Q2 2018 Marin Market Report

The value of homes in Marin County continue to rise. One-fourth of all single-family homes that sold were $2M or more while the median sale price hit $1.41M for the county; this represents a  year-over-year gain of 7%. This increase in sales price happened while the overall number of home sales dropped by 3%. Homes are also selling faster; the median market time dropped to 23 days, which is a 15% decrease from last year.

Though the number of sales county-wide is down compared to last year, certain cities saw a spike; Belvedere, Greenbrae, Mill Valley, and San Rafael had the largest increase in number of sales. Stinson Beach saw the largest drop in market time, while Novato received the largest boost in sales price compared with last year. 

SINGLE FAMILY HOMES SOLD: 721
YEAR-OVER-YEAR MEDIAN SALE PRICE & DAYS ON MARKET
CHANGE IN PAST YEAR:
SALE PRICE
+7%
DAYS ON MARKET
-15%
YEAR-OVER-YEAR MARKET COMPARISON

SFAR Market Focus – June 2015

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The curtain closes and the first half of 2015 is a finished act. Monthly market analysis helps nudge the real estate story forward for a final bow. The orchestra (consumers) and conductor (the REALTOR®) are thanked. Metropolitan operas, er, markets across the country continue to improve and further perform at peaks not seen in years. Bad memories from that one lousy show known as the Great Recession are pushed even further into the past.

New Listings were down 19.1 percent for single family homes and 26.2 percent for Condo/TIC/Coop properties. Pending Sales increased 10.5 percent for single family homes but decreased 9.1 percent for Condo/TIC/Coop properties. The Median Sales Price was up 10.7 percent to $1,301,000 for single family homes and 15.2 percent to $1,100,000 for Condo/TIC/Coop properties.

Months Supply of Inventory decreased 28.6 percent for single family units and 23.8 percent for Condo/TIC/Coop units. Having six months of 2015 data in the books is great, but it is still just intermission at this halfway point of the year. Forecasting market trends can be as dicey as the weather, but with interest rates managing to remain low into the summer months, the outlook is promising, even if rates go up later in the year. Metrics like inventory and percent of list price received at sale are two of the better understudies to watch this year.

The 3 percent down payment programs from Fannie Mae and Freddie Mac should help potential new homeowners, but in a recent member survey by the Independent Community Bankers of America, three-fourths of respondents stated that regulatory burdens are hurting their ability to loan money. The wider economy shows slight wage increases and gas prices near five-year lows but rising along with extended daylight and buyer demand. These various economic pushes and pulls can turn stagnant markets into exciting ones. It’s all in how you look at it.

Click here for the full report and do not hesitate to call if you have questions.  415-297-3874

Vanguard Half-Year Marin Market Update

 

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July 4th is generally known as a celebration of America’s independence, but it also signals the start of the second half of the year for the real estate market. Time to look back and reflect on the first six months of 2015, and also to make some predictions for the remainder of the year… as best as any market observer can!

The Marin County market was strong in Q1 and Q2. In what is generally classified as a hot market, or a seller’s market, 1,100 houses exchanged owners from January 1st through June 30th with a median home price of $1,105,000. That’s up from last year by 10.5% when the median home price in Marin was $1,000,000 for the same period in 2014.

Q2 price-volume

Inventory was sparse and we currently have 1.74 months of inventory in stock — meaning 1.74 months that it would take to sell everything that is available on the market today. A normal market would be about six months’ worth of inventory. Anything less is considered a seller’s market, while anything more is a buyer’s market.

We are still experiencing multiple offers on properties that are priced fairly (according to the market comps), well presented, and in desirable locations. The desirability for homes in Marin includes proximity to town, an easy commute, flats vs. hills, fixed up vs. a fixer-upper, and of course “the right neighborhood” as determined by the buyer.

