Novato Real Estate Market Update (July 2009 Home Sales Report)

July 17, 2009

The Novato single family home market seems to be forming a bottom. Prices appear to be leveling out and the percentages of entry level homes in escrow are very high. I know that many foreclosure sales and short sales are getting multiple offers. I have several clients who have faced as many 9 to 20 offers in competition for a single family home. This activity bodes well for sales in the higher price bands.

Moreover, in June 2009, Novato had 38 sales (up from 32 in June 2008). Indeed, this reflects an upward trend over the past few months—May 2009 had 44 sales. Of course, many of these are bargain priced homes such as REO’s or short sales. But, nonetheless, the inventory is rapidly being absorbed as there is extraordinary pent up demand.

Perhaps more significantly, the average sales price of Novato homes jumped up to $666,124 in June 2009. This is an increase from $564,770 in May 2009. While there was one $2 million plus sale (an off market sale), which supported this increase in average sales price, even stripping that outlier sale from the equation, the revised average sales price was over $622,000—a strong bump upwards.

We believe that the move up market has begun to find its legs in Novato and that there are definite signs of improvement in this very important market segment. Interestingly, and in line with recent months, the move-up price bands are selling as well as the entry level price bands:

  • 17 homes priced under $600,000 sold in June 2009
  • 17 homes priced from $601,00 to $1 million sold in June 2009.

As of today, here are the percentages of homes in escrow in each price band:

  • 78% of homes priced under $500,000;
  • 57% of homes between $501,000 and $600,000;
  • 43% of homes between $601,000 and $750,000;
  • 25% of homes between $751,000 and $1 million;
  • 25% of homes between $1 million and $1.5 million;
  • 15% of homes between $1.5 million and up.

There are 131 single family homes currently for sale in Novato, CA (there were 141 in June 2009). Novato’s absorption rate (e.g., the number of months of inventory currently available in Novato) remains extremely low. In March, we had 7.9 months worth of inventory. Last month, the absorption rate fell to an unbelievable 3.04 months. Today, while up a bit to 3.45 months, it remains very low! Absorption rates, along with days on market averages, provide a telling insight into the overall state of the market. And today’s shrinking inventory and exploding sales evidence a pent up demand and reflect the increased affordability of Novato real estate. Also, note below that the 90-day rolling average of Novato home prices has jumped up — I consider this an additional leading indicator that market forces are establishing a bottom.

Real Estate Market Chart by Altos Research www.altosresearch.com

As noted above, thirty-eight Novato homes sold in June 2009 (down from 44 in May 2009). These Novato homes averaged about 148 days on market, were about 2,128 sq. ft., and sold for an average sales price of $666,124 (roughly $316 per sq. ft.). Homes in Pointe Marin, Country Club, Hamilton Field, Rush Creek, and Bel Marin Keys generated the most calls and showings this past month. If you are thinking of buying, please call my office at (415) 350-9440 as I have a long list of people who would like to sell their homes, but because of market conditions are not quite ready to list their home officially. I am also receiving many calls regarding lease-options.

Below is a breakdown of the Novato real estate market by price band:

Price Range

Total Homes

Pending Listings

Up to $500K

54

78%

$500K – $600K 35 57%

$600K – $750K

43

44%

$750K – $1 mil.

51

25%

$1 mil. – $1.5 mil.

32

25%

$1.5 mil. & Up

20

15%

For an explanation of the importance of the statistic addressing the percentage of “Pending” listings, click HERE. If you would like me to run the exact numbers for your neck of the woods or have any questions about Novato’s many delightful neighborhoods, just give me a call at (415) 350-9440. My name is Kyle Frazier, Certified Residential Specialist (CRS), with Morgan Lane Marin Real Estate. It is always my pleasure to be of service.

Now that the the HWY 101 widening project has been completed on both north and southbound lanes, the commute through San Rafael is very much improved. Southbound commute traffic is reduced by about 25 minutes. The improved commute will certainly make Novato a preferable choice for those who want more house for the money, yet were scared off the traffic we experienced during the highway construction period. Moreover, the first-time home buyer credit of $8,000 (this is a flat out gift from the government) certainly helps those who qualify. As I tell my clients, “Give Yourself a Raise. Move to Novato.”

Marin Real Estate (June 2009)

July 10, 2009

This year has been peculiar in real estate. Obviously, prices are down in all categories. Obviously, short sales and foreclosures are featured on many buyers’ dance cards. And obviously, the market is suffering from a negative feedback loop fed by the media. I spend all day, every day, talking with prospective buyers, prospective sellers, and contemplative owners of real estate. Early in the year, buyers were ALL talking about how they anticipated interest rates would go down to 3% (and some buyers were insisting that rates would go even lower). I would just nod my head and concede that was a possibility. After all, what do I know about the unknowable? But, I always pointed out that whatever rates fell to, you could never know the bottom until it was gone. And that rates would surely go back up again — I was not going out on a limb; every economist on Earth is saying the same thing. Sure enough, since my last report, interest rates have jumped up almost a full point and the forecast does not look as though rates will fall back to the levels buyers were talking about just a short 2 months ago (let alone where they were three weeks ago). Meanwhile, it seems buyers are picking up on the FACT that rates are likely to climb and they are out in droves. 

Predictably, the low end is getting the most attention. In Novato, 72% of homes priced under $500,000 are in escrow (that’s 44 out of 60 homes!). In San Rafael, 64% of homes priced at or below $600,000 are in escrow (that’s 29 out of 45!). Incredibly, 11 homes in Novato sold last month under $400K, 9 more sold under $500K, and another 11 sold under $600K. That’s 31 Novato homes selling under $600K. Three years ago, under $600K, you would see perhaps 3 or 4 for homes on the market at any given time. These sales are propelled by value, the $8,000 tax credit, and the increased FHA loan limits which went into effect in April 2009.

[Click HERE for the rest of the article, courtesy of www.NorthBayRE.com.]

Marin Real Estate (May 2009)

July 10, 2009

The leading indicator of future sales is the number of homes in escrow at a given time. We have experienced over 60 new escrows in five of the past seven weeks and over 70 for the past three weeks. May 2009 new escrows will likely surpass the levels of April and May 2008. As you can see from the below chart (which goes back 6 months), the number of escrow is up 105% and sales are up 30%. 

The upsurge in sales and escrows is seasonal, but also due to low 5% interest rates on conforming loans right now. We are also seeing a spike in home sales at the low end due to the increased FHA loan limit (now at $729,750). Given the activity we are seeing, it seems likely that the traditional Summer slowdown in home sales will be modest as buyers continue pursuing those “value” properties through the Summer. This year is shaping up to be one defined by “value.”

[Click HERE for the rest of article, courtesy of www.NorthBayRE.com.]

Marin Luxury Report (June 2009)

July 10, 2009

As noted in prior reports this year, Marin County, CA’s luxury segment is slow and currently weighted towards homes priced under $4 million. In fact, not a single home priced over $4 million sold in May 2009 and just 2 are currently in escrow (although that could change in a moment as the domino effect is very real in home sales). Of course, the luxury home slump exists throughout the country as affluent buyers wait for a signal to buy. For a detailed snapshot of current national trends from the Institute for Luxury Home Marketing dated June 14, 2009, click here. Yet, the news relating to home starts and permit applications is improved again this month. And while the stock market closed in the black for the year last week, this week has brought a correction. So, it appears we will continue to wait for the buying signal. 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.

Buyers are dubious of price stability for good reason (see chart below reflecting year over year median 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 er 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).

[Click HERE for the rest of the article, courtesy of www.ImagineMarin.com.]

Marin Luxury Homes (May 2009)

July 10, 2009

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).

[Click HERE for the rest of the report, courtesy of www.ImagineMarin.com.]

Marin Luxury Report (April 2009)

July 10, 2009

Despite my self-imposed limited media diet, I do read headlines. And the headlines are becoming more optimistic. This is a prerequisite for increased buyer confidence. I remain convinced that with minimal social proof, buyers will return to the market and pent-up demand will create a surge in sales figures. Increased conforming loan limits and a pronounced level of increased affordability across the board is a recipe for sales. 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 (it is said that 80% of buyers are also sellers) and this will be a big step in the right direction. And interest rates are a full 1-point lower today than they were last year. Certainly, the pump is primed as there are nearly 60 active escrows on homes priced $1 million and up (again, move-up buyers typically need to sell their current home). For national trends,  click here — April 2009, 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, call (415) 350-9440.

[Click HERE for the rest of the report, courtesy of www.ImagineMarin.com.]

Marin Real Estate (April 2009)

July 10, 2009

March 2009 new escrows up 17% from March 2008 (and 58% from February 2009) – In Marin County our most reliable indicator of changing market conditions is new escrow activity. New escrow activity bottomed out in December 2008 and began a modest ascent through January and February 2009. I believe the sharp increase in new escrows in March 2009 is a combination of demand returning to our market and the cyclical nature of the business. It stands to reason that thought is that April and May closings will rise accordingly.

Another interesting trend is the surge of activity in central and southern Marin. In the first half of 2008, nearly 60% of the units sold were in central and southern Marin. By January 2009, largely a result of the October 2008 stock market meltdown, this activity gradually fell to 37% of the units sold in Marin. In February and March 2009 the percentage rebounded to nearly 50% of the county’s activity.This upbeat trend in central and southern Marin is consistent with the activity in my business and a solid sign of strengthening buyer confidence. We expect a strengthening Spring season in Marin County real estate.

[Click HERE for the rest of the article, courtesy of www.NorthBayRE.com.]