Marin Real Estate (May 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 Homes (May 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.]

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

While the pipeline of new properties and overall inventory levels increases dramatically throughout most of Marin County, CA (this is the prime selling season, after all), Novato’s inventory level has remained very steady over the past 3 months. Just 151 single family homes are currently for sale. There were 152 homes for sale in April 2009 and 142 in March 2009.

Novato’s absorption rate (e.g., the number of months of inventory currently available in Novato) again dipped dramatically. In March, Novato had 7.9 months of inventory, in April there was 6 months inventory, and today there just 4.97 months of inventory. Absorption rates and the days on market averages provide a telling insight into the overall state of the market. Today’s shrinking inventory evidences pent up demand and reflects increased affordability for Novato real estate. It is also noteworthy that the absorption rate calculation does not increased “contingent” properties as sold properties. There are another 83 homes in escrow in Novato. More on this striking statistic below.

Of course, there is ample value out there in virtually all price ranges. Prices in most Novato neighborhoods are back down to what they were in 2003 (and 2002, in some neighborhoods). Novato currently has thirteen active listings priced under $400,000 (Novato is Marin’s “Valhalla of Value”). In addition, there are 26 homes priced under $500,000. Note that available inventory in these price ranges is way down and the percentages of homes in escrow is rising. For example, 63% of homes in Novato priced under $500K are in escrow; 51% of homes between $500K and $600K; 33% of homes priced between $600K and $750K; 30% of homes between $750K and $1 million; and 25% of homes priced between $1 million and $1.5 million. These are some strong numbers!

My prediction relating to phantom buyers (I’ve been talking about this for a year now) is coming true. I hold open houses almost every weekend and I talk to a lot of buyers. Here is my observation: there are LOTS of people who sold over the past couple of years and who have waiting for prices to dip. Fortunately for these folks, interest rates are WAY down right now and so they are jumping in. Many of these people sold in Southern and Central Marin and see the extreme value and comfortable existence Novato provides. This past month, even the move-up price band in Novato (with homes priced between $750K and $1 million) is going great with 30% of these homes in escrow.

Twenty-five Novato homes sold in April 2009 (same as March 2009). These Novato homes averaged about 146 days on market, were about 2,120 sq. ft., and sold for an average sales price of $589,000 (roughly $287 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 call regarding lease-options. Insofar as my listings are concerned, I had two closings last month and another scheduled for this month. From my perspective, the market seems pretty active.

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

Now that the the HWY 101 widening project has been completed on both north and southbound lanes, it is clear that the commute through San Rafael is very much improved. Even salty, hardened naysayers concede that the drive to work is now just a drive, not a battle–estimates range from 25-35 minutes saved each day since the completion of the project. As I have been saying for 2 years, the improved commute will certainly make Novato a viable choice for those who had sworn it off because of the traffic. 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.”

As mentioned in prior months’ market updates, it seems that buyers are hypnotized and mesmerized by foreclosures and short sales — as if these properties hold some promise of value and an assurance of happiness. But, instead many buyers of these homes would do it differently if given another chance. After all, many of these homes are in rotten condition and entail lots of work. Wise buyers focus on real value and keep attuned to the benefits of homes that display “pride of ownership.” Not that all distressed sales are problem properties, but caveat emptor for those lured by the siren call of distress. Indeed, investors and buyers who have been burned by the short sale process — it can take months if the proper process is not followed or the banks do not issue approvals — are focused mainly on well priced homes without the strings of REO properties.