Locations that showed an increase in sales volume include Corte Madera, Mill Valley and Novato.

volume by area

The high-end of the market (considered those properties above $2 million) makes up for about 37% of all sales in the past six months. Belvedere and Ross saw gains in the median price, with 55.8% and 35.6% increase in prices respectively. Kentfield saw an increase in unit sales (66%) as well as an increase in median price up 3.6%. The highest priced home sold in Marin in the first half of 2015 was 125 Belvedere Avenue in Belvedere for $13,000,000.

Belvedere home

While most experts expect inventory will continue to be tight, and rates may or may not rise a bit, we predict to end the year on a high note in Marin County. Everyone is searching for market equilibrium. Here on the West Coast we have experienced more than our share of the real estate recovery and the rest of the country is just now catching up. We’re watching the tech industry for signs of strain, which could potentially strain our local economy, but the industry seems to be holding its own at this writing.

We don’t hear anyone talking about a real estate bubble or crash, but there are expectations that since we are a cyclical business, what has come up must eventually come down. Nobody says it has to be a hard down though.

Median sold

Is it possible we will see real estate prices fall in time? Sure. Possible we will see interest rates rise? Absolutely. But, when will we see more inventory? It’s going to have to be a movement that builds momentum. People are staying in their houses because they have nowhere to go. They have nowhere to go because prices are too high. Once something gives, we could see a whole trickle of new activity and perhaps more activity, more normalized pricing, and less stress on buyers and sellers alike. We are hoping!

As for the lending market, RealtyTrac released its May 2015 U.S. Home & Foreclosure Sales Report, which shows 24.6 percent of all single family home and condo sales in May were all-cash purchases, down from 28.5 percent in the previous month and down from 30.4 percent a year ago to the lowest level since November 2009. Lenders are open for business and cash sales are declining.  Mortgage activity is soaring, with total mortgage origination balances reaching $466 billion in the first quarter – nearly a 75 percent increase from the same time a year ago, according to Equifax National Consumer Credit Trends Report.

Much of 2015’s rising rates are in response to market expectations of an eventual rate hike by the Fed. In fact, Janet Yellen recently reiterated that an increase would occur this year. While the Fed’s rate hike doesn’t have direct bearing on 30 year fixed mortgage rates, often when short term rates move up, so do mortgage rates.

Mortgage rates are still historically low and usually drop in the 4th quarter although this is never a guarantee. Barring unanticipated economic surprises, and if the economy continues to improve, expect rates to remain higher than they were in the first quarter.

For those still wondering if it’s cheaper to rent than buy, check out the Trulia article on this subject.  As the article states, “Homeownership remains cheaper than renting in all 100 largest U.S. metro areas.” The analysis does incorporate the down payment and the opportunity cost of investing the down payment in a house rather than the market.

According to results from Fannie Mae’s June 2015 National Housing Survey, the share who believe now is a good time to sell a home reached a new survey high, increasing three percentage points to 52 percent and crossing the 50-percent threshold for the first time in the survey’s history.  At the same time, the share who said they expect home rental prices to go up in the next 12 months rose four percentage points to 59 percent, also an all-time survey high. With an increase in housing supply from those ready to sell, combined with higher rental cost expectations, more potential homebuyers may be encouraged to leave the sidelines.

 

Lawrence Yun, the National Association of Realtor’s chief economist, says it is likely that home sales are off to their best year since the downturn. “The steady pace of solid job creation seen now for over a year has given the housing market a boost this spring,” said Yun. “It’s very encouraging to now see a broad-based recovery with all four major regions showing solid gains from a year ago and new home sales also coming alive.”  Read Yun’s full first half report for 2015 here.

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(Click here for video)

Right now all eyes are on the fall as we always expect a little bump of real estate activity after Labor Day. But, smart sellers know that buyers (all still connected to their mobile devices, wireless internet and social media while on vacation) are still on the hunt for the perfect property this summer. Vacationing buyers are no longer detached from what’s going on in the local market and chances are they are prepared to pounce on their ideal property when it shows up in their MLS alerts.

Rest assured, when most Marinites have headed toward the shores of Tahoe, the local real estate market is still very strong and active! If you need me to drill down more specifically to activity in your neighborhood, please don’t hesitate to call me. I am working through the summer and happy to answer any questions you may have.

Q1 2015 Marin Market Report

The first quarter of 2015 was perhaps one of the slowest starts to the New Year since the market stall of 2009.  Frustrated buyers are everywhere, patiently waiting for new inventory to arrive.  Question is, will it?

There is a shortage of houses for purchase in Marin County as sellers cling to their homes, hoping their values will increase.  In the process, the shortage is creating somewhat of a housing stalemate.

The growing and booming economies of San Francisco and Silicon Valley, a record-low jobless rate and an ever-increasing influx of newcomers to the Bay Area are pushing demand northward and adding pressure to the Marin County real estate market.  Not even factored in yet are all the new young tech workers who will, in short time, expand their own families and look to move outside of the San Francisco city limits.  No, it doesn’t appear that the shortage of housing is a short-term issue in the Bay Area at all.

Monthly Supply of Inventory

MSI

Why is there so little inventory?  There are several factors at play here, all creating the perfect storm making for a dry winter in California, and more specifically in Marin.  First, we all know there is little growth in Marin County.  Marinites prefer to keep things status quo, no matter what the market forces.  But, this approach comes at a big price:  low growth, which creates a lack of housing in a normal market, is exacerbated in a strong market, driving prices ever higher.   This is why everyone who comes to Marin cannot believe what their money can or can’t buy here.  Prices are through the roof… literally!

Well then, why aren’t sellers selling? 

1) Finding a replacement property may be the biggest issue for many homeowners.  “Yeah, I’m happy to sell, but where would I go?” is a legit question for many sellers.  If sellers are not prepared to move to a less expensive market, their options are limited.  “Sure, I can get a lot for my home, but then I’m going to have to pay a lot for that smaller unfinished home down the street … not to mention higher taxes. So what’s my incentive for moving?”

This is a real dilemma.  The move-up market has all but come to a screeching halt.  By the time today’s sellers figure out what they need to do to move up, and how much it’ll cost them in increased taxes, not to mention increased interest rates, it may make sense to just stay put.

2) More homeowners are finding that they can get a bigger return by renting out their property vs. selling.  And, with property values increasing, so does the tax liability for capital gains something sellers may not be prepared to deal with.  Taxpayers may exclude up to $250,000 of profit ($500,000 for married couples), but they will get taxed on the rest.  23.8% federal and 13.3% in California.  That’s a total of 37.1% tax on the incremental gains!  A hefty chunk out of what could have been a nice profit.

3) Off-market sales are also occurring in record numbers.  Buyers and sellers frustrated with the current market conditions are taking matters into their own hands.  “Make Me Move” pricing – that usually outrageous price at which a seller would consider selling and no buyer would consider buying – is on the rise.  But, believe it or not, there are buyers out there now who are willing to pay these prices.  For some reason an outrageous price is more appealing than it would be if the home was put on the MLS.  Both buyers and sellers are at risk here – buyers typically over-paying for a home, and sellers potentially leaving money on the table.  The best way to really know the market value of a home is to put it on the open market, on the MLS, and have it professionally marketed and exposed by a real estate professional.

4) While sellers are trying to figure out their next move, some buyers are choosing to wait it out.  But, waiting may have its costs as well.  If interest rates rise, buyers will have less buying power.  The first quarter of 2015 had some of the lowest rates we’ve seen since May 2013 however, there has also been an increase in rate movement and volatility this year.

The direction of rates for the rest of the year is uncertain.  While some believe global economies have recovered and rates will rise, others believe a strong global push to devalue currencies and lower rates will prevail.  Unfortunately we won’t know which prediction is right until the market changes.  Until then, it would be prudent to take advantage of today’s incredibly low rates.  If prices continue to rise, and rates ultimately rise, some buyers may be priced out of the market.

Is this the new normal?  With each new sale, new pricing records are being established and these are the new market comparables at which everyone is looking.  At some point, buyers may need to look at homes maybe $100-$200,000 below their price range and even then still be prepared to outbid their competition.   But, try giving that advice to a buyer … they’ve mentally left that lower price range behind and only want what’s currently in front of them or a higher value!

The median price of a Marin home was $935,000 in March, compared with $912,000 a year ago. March sold 241 homes as compared to 225 a year ago.  For January, February and March a total of 519 homes were sold in the county, as compared with 530 in the same three-month period last year.  The median price was down slightly from quarter over quarter at $854,500 in Q1 of 2015 vs. $898,000 in Q1 of 2014.

 

Median Sold Price by City

MSP

Number of Homes Sold by City

Homes sold by price

Last 12 Months Median Prices & Number of Units Sold

last 12 mos

Multiple offers are still de rigor on properties that are well-priced and well-presented.  Everyone seems to be looking for the same thing – walk to town, flat yard, something turnkey that doesn’t require much work, and something affordable (ha!).    All-cash offers make for roughly a quarter of today’s purchases, and there are many creative bridge loan products being offered by lenders to make a buyer’s offer stronger.  Sellers are also seeing that a buyer can still have financing and a strong offer at the same time.  At the end of the day it’s all cash to the seller regardless, but the key question is who will perform with the least amount of risk to the seller.

Sellers are also looking for the best terms: fewest days for contingencies, amount of cash down and flexibility of the buyer allowing sellers to stay in their home for a longer period of time, sometimes at little or no cost.  Something sellers should also consider is placing an offer on a replacement property that is contingent on them finding a buyer for their property – in this market this is a pretty safe bet.

No longer considered a lesser property, condominiums and PUDs offer better entry points for new buyers and possibly greater variety of housing options.

Median Prices & Number of Condo Units Sold in the Last 12 Months

condos

Once you’re in contract, now what? Unfortunately, in this market that’s not the end of the drama. Now it’s maneuvering through the loan, the appraisal and the inspection process.  Negotiations continue, and flexibility and communication in the transaction are key.  Buyers can still get spooked by an unrealistic or uncooperative seller.  Heaven forbid a new material fact affecting the home is found during the inspection contingency.  Sellers must be prepared to bargain if they want to keep the current buyer in place.  Risking that they can get their back-up offer to perform, or worse, find another buyer at the same price is not a great bet.

So, what does the next quarter hold?  While we fully expect more properties to be listed in the coming months – we’re seeing a bit of an up-tick right now – will it be enough to satisfy consumer demand?  Real estate is cyclical; we must continue to remind ourselves of that.  What goes up, usually comes down.  But, new trends are being set as are the new normal. Buyers like to believe prices will come down and that there will be more inventory.  But, sellers conversely like to believe prices will continue to rise.  Something may have to give!

What are the answers for Marin?  More affordable housing for sure, but it can’t be done haphazardly or without thought to the growth of our community and the impact of additional growth.  Perhaps turning one-bedroom dwellings into two-family dwellings might be a less profitable, less ambitious, but better received plan by developers as opposed to a 400-unit apartment or condo development.  We have to think outside of the box a bit and try to build within the existing footprint of Marin County.

Pre-sale inspections for the Ross Valley Sanitation Department, housing density in general, and a proposal from air quality officials to phase out old-fashioned fireplaces are some of the current issues affecting Marin homeowners.

If you are in the Ross Valley Sanitation District, you may want to review the disclosure we created for those selling and buying in this area.  Addressing this issue ahead of time may help aid a swift, successful sale.

We continue to monitor these issues as they affect you and will bring news of developments to you as they occur.  Please keep an eye on our company blog for Marin and visit us on Facebook.

Finally, are you a seller wondering when is the right time to sell?  Are you a buyer desperately trying to find the home of your dreams? Or, do you know someone who might benefit from my expertise? If so, please feel free to contact me for the latest home news in Marin County real estate.