francisco, please let me know.

Overall inventory has dipped to 762 single family homes for sale (we had about 757 last month) in the Highway 101 corridor (this number excludes Western Marin inventory and condos). 

For a detailed executive summary similar to, but much more detailed than below, providing statistics and trends relating to the Marin real estate market (or any specific zip code), contact me any time. 

Kyle Frazier, Christie’s Great Estates Marin | Morgan Lane International Real Estate at (415) 350-9440, [email protected]. It is always my pleasure to be of service.