Heat waves, thunder storms, humidity, flooding, hurricanes and calm. We seem to be experiencing it all... sometimes at the same time. We've always loved how reliably temperate the climate is here in Marin, but these days it seems to be a mixed bag. One thing that does remain constant about the fall season is there are always new homes to be sold, and the real estate market continues to move along.
At this writing we are experiencing back-to-record-low mortgage rates (as little as 3.5% on a 30 year fixed), moderate inventory (still a bit paltry compared to demand), and what seems like an endless pool of buyers with varying degrees of enthusiasm and frustration. Yep, this is Marin!
We are currently in our eighth year of economic recovery, and recently the economy is showing even more strength, according to The New York Times.
There are two messages we have for players in the market. Step in and Step up! Let me explain:
Step Into the market if you're considering selling. You have the motivation, you want to move on, so let's get you moving. We can certainly find you buyers out there. Some sellers have been reluctant to enter the market in the past years for fear of nowhere to go. But, now we're seeing sellers getting creative about making their move. Contingent sales (having to sell a house before buying another), are becoming more acceptable in order to make a deal happen. And, for every contingent sale, that's another listing coming on to the market that will pave the way for new families and new buyers to enter the market. (And believe me, there are plenty out there!)
Step Up is our message to buyers. You know what the sellers want, and you want it, too. So, while I don't recommend overpaying for your home, you do need to come in with your best foot forward. What many buyers don't realize is a $50,000 or $100,000 jump in their price point may only translate to a nominal increase in monthly payments that still sits pretty within the budget. Ask your mortgage professional to run the numbers and see if it makes sense to loosen your purse strings a bit. Not for everyone, but you want that house, don't you?
With the median price of a single family home hitting $1,215,000 in August for Marin County (up just 1.25% from last August and only up $5,000 from last month), August was busy for the end of the summer, but with substantially fewer homes selling than last year at this time. While we currently have about 340+/- homes on the market now, we sold 178 in August, which is down from last August (235), and down from last month (208 in July).
MARIN RESIDENTIAL REAL ESTATE SALES BY CITY
Big pricing gains this past month in Tiburon (+64.1%), Larkspur (+45.9%) and Greenbrae (+35%), as well as Fairfax and Sausalito which both saw pricing increase above 22%. While sampling sizes are small in the big-gain cities of Marin, their number of units sold did substantially increase from a year ago.
MARIN RESIDENTIAL REAL ESTATE SALES BY PRICE POINT
We are seeing some upward pressure hitting the $1.5 to $2 million range, possibly buyers stretching a bit more to get into the market (perhaps taking advantage of historically low interest rates to do so). Interestingly, same upward pressure may be affecting the $2-3 million range as we had almost 2x more properties sell year over year from last August. Days on market is substantially higher, so looks like we were moving older inventory this past month in that price category. We are definitely seeing signs of a cooling in above $5 million. The same small amount sold as last year, but substantially more properties on the market in this price range and they're sitting an average of 298 days on the market (close to a year) vs. 56 days this same time last year. That's a pretty significant shift showing a slowing in the luxury market in Marin County.
While we could have had more sales in August, it was actually a relatively strong month of real estate for this typically slower month. There is definitely a lack of inventory as illustrated by this article in the San Francisco Chronicle. The price increases from this current real estate market are different from the bubble when subprime mortgages led to a housing bust. Current supply is driving prices higher, and low interest rates are easing the affordability woes being felt around the Bay Area.
Some recent takeaways from the Marin Association of Realtors meeting featuring economist Robert Eyler:
- Rental and purchase prices will remain relatively high through 2020
- When the slowdown occurs, it will be gradual (movement of interest rates, wages, prices will signal the change)
- Our biggest threat to the economy are macro and political issues
- Marin prices will always be buoyant because of the low-growth stance of the County (a supply/demand issue always)
Interesting facts and figures about Marin County:
- Marin County’s population is 16 percent Hispanic vs. 37.6 percent for California on average;
- Marin County to hire 11,215 people between 2017 and 2024;
- Marin County’s population 270,000 residents;
- K-12 enrollment forecasted to fall by 2,100 students by 2025;
- Marin County highest per-capita personal income in CA at $108,000;
- Industries to grow: biotech, tourism, health/wellness
Dr. Robert Eyler is president of Economic Forensics and Analytics, Inc.
In next month's Market Update, we will discuss how well this new inventory is being absorbed by eager buyers.