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

Real estate sales in Marin County’s luxury segment are currently weighted towards homes priced under $4 million. In fact, not a single home priced above $4 million is in escrow (although that could change in a moment as the domino effect is very real in home sales). But, as it stands, the ultra-luxury home sales segment is flat-lining in Marin County, CA. For a detailed snapshot of current national trends from the Institute for Luxury Home Marketing, click here (May 17, 2009 Report). 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 improving: the West experienced a 42.5% jump in housing starts; the National Association of Homebuilders reported increased confidence (as high as it has been in 9 months); and construction and permits both rose last month (these are considered leading indicators on the macro level relating to housing stability). Nonetheless, the inertia of caution remains firm.

Buyers are dubious of price stability for good reason (see chart below reflecting year over year prices in Tiburon, Mill Valley, and Kentfield). 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, many buyers of luxury homes must sell their current homes first (80% of buyers are sellers).

Curiously, inventory levels in Kentfield and Mill Valley have risen moderately over last year, while Belvedere’s inventory has skyrocketed by over 60%. Prediction: 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. 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.

$2 Million to $4 Million Luxury Homes

The scuttle on the street is that the 2009 Spring selling season will continue through the Summer as buyers spend time between school years to locate and buy the perfect home at a value price. Inventory has climbed to 146 homes on the market between $2 million and $4 million (up from 130 last month and 110 in March). Since the emergence of the “new economy,” post-October 2008, sales numbers in this price band are down. 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). In February 2009, we recorded just 2 sales. In April 2009, that number jumped back up to 8 sales.

Cities recording sales in this price band include: Tiburon (1), Belvedere (1), Sausalito (1), Mill Valley (2), Corte Madera (1), and Kentfield (2). These homes averaged 81 days on market (a testament to pricing your home to sell from the outset). Their average sales price was $2.458 million (roughly $721 per square foot), with an average of 3,547 square feet. We also have a good number of homes in the escrow pipeline, including homes in Belvedere (3), Tiburon (4), Mill Valley (5), Ross (5), and Kentfield (2). Last month, 25% of the contracts for homes in escrow were cancelled. The absorption rate for Marin homes in this price band is well over 1-year.

$4 Million & Up Ultra-Luxury Homes

As expected, the inventory level of Marin County’s flat-lining ultra-luxury market (homes priced in the $4 million and up range) rose last month by 33% to 60 homes for sale. The highest concentrations of homes in this price band are Tiburon, Belvedere, and Ross. There was just 1 sale in Belvedere. The Belvedere home was a remodeled estate with jetliner views of the Golden Gate Bridge and San Francisco — it sold for $5.4 million (about $1,148/per sq. ft.). There are no 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.

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].