December Market Update for Marin County as well as a look into what 2017 may hold for home buyers and sellers.
There is much debate about where the market is going, but for savvy buyers and sellers, it doesn’t really matter. The ups and downs of the market are expected in the real estate world. So, unless we're facing another mortgage crisis, which doesn't seem likely (given everyone's hyper awareness of making sure that doesn't happen again), we should be good. I’m actually kind of loving this market right now. Strategy is key, and if you're in the market to win, the world (or shall I say Marin) can be your oyster!
Fortunes have been made in markets like this. Quite frankly, fortunes can be made in ANY real estate market. Though it might be a bit trickier right now, for the average buyer and seller it's simply a matter of strategic persistence with a skilled Realtor, like me!
If you're thinking of selling your property here are some tips:
- Know your house inside and out -- best practice is to get a pest and contractor's inspection ahead of time so you know what the issues may be at the time of sale; always address what you can in advance.
- Be realistic about price -- just because the house down the street sold for a fortune, doesn't mean yours will. Talk to me about a strategy that works for you (and for the market). When in doubt, price below the latest and closet comp (recently sold properties of a similar nature to yours).
- Listen to your real estate professionals -- most are giving you good solid advice based on their market experience and knowledge -- we're not making this stuff up. Yes, it's easy to play along with Zillow and Trulia, but our professionals are studying the nuances of the market daily and can provide you with some good sage advice.
- Presentation matters. In this day and age, buyers want "done.” They don't want to hassle with having to fix this or that; they want to imagine themselves moving right in to a turnkey home and getting on with their lives, they are usually willing to pay more for that convenience. Here's an interesting article by Carole Rodoni about the purchase habits of Millennials.
If you're a buyer...
- Have patience! With less inventory on the market, it may take longer for your ideal home to appear. But, when it does pop up, you'll want to be ready to pounce on it (and be prepared to write an offer that trumps your competition)
- Get pre-approved -- I know it sounds like a no-brainer, but many buyers do not have a clear picture of their financial situation. It would be a waste of time to start looking at homes without knowing what you can realistically afford. Talk to me about getting pre-approved and also talk with your mortgage professional (or ask me for a referral) about just how high you can go. Perhaps your price point can be pushed a bit without much implication on your monthly mortgage payments.
- Flexibility. I always contend that just about everyone in Marin settles in one way or another. I know that may sound negative, but let's face it… Marin homes can be a little funky! If you can accept this small truth, it may make house hunting here actually more fun. One of the skills one learns in Marin is how to make your home your castle. It's amazing what some new windows, hardwood floors and crown molding can do. With a little vision, that million dollar shack could be a really cool home!
- Price point: A more restricted market may require you to adjust your price point. If you're looking in the $900's and all of those properties are going for $1.2 million, perhaps you need to start looking in the $800's or even $700s. Or, can you have better luck by increasing your price parameters to a higher mark? Talk to your mortgage professional and see what might work and what programs might impact your financial attractiveness.
- Expand your location parameters -- can you stand a little longer commute? Or perhaps a different neighborhood, or the next town over? Marin is full of amazing neighborhoods worth considering. You may have your mind set on a craftsman in Sycamore Park or an Eichler in Terra Linda, but there are so many more options worth looking into.
- Reconsider properties that have been on the market a while -- this may require a bit of sleuthing by your agent, but why not try to put in a lower offer on a property that has been on the market a while? It may not be perfect, but for the right price perhaps you'll find you have money left over for some quick and stylish fixes.
- Find out what properties have expired and did not sell last time around. See if the sellers are ready now to sell at a more realistic price -- or maybe the price they had before, now seems like a bargain. Or, why not pick your house and ask me to find out if the owners would be willing to sell?
When it comes to buying a house in today's market, getting creative can definitely work to your advantage. There are plenty of opportunities around -- sometimes you just need to change your perspective a bit.
