Pacific Union Int’l – Christie’s Great Estates | Marin County, CA Luxury Home Sales (July 2012)
Pacific Union Int’l – Christie’s Great Estates | Marin County, CA Luxury Home Sales (July 2012)
Here in the Bay Area, we experienced an over-30 percent increase in homes sold, year over year. Many of Pacific Union International’s regions continue to show robust and dynamic growth in homes sold, putting them on track to post their best years since 2005.
And we are even more excited about what lies ahead with Bay Area real estate. We’ve seen numerous positive indicators in our regional data, including firm pricing, multiple offers, and fewer days on the market – all of which support the belief that the current Bay Area housing demand is indeed sustainable.
Meanwhile, sellers are slowly coming off the sidelines, and we are finally seeing an improvement in the number of available homes for sale. This suggests that people are more confident of getting the sales prices they want.
On a larger scale, the real and marked improvement in our Bay Area economic engines, particularly with job growth and the successful technology sector, indicates that the bottom of the real estate market is finally behind us and we are at long last in a new market.
The second-quarter real estate market in Marin County mirrored the first quarter: extremely strong sales but a limited supply of inventory. We saw multiple offers on most desirable properties, with buyers outnumbering sellers across the county.
Home prices climbed higher in the last quarter but are still below levels at the height of the market. People who bought homes in 2005 and 2006 are choosing not to sell for a reduced price, which helps explain the dearth of homes on the market.
In another continuing trend, first-time buyers had a difficult time competing against investors able to pay cash for properties. The investment market remains strong, with buyers having no trouble finding renters for their properties.
Looking Forward: There’s no sign of a sales slowdown in the third or fourth quarters, putting us on track to post our best year since 2005. And home prices are rising, which should encourage more sellers to join the market and relieve the inventory shortfall.
We recently had a conversation with Stephen Levy, one of the top economists in California, whose observations on these topics further fueled our optimism as we swing into summer. We’re sharing that exclusive interview with you in this quarterly report and are confident you’ll find it as valuable as we did. Please see below.
Exclusive: Pacific Union’s Interview With Stephen Levy
In late June, Pacific Union International spoke exclusively with Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy (CCSCE) in Palo Alto, about the state of the economy and the real estate market in the San Francisco Bay Area. Here are the highlights of our interview.
Pacific Union: Housing markets are on fire, but this seems to be consumer-led rather than job-led. What’s your view of the Bay Area versus the state as a whole?
Stephen Levy: For the San Jose and San Francisco metro area, jobs are on fire. The San Jose metro area is the fastest-growing large metro area in the U.S., measured by jobs, and the San Francisco metro area (San Francisco, San Mateo, and Marin counties) is close behind. We’ve seen 2.8 percent (San Francisco) to 3.5 percent (San Jose) growth from May 2011 to May 2012, which is way ahead of the nation.
It’s also IPO-led. It’s job-related, but also tied to the ability to cash out from the successes of LinkedIn, Google, and Facebook.
Is the Bay Area still in economic recovery, or are we transitioning to growth?
Both. The Santa Clara valley and San Francisco are transitioning to catch this new wave of growth. Most of the state and most of the rest of the Bay Area is still struggling with the lack of construction and lack of government jobs; there hasn’t been really any big pickup in home building. They’re definitely in recovery. The only places you could say are in a new growth mode are San Francisco and San Jose.
How bullish are you on an appreciable drop in the unemployment rate?
Santa Clara is at 8.2 percent, and both San Francisco and San Mateo are below 8 percent already. Those counties will have their own special bonanza. The state is at 10.9 percent unemployment and won’t see 8 percent for three years at an absolute minimum. But the Bay Area will be below 8 percent as a region.
I wouldn’t worry about the unemployment rate quite as much as the rate of job growth. If it stays up, it’s because people are pouring into the workforce.
Are you saying that the job-growth rate is a more meaningful economic indicator than unemployment?
Yes, absolutely. My mother, who made clothes, always said, “You’re only as good as your next season.” Our current “next season” is looking pretty good. It’s not just Facebook and LinkedIn, it’s the big run-up in value of Apple, Google … it’s pretty broad.
What do you see happening in Contra Costa County? Many corporations have moved out there and it seems attractive for business.
I think it’s an incredibly attractive area for the same reason it has been for past 15-20 years: It captures both the labor market within the region as well as the labor market close to it in the Central Valley — Stockton and Tracy, and further out. It’s very well placed for the labor force. They’re not doing what San Jose and San Francisco are doing, but for the long-term future they have a great location.
Housing has been on a tear in Marin lately. Is that due to a jobs uptick?
They have low unemployment, but a lot of those folks work in the city. I don’t know about job growth — unemployment tends to affect you where you live, while job growth is where you work.
Is there any bright news ahead for the East Bay?
I think they’re caught up in the national slowdown. I think they’ll do fine once we get into a strong recovery nationally. They were a home-building center, and have been hurt by that. They’re a very strong region, and historically have had location and price advantages.
In the Wine Country — Sonoma and Napa counties — we’ve noticed increased demand lately, especially for vacation homes. Do you see job growth as an engine there?
That area is not my specialty, but I don’t think the home buying you are seeing is related to local job growth. Foreign investors from affluent areas find California prices cheap — in Napa as well as Palo Alto and Newport Beach. I think Napa and Sonoma are connected to both the overall Bay Area high-end economic growth and to the worldwide tourism/retirement demand.
The Pew Research Center just released a report, “The Rise of Asian Americans” talking about how Asians are now our largest immigrant group. What I see is that the Asian buyer market is on fire, both with new immigrants and because Chinese and other Asian folks are heading into tech companies as employees.
Finally, is there anything you see driving jobs besides tech?
There has been a resurgence in convention and tourist activity. Hotel and tourist numbers are up. Foreign trade has also been doing pretty well. Tech, trade, and tourism — the three Ts — bring other economic improvement along with them. Retail sales are picking up as the income flow from the tech sector begins to spread into restaurants, car dealerships, and other areas.
Kyle Frazier, Certified Residential and Luxury Home Marketing Specialist, DRE# 01405738 -- Selling luxury homes, properties, and real estate in Marin County, California, including Sausalito, Mill Valley, Tiburon, Belvedere, Larkspur, Corte Madera, Greenbrae, Kentfield, Ross, San Anselmo, Fairfax, San Rafael, Terra Linda, Marinwood, Novato, Pointe Marin, Country Club, Rush Creek, and Hamilton Field. Buffini referrals welcome.
The Marin Real Estate Blog focuses on home and real estate sales in Marin County, California. Entries to include regular local real estate market updates, neighborhood profiles, schools information, buyer and seller information, Kyle's musings on various topics, and other news. If you have comments or would like to talk with Kyle Frazier, Certified Residential Specialist (CRS), Certified Luxury Home Marketing Specialist (CLHMS), Broker Associate, J.D., e-Pro, Pacific Union International Real Estate, Christie's Great Estates, please e-mail [email protected]
Kyle Frazier | The Landing Novato | ImagineMarin | Rudnick Estates, Novato New Homes | MillValley101 | NorthBayRE | Novato101 | SanRafael101