Marin Luxury Homes | Real Estate | April 2013 Report

Marin County sellers enjoyed the best of both worlds in the first quarter of 2013: Their homes sold quicker than they have in years, and median sale prices rose considerably. For buyers, it was another story. The supply of homes for sale continued to shrink and multiple offers were common – they often faced over a dozen offers for desirable, well-priced properties. In particular, first-time buyers (e.g., buyers who required financing) were disheartened as their bids were overcome by all-cash offers time and again.The tight market prompted a rise in off-market deals – transactions that close without ever being listed on real estate websites or multiple listing services. So far in 2013, I have had several properties close in this manner.Tiburon was especially active in all price points, especially the market for homes priced at $2 million and higher. In Novato, homes priced at $800,000 to $900,000 sold as soon as they became available, and sales rose noticeably in the $2 million-plus market. Mill Valley, San Rafael, and Corte Madera were also busy in the quarter.We also experienced fewer distressed homes coming to market. In recent years, the number of short sales, foreclosures, and bank-owned homes had been on the rise, but that supply has mostly sold. Investors remain active in the market, though their numbers are not as high as in 2011 and 2012.

Looking Forward: We expect to see more homes coming on the market in April and continuing through the summer months. Multiple offers will remain the norm throughout the second quarter, although a greater supply of homes will bring more balance to the market.

Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Contact Kyle Frazier for sales data relating to these communities.

Sellers, Start Your Engines!
After record-breaking results in 2012 for units and volume of residential real estate, activity in the first quarter suggests 2013 will once again reach new highs. Local trends drive the dynamics of our markets, but overall we expect 15 to 17 percent increases in units sold in the Bay Area and price appreciation of 4 to 9 percent.The single most important dynamic driving this growth is our healthy regional job market. Economist Stephen Levy noted that the Bay Area led California job growth in January, with San Francisco at the forefront and the Oakland, Napa, Santa Rosa, and Vallejo metro areas all posting gains far above the state and national average.These are high-quality, high-paying jobs in the technology and professional services sectors. We believe confidence in jobs and business in general is driving consumer confidence and the intense pent-up demand for residential real estate. 2013 may be the last year of this cycle that money (mortgage interest rates) remains on sale as real estate prices lift from the bottom and consistent appreciation returns for a sustainable period of time.Intense demand is occurring even as the supply of available homes remains constrained, and coupled with modest price appreciation is driving the return of equity into homes. This may allow more sellers to realize gains, sell existing homes, and trade up to new dream homes or neighborhoods.These dynamics are occurring in nearly every one of the markets Pacific Union serves, and we expect it to entice move-up buyers to act – making them a likely source for new, mid-tier inventory.

The Sellers’ Market Heats Up

It has been a bitterly cold few years for would-be sellers in the Bay Area, but spring is bringing welcome warmth for both home values and buyer activity.Home prices have been rising for a year across all of Pacific Union’s eight regions in the Bay Area and Tahoe/Truckee. In San Francisco the median sales price of homes rose nearly 30 percent in the first quarter from a year earlier, and double-digit increases were recorded in all other regions as well.In a recent Wall Street Journal survey economists agreed that home prices will continue rising at least through 2017, and the Bay Area’s strong economy suggests price increases here will outpace those in most of the rest of the nation.Those rising values translate to greater equity, and many homeowners who believe they are “underwater” – owing more on their mortgages than their homes are worth – may be surprised to learn that they’ve regained equity based on recent sale prices for comparable homes in their neighborhood.Why the lift? In part it’s because a persistent shortage of homes for sale has created a veritable army of aggressive and highly motivated buyers who are willing to outspend the competition. For example, in our East Bay offices, 90 percent of transactions in the first quarter involved multiple offers; on average, homes sold for 13 percent over asking price.Homes in the Bay Area sold within weeks of coming on the market, frequently in all-cash deals, and multiple bids pushed sales prices above asking prices in all regions, much to the delight of sellers.
Click to view larger chart.

Overall, the increased velocity of real estate activity in the first quarter of 2013 was nothing short of remarkable.This means that sellers looking to trade up to a higher-priced home may now make significant gains in the current market. For example, consider a homeowner whose property was valued at $300,000 in 2006 but dropped 20 percent in value to $240,000, for a loss of $60,000. That same 20 percent drop in value for a higher-priced home – say, a $450,000 home now valued at $360,000 – gives a trade-up buyer savings of $90,000, or a net gain of $30,000 on the new home.Today’s low mortgage rates also offer serious savings to trade-up buyers. In 2002, when the interest rate on a 30-year fixed-rate mortgage stood at 6.5 percent, the monthly payment on a $500,000 loan was $3,160. At current rates, which hover around 3.6 percent, approximately the same loan payment would buy a home with a $700,000 mortgage – a net gain of $200,000.The benefit won’t last forever, so prospective sellers should move quickly: A report from the Mortgage Bankers Association predicts that rates will average 4.4 percent by the end of 2013. That 0.8 point rise will add $230 to the monthly payment on a $500,000 mortgage.So if you’re thinking about selling in this blazing market, don’t get burned by waiting too long. And count on the expertise of a real estate professional who knows the local market to help assess your home’s current value and prospects. Looks like it’s shaping up to be a hot season for sellers!If you have any questions or would like a custom market analysis of your home’s current likely sales price, please call me.

My name is Kyle Frazier. I am a Broker, Certified Residential Specialist (CRS), and Certified Luxury Home Marketing Specialist (CLHMS) with Christie’s Great Estates | Pacific Union International Realtors.

And if you are a buyer, I am also a member of the Top Agent Network (Top 10% in Marin County) and the Marin Platinum Group (Top 100 agents in Marin County). These are elite agent networks with access to dozens of homes being marketed informally and not on the MLS. It is always my pleasure to be of service. Call me at (415) 350-9440.