Marin County, California, Luxury Homes Report (July 2009–Sales and Inventory Analysis)

Marin County, CA’s luxury real estate market segment is slow and remains weighted towards homes priced under $4 million — just one home priced over $4 million sold in June 2009 and it was an off-the-market sale. The number of sales in June 2009 is off by over 40% from June 2008, yet the average price of sold homes is down just 3% from last year. In Marin, only the homes with special locations, views, or features seem to be getting significant attention. For a detailed snapshot of current national trends from the Institute for Luxury Home Marketing dated July 19, 2009, click here. Note, if you would like a local report relating to any town or zip code in Marin or San Francisco, call me at (415) 350-9440. Yet, the news relating to home starts and permit applications is again improved this month. As earnings reports come in for Q2 and the stock market has found some hope in the numbers, it does not appear that such developments consitute the siren call buyers seek. 

As noted last month, buyers remain dubious of price stability for good reason. But, increased conforming loan limits and a pronounced level of increased affordability across the board should help sales moving forward into the Summer as buyers with 25% down will obtain top-shelf financing for purchases of $1.6 million. While not “Luxury” territory here in Marin, a sizable segment of buyers of luxury homes must sell their current homes first (80% of buyers are sellers). The chart below indicates that across the trend in Marin’s luxury segment is for lower prices — 10% to 28% lower than last year in Mill Valley, Belvedere, and Kentfield.

The year over year inventory levels in Mill Valley have hovered at around 20% for the past couple of months. Meanwhile, inventory in Kentfield has rocketed to 60% higher than last year. Belvedere is 75% higher than last year. Prediction: Kentfield and Belvedere prices will continue to recede markedly through Q4 2009. Indeed, we can see that trend has set in dramatically in the above chart.

Despite the apparent slowdown, open houses have been extremely busy. Offers are being written. And our agents are noting a more focused approach by buyers. One listing in our office, priced at over $10 million went into escrow last week after just 3 days on the market. We are also starting to see buyers lose out on properties they loved because they assumed there was no urgency in writing an offer. The graph below reflects a 90-day rolling average of asking prices for homes in the topmost quartile (e.g. prices of the most expensive homes) in 3 touchstone Marin County cities: Tiburon, Mill Valley, and Kentfield. As you can see, over the past year, prices have declined, although asking prices appear to have leveled in Mill Valley and Tiburon.

Below is a new chart focussing on the percentages of homes in Tiburon and Mill Valley that have experienced price reductions, as well as a look at how deep those reductions have been, on average.

The definition of this market stat is:

“Percentage of homes on the market that have decreased their asking price at least once over the past 90-day period.” In any market, even in strong seller’s markets, there will always be some number of properties that will decrease their listing price. These may include sellers that drastically overpriced their homes just “to see what they could get” or homes that simply entered the market at a price level above what the market will bear.

Even in strong seller’s markets, the Percent Price Decreased will be 10-12%, so some repricing of individual properties is common in any market. In weaker markets, this value begins rise into the teens, 20%, 30%, and higher. Percent Price Decreased is an incredibly insightful gauge of demand levels in the residential housing market. This statistic illustrates how many listed properties may be behind the “price curve” – listed at a price above what the market is willing to pay for similar properties. However, “Percent Price Decreased” alone does not indicate the overall health of a particular market. This statistic should be combined with other market stats to determine the overall direction of a market.

$2 Million to $4 Million Luxury Homes

Historically, the Summer has been slow for Marin real estate because many families focus more on vacations than on home buying. But nothing has gone according to historical precedent in 2009. And this year buyers seem to be spending time between school years focussing on locating the perfect home at a value price. Inventory hovers at 135 homes on the market between $2 million and $4 million (down from 143 last month, but up from 110 in March).

Quick recap: Since the emergence of the “new economy” (typically identified as post-October 2008), sales numbers in this price band are down overall, but improving. For example, there were 18 sales in October 2008 (a relatively strong time of year for sales and, of course, these buyers were well into their escrow periods at the time of the meltdown). Then, by February 2009, sales dipped to just 2. As things began to improve in April & May 2009, sales bumped up to 8. The first 3 months of 2009 were simply abysmal. Overall, the past six months were the worst we have seen in 16 years. 

Yet, June 2009 was realtively strong with 16 sales and today we have an additional 18 homes in escrow. To sustain the apparent transition, we will need to see a sustained level of demand. May and June 2009 activity may represent the beginning of this recovery. However, the current rally described here applies only to units sold, not price appreciation.

Cities recording sales in this price band include: Tiburon (3), Belvedere (1), Mill Valley (3), Larkspur (1), and Kentfield (1), Ross (4), San Rafael (1), and Novato (1). These homes averaged 70 days on market. Their average sales price was $2.6 million (roughly $714 per square foot), with an average of 3,769 square feet. We also have a good number of homes in the escrow pipeline, including homes in Belvedere (4), Tiburon (5), Mill Valley (2), Ross (2), and Kentfield (2), and San Rafael (1), and Novato (1). The absorption rate for Marin homes in this price band is reduced to just under 10 months (down from nearly 18 months). Sellers must position their home at the head of the line when it comes to pricing if they want to sell.

$4 Million & Up Ultra-Luxury Homes

The inventory level of Marin County’s ultra-luxury market (homes priced in the $4 million and up range) remained static with 55 homes for sale. The highest concentrations of homes in this price band are Tiburon, Belvedere, and Ross. As referenced above, there was just one sale last month — an off-the-market sale of a spectular home for $5 million in Mill Valley’s Country Club neighborhood. We have 2 homes currently in escrow in this price range. Marin cities and towns with homes priced over $4 million include Tiburon, Belvedere, Sausalito, Kentfield, Ross, Mill Valley, San Rafael, and Novato. The absorption rate for these homes cannot be accurately stated as the number of sales is too low to be meaningful.

Marin Cities & Towns	$2 Million — $4 Million		$4 Million & Up
	Active	Pending	Active	Pending
Sausalito	13	1	7	0
Belvedere	26	4	11	0
Tiburon	20	5	20	1
Mill Valley	30	2	4	0
Larkspur	3	0	0	0
Corte Madera	1	0	0	0
Kentfield	12	2	3	0
Greenbrae	1	0	0	0
Ross	8	2	7	1
San Anselmo	7	0	0	0
San Rafael	7	1	2	0
Novato	6	1	1	0

The above graph identifies the numbers of active listings and homes in contract in the Marin County luxury ($2 million to $4 million) and ultra-luxury ($4 million and up) home market segments. Note that all homes in contract are included in the category “Pending” even though some are technically “Contingent” properties (e.g., the buyers have not removed all contingencies). This information is limited to Marin County’s Highway 101 corridor towns and cities that consistently maintain a monthly inventory of luxury and ultra-luxury homes (Western Marin coastal homes are not included).By: Kyle Frazier, Marin Realtor & CRS, Broker Associate, Morgan Lane Marin Real Estate, at 415/350-9440 for more luxury home market information. You can also e-mail Kyle at mailto:[email protected].