In terms of current market dynamics, the new Marin real estate market is shaping up to be a more measured version of the market seen last year. As an example, properties are taking about a week longer to sell than before, and the rate of appreciation has gone from double to single digit rates. Furthermore, the Months Supply of Inventory (MSI) has expanded to almost two months, versus the one month level seen last year.
Homes above $2 million are actually selling at a faster rate than last year. Homes from $3 to $5 million are selling 71% faster while homes above $5 million sold 90% faster (note the smaller sample size).
Corte Madera and Fairfax remain the hot Marin markets. Larkspur prices are off the charts with 76% appreciation since last year with almost the same amount of sales. San Anselmo, Mill Valley, Sausalito and Tiburon actually saw price drops year over year. Opportunity!
Overall, however, there is continued upward pressure on pricing. April's county-wide median sales price grew 10% year-over-year. Strong economic fundamentals continue to propel property values upward. With the prospect of oil prices stabilizing, the national economy appears to be on better ground. Reuters reported on the markets Friday morning, stating “The S&P is marginally positive for 2016; the benchmark index has rebounded some 13 percent off of February lows…data on Friday showed U.S. home resales rose more than expected in April, suggesting the economy continues to gather pace during the second quarter (Reuters, 2016).”
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They're finally here.
A new crop of homes has hit our inventory-starved County, and Marin Buyers could not be happier. This is the moment we've been waiting for.
Savvy shoppers, who have been watching the market, and are pre-approved and ready to act will reap the benefits of this new Spring harvest. Buyers, if a home pops up in your price range that hits most of your parameters, this agent says go for it! If a home feels right, don’t wait. Write an offer. Too often when a flood of inventory hits the market, buyers get overwhelmed and hesitate, hoping that a more perfect home will come on the market in the coming weeks. But those who hesitate often miss out on a great home, and then find themselves with fewer choices down the road than they had hoped.
Pricing remains critical in this highly charged market. Sellers pricing too high may miss out on a buyer that has dismissed their home as being overpriced. Better to start with a more realistic offer price and let the market determine for how much it should sell.
In Marin, real estate agents, for the most part, try to price as accurately as possible. Sales of comparable homes in one of Marin's many micro-markets that are similar in size, layout and make-up help determine an offer price akin to what the going sales prices are in that area. While there's generally a range that feels comfortable for both buyer and seller, remember that ultimately the market price is the price a buyer is willing to pay.
One of the most common questions we get asked is, “Are we in a bubble? And, if so, when will that bubble burst?” Let’s first burst all this bubble talk. Real estate is a cyclical business. Historically, prices go up and down. Inventory goes up and down. There will always be shifts and swings; that's just the nature of the business. So there will be a downturn again at some point, but since mechanisms have been put in place to guard us from the bubble burst of the past, we expect any market shifts up or down to have little impact over the long term. That’s because for the majority of us, real estate is a more long-term decision: where you want to live to suit your lifestyle, or where you'd like to raise your kids, or where you see yourself building a future, etc. If you are looking to make a move for any of those reasons — or want to make a different kind of investment, real estate continues to be one of the very best places to put your money. I can help you with both.
Here’s what happened in Marin Real Estate in the month of February:
Single Family Houses Sold in February 2016 vs February 2015
While fewer properties were sold this February, overall prices did increase in Marin. January and February started off slowly, but look for some solid numbers in March with inventory on the rise. Housing prices are still predicted to rise moderately this year at about 6%, which is a healthy increase, though not as dramatic as in the last few years that saw 10-15% or more appreciation.
The median home price for Marin in February was $1,141,400, up 14% from last year at this same time. For a typical buyer today, purchasing a home at this median price, with a down payment of 20% ($228,280), and a 30-year fixed rate of 3.375%, the monthly mortgage (not including taxes and insurance) would be approximately $4,036.87.
Working with a qualified mortgage professional will help you determine your magic number and what you can afford in the Marin market. Some new loan programs are available, so with good credit you may be able to finance more and pay less down. Rates are still amazingly low, so doing research will help you find the loan package that works best for you.
he majority of properties sold this February in Marin (single family homes and condominiums combined) were under $1 million dollars. In the combined $1.5 million to $5 million price ranges, there was significant increase of days on market, meaning it took longer to sell these homes than it did one year ago. And in the $2-5 million dollar range, while the numbers are small, we did see a slight increase in the number of properties sold.
Of the 60 sold properties under $1M, most of them were in Novato (28) and San Rafael (19). Novato’s under $1M properties were mostly single-family homes, while San Rafael had a majority of condominiums in that range. There were 30 total condominiums sold in Marin this past February with a median sales price of $464,000, versus 49 sold last February 2015 with a median sale price of $505,000.
All in all, we're seeing more normality in the market. Prices are rising, but not at the clip they rose in the past few years. Sales are slower, but we attribute that to low inventory levels and expect to see a significant upward change in the coming months. There are some good values out there right now and more will be coming on the market as we move into Spring. Well-prepared buyers will win by knowing the market, what’s available and having a good sense of recent comparable sales. The key is always to work with a reliable agent as your trusted partner.
OPENING SOON: OUR SECOND OFFICE IN MARIN
We're putting the finishing touches on Vanguard Properties’ new office on Magnolia Avenue in Ross Valley. Look for an invitation in the next few weeks to our Grand Opening event. More details to follow.
Looking to buy or sell a home in Marin County? The Costa Group knows the Marin market well. We'd love to learn more about your real estate needs and share how we can help you make them a reality.
There was so much anticipation for 2016, “another banner year ahead for real estate!” But, what happened? Not to worry, there's still time for the market to heat up, but man was it dead in January. Not by sheer numbers sake, we did end up selling 126 homes and condominiums in Marin (compared with 115 in January of 2015), but there was just a feeling that nothing was happening. Nothing on the market, nothing to sell, buyers not awake yet from their holiday slumber... what was going on?
Well, maybe it was a bit of a hangover from 2015. Perhaps it was the small interest rate increase by the FED. Maybe it was the stock market scare that had stocks plunging to record drops. Maybe it was the El Nino storms. Who knows? But, rest assured, the heat is back on and the market is just NOW getting going for 2016. Some people say it's "after the Super Bowl" when everything starts happening. This year, and maybe because the Super Bowl is in our own backyard, I'd say that may definitely be true. There's an energy out there – a frenzy descending on the paltry amount of inventory that has shown itself in January. There's an excitement about what's "coming soon" and let me tell you, everybody is ready to go.
Buyers are pre-approved and ready to pounce as soon as they see the home they like (or kind of like). Sellers are still pushing the market, wondering just how far they can take it from a price standpoint. Savvy buyers say “don't take it too far, ‘cause we ain't stupid!"
While mortgage rates are at the lowest they have been in eight months, they will eventually rise, inventory will remain tight, rental rates may also rise making housing feel like a better option, and experts expect slower growth of housing values at about 6% this coming year. We are seeing Gen-X’ers moving into prime wage earning years and enjoying their newly improved financial situation, perhaps new job opportunities, relocation, or even seeking out better neighborhoods for their growing families. In Marin we have the older boomers approaching — or already in — retirement and seeking to downsize or lock in a lower cost of living. Together, these two generations will provide much of the suburban inventory that Millennials will start to acquire. Sellers may finally be ready to put their homes on the market after a few years of equity building, and the realization that with interest rates on the rise, buyers may have less ability to pay top dollar as the year progresses.
There was very little to report as far as stats go this month (only 208 homes in Marin on sale at this writing). Few properties are currently on the market, and some have been sitting for quite some time. Perhaps price is the issue, perhaps there are some hidden defects, or perhaps nobody has come up with the right offer to charm the sellers, but I am happy to show them to you, so call me if you have some interest! Perhaps the sellers will entertain a lower offer, and perhaps this is the diamond in the rough for which you’ve been looking.
Overheard in Marin real estate circles...
OK, that last one wasn't actually overheard, as most sellers would not admit that they miscalculated the market and didn’t take a professional’s advice, but the others are quite common scenarios in Marin. The stories we're hearing right now are varied -- success stories from buyers and sellers, and stories of extreme frustration.
- “We finally reduced our list price by $100,000 after a month on the market, and immediately got a surge of interest, multiple offers and have just sold at the original asking price!”
- “We went in under asking and got the house… without a counter!”
- “We priced our home low, thinking we'd get multiple offers and we didn't get one!”
- “Despite our agent's suggestion, we listed our house $200,000 over their recommended asking price... no offers. We just accepted an offer below the agent's original suggested price.”
Some properties are flying off the shelves, perhaps because they are well-priced, expertly marketed, in a great location (close to town, transportation, schools, parks, etc.), look great with very little work to be done, or a fixer with tons of potential.
On the other hand, some properties languish on the market. This is ether because the seller is unrealistic about price, the agent has not marketed the property well, the layout is funky, the location is less than desirable, there is too much work to be done, or it is some combination of these factors.
Rest assured, there are eager buyers out there who are ready to make a move... they just want what they want.
As of November 11, 2015, there are 291 active homes on the market in Marin, ranging from $269,000 to $20,000,000. There are also 82 active condos for sale, ranging in price from $120,000 to $2,150,000. Here it is broken-down first by price and then by location:
The further we break it down into location-specific, the numbers dwindle even more. You can see there is a true inventory shortage in all categories. Broken-down by a few select Marin cities, one can see where the opportunities lie (for now):
The average days on market for a single family house this past October is 50, down from the average 58 days on market in October of 2014. This indicates inventory is moving a bit faster than this time last year.
As the economy gains a bit of strength, mortgage rates are beginning to inch up. The Federal interest rates are expected to rise in December and although not directly tied to mortgage interest, they do ultimately affect it. If not raised in December, certainly in the New Year. This is a healthy sign that our economy can stand a little stronger on its own. But, it also has immediate effects on affordability, so will most definitely impact some home prices moving forward.
We are right now in a window of opportunity for buyers and sellers to find that perfect balance of list/buy price. It’s a shame more properties are not on the market. Though the market is pretty healthy, with a solid amount of sales, I think we’d be seeing a lot more movement if we had more properties on the market.
If you are interested in more specifics about your town or neighborhood, please don't hesitate to call us. While the market is varied, there are still ways of determining the true value of your home based on its unique features, recent comps and market conditions. And, if you're in the market to buy, let's strategize about how to make the best purchase for your dollar.
Marin Market Update
A look at how the international economy, mortgage rates, the moods of today's buyers and sellers and local market issues affect Marin Real Estate.
Well, we made it through summer vacations, got everyone back to school, and are ourselves now getting back into the work groove. For those watching the real estate market, we can safely declare that the Fall selling season is upon us. Sellers who’ve been waiting until after Labor Day are poised to put their properties on the market and we expect plenty of increased inventory for Marin County in the coming weeks. Buyers, start your engines!
This past summer 887 homes sold in Marin from June through August as compared with 939 last year. August prices for Marin real estate ranged from $110,250 to $2,175,000 for condominiums – and $390,000 to $47,500,000 (a record setting estate in Belvedere) for single family homes, with a median single family home sale price of $1,085,000 (compared with $960,000 last August).
Who exactly is buying in Marin these days? The spectrum is broad: young families priced out of San Francisco; downsizers who are tired of caring for their large homes; upsizers who are realizing they can get a good price for their current home and find a larger home for their growing family, and; investors who are also looking to cash in on fixers or buyers who are eager to invest in a project. We’re living in a very prosperous time in a very prosperous area. The Bay Area is a global wealth center and that means demand for housing will not be slowing down anytime soon.
The current real estate market is complex. Many are wondering: how long mortgage rates will stay low? Will housing prices start to stabilize or even drop? When will all this happen? The stock market has been volatile. There are questions about the global economy and how that will affect Marin County. Some would-be cash buyers, especially at the higher end, will likely wait and see what happens. But, for many who are thinking about a home purchase with financing, now is a great time to buy.
Sellers, too, need to be aware of the myriad of changing market conditions.
Most economists were predicting the Federal Reserve would start raising rates this fall as the economy shows signs of improvement, but are now talking about a continued easing policy. In other words, low rates should stick around longer.
Low mortgage rates increase affordability. The lower the rates are, the more buyers are willing to spend on a house. Low mortgage rates also drive investors into the housing market since they can leverage their money and earn positive cash flow on rent. Bottom line: low mortgage rates stimulate high housing valuations.
The August jobs report showed unemployment rate falling to a seven year low. With this news, the Fed may announce on September 17 it will begin moving interest rates higher. The only thing that would hold it back is uncertainty about the global economy and the U.S. market volatility. Even so, many believe if there is a rate hike it would be only a quarter percent. The impact to Marin real estate? It might possibly create a sense of urgency with the sellers who feel that any increase in interest rates could mean less buying power and potentially lower prices.
Foreign investors, especially Chinese investors, are very active in high-demand markets in places like New York, London and Sydney, and yes, Silicon Valley, San Francisco and Marin County. Chinese investors looking for alternatives to their country's crashing stock market and the devaluation of their currency now account for 25% of all real estate purchases made by foreigners in the US -- a record high at $29 billion in the 12 months to March 30 according to the National Association of Realtors.
Some of U.S. consumers – those who lost their homes to foreclosures or short-sales during the real estate downturn in 2008 Recession – are also back. It generally takes seven years for a foreclosure to drop off a credit report, and these “boomerang buyers” are reclaiming their credit scores and many are ready to buy. Nearly 700,000 of the 7.3 million homeowners who went through foreclosure or short sales during the bust have the potential to get a mortgage again this year. Experts say these boomerang buyers will be an important segment of the real estate market in the coming years.
And, with equity back, those who were able to make their mortgage payments through the rough economic downturn have been rewarded by rising home prices. Millions are experiencing significant equity increases in their homes, allowing them to sell in this current market and trade up for their next purchase. Overall, that can trigger more homes on the market for first-time buyers.
Renters, too, are thinking now could be a good time to buy. With rental rates skyrocketing in the Bay Area, many renters are realizing that the cost of home ownership is lower than renewing a lease. On average in the second quarter of 2015, homeowners in the U.S. devoted 15% of their income to mortgage, whereas experts say 33% is a comfortable number. Some people living in rentals in the Bay Area devote as much as 50% of their average income on housing.
Demand for Marin real estate in the coming year will also be fueled by the new high speed rail system Smart Train, as well as a continued influx of life sciences and biotech companies into the North Bay. Home values in key areas near the train route and the work centers in San Rafael and Novato are expected to thrive.
Also of interest to Marin home buyers and sellers are continued adoptions by local municipalities to disclose and correct sewer lateral issues prior to the sale of real property. The Marin Association of Realtors has outlined an overall disclosure for consumers to be sure they are complying with local regulations. With all parties aware up front there will be less potential for delays in closings.
Additionally, city inspectors throughout Marin are paying much closer attention to decks and balconies, holding them to higher health/safety standards than in the past, following the recent the deck collapse and fatalities in Berkeley.
For those following the technical aspects of escrows in California, new lending regulations take effect on October 1st and are meant to simplify the reports generated at the end of escrow to clearly show where all proceeds go and to whom. The new forms and disclosures call for ample time to be given for review of files and any changes in the original contract such as credits, accommodations or prices changes. Attorneys who work closely with the National Association of Realtors® have recommended as conservative advice to build into your escrows an extra 15 days for closings. If for example, you had expected a 30 day closing, now plan for a 45-day escrow as a precautionary measure.
So, that's it for the September report. Lots going on, lots to look forward to and lots to observe in this exciting market. We look forward to sharing more with you about Marin Real estate in October.
Please connect with The Costa Group to learn more about home values and current real estate opportunities in Marin County.