Marin County, California, Luxury Homes Report (March 2009–Sales and Inventory Analysis)
While sluggishness has trickled-up into the luxury real estate market in Marin, CA., there is legitimate cause for optimism in coming months. For example, there were 161 new escrows opened in Marin County in February 2009. While the majority of these (68%) were value plays in Novato and San Rafael, it was the highest level seen since August 2008 and was 19% higher than February 2008–encouraging news since we had just 19 “working days” last month. Moreover, the first 2 weeks of March 2009, resulted in 116 opened escrows. In March 2008, we saw just 98 homes go into escrow. That is an increase of 18% over last year. Again, encouraging. For a detailed accounting of national trends, click here for the March 2009 Market Report from Institute for Luxury Home Marketing. Note, if you would like a local report relating to any town or zip code in Marin or San Francisco, e-mail me.
It is clear to me that with minimal social proof, buyers will return to the market and pent-up demand will create a surge in sales figures. The $8,000 no-strings-attached credit from the government (for first time home buyers, loosely defined as someone who has not owned a home for the past 3 years and meets income limitations), the increased conforming loan limit (set to go back up to $729,750 some time in April 2009), and a pronounced level of increased affordability across the board is a recipe for sales. I should also note that with the increased conforming loan amount, buyers with 25% down (and who otherwise qualify) will be able to obtain top-shelf financing for purchases of a little over $1.6 million. While that is not “Luxury” territory here in Marin, many potential move-up buyers of luxury homes must sell their homes first and this will be a big step in the right direction. And interest rates are a full 1-point lower today than they were this time last year. Certainly, the pump is primed.
As noted above, we are seeing greater activity so far this year as the number of homes in escrow has increased and buyer enthusiasm is improved. Open houses have been extremely busy in all price bands with 30-50 groups being reported for new listings in desirable locales. Offers are being written. And our agents are noting a more focused approach by buyers. We are also starting to see buyers lose out on properties they love because they figured 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 in each. Note however, that a few homes in Kentfield marketed early last year were priced at the extreme high end, resulting in an exaggerated shift.
Because people constantly inquire about the infiltration of foreclosed homes (a.k.a. REO’s) and short sales in the higher end, just a few quick notes: While 42.9% of Marin home sales in January and February 2009 were distressed, the phenomenon has not appreciably gathered traction in the luxury segment. The numbers of foreclosures and REO’s in Southern Marin is definitely on the rise though. For example, Sausalito has 19 homes in some stage of foreclosure and Tiburon has 28 homes. Yet these towns only have 8 homes that are actually bank owned. Finally, while we seem to hear a lot about distressed homes, less than 1% of Marin homes are considered “distressed.”