Marin Median Home Price Goes Up

Since August, people have been asking us in hushed and hesitant tones, "So how's business going?" And for some reason, no one seemed to believe our answer, "You know things are really going well." So if you won't take our word for it, look at this article from the Marin IJ. We try to stay away from saying that Marin and San Francisco are bullet proof or evergreen markets, but sometimes a headline tells at least some of the story. True, strong sales in the upper end of the market are pulling the median price up. And true, total units sales are down. But for local home owners worried about their investment or for home buyers looking for the deal of a lifetime, the picture couldn't be clearer. The local market is a lot more stable than people want to believe.

Another thing to keep in mind (and something we've harped on before at your favorite real estate blog), there is no one local market. In San Francisco, South Beach can be cool while NOPA is red hot. (This is, in fact, the case.) In Marin, Kentfield sales can be up 63% through November 20th while Novato sales are down 35% over the same stretch. (Also not a hypothetical example.) As always, our local market it more complex than any headline can capture.

August Mortgage Woes Come Home To Roost

The newspapers finally confirmed what we all already knew. Real Estate sales are way down, even in Marin and San Francisco. In the Bay Area, September '07 sales were down nearly 45% from September '06. San Francisco and Marin fared slightly better with drops of 30% and 24% respectively.

Why was September such a nightmare of a month? Because August was when the mortgage crisis hit its peak and most real estate transactions take 30 days or more to close. Thus, every buyer who couldn't get a loan in August became a house that didn't sell in September.

Take a look at these articles in the SF Chronicle and Marin IJ for more details on the slowdown.

The upshot? The next several months are shaping up as a spectacular time to buy real estate. For the first time in years, there are real bargains available. At Next Generation Real Estate, we are looking at Sonoma County (especially south of Santa Rosa) as a particularly intriguing market. Sales and prices are well off their over-valued highs from 2005-2006. But our hunch is that this market will recover more quickly than some other hard hit counties. We're always happy to discuss our thoughts on where opportunities lie. Call us any time.

Front Page. Back Loaded.

We're sure many of you caught the front page headline in the Chronicle on October 11th. "State's Housing Market Agony Predicted to Deepen Next Year," it read. At Next Generation Real Estate, we agree. Statewide, the picture isn't pretty (unless you're a buyer with good credit, cash on hand, and a long term investment strategy, that is). And it doesn't look likely to improve right away. (Of course, headlines that include the word "agony" don't exactly soothe shattered confidence.)

But as we're always saying, do yourself a favor and read the entire article. Note the passage that says, "The median price for the state is expected to edge up 3.5 percent for this year." What?!? Huh?!? Why would prices go up when sales go down? Indeed, as the article points out, it's the lower end of the market that's really struggling. In fact, properties at higher price points are actually selling reasonably well and accounting for the uptick in median price. And guess where many of those high-end properties are located. Right here in San Francisco and Marin. Maybe you even own one.

As we're also always saying, you can't draw conclusions about a local market based on broader regional or national trends. Ask a Realtor (we know a couple good ones) how your local market is doing before you decide it's in the tank.

Of course, even Marin and San Francisco have come back to earth from their dizzying heights. "What goes up..." and all that. But looked at under a clearer lens, both local markets offer a prettier picture than you might expect.

If you'd like an in depth market analysis of your home or neighborhood, don't hesitate to get in touch.

Taking the Market's Temperature

Before we get to today's City-centric post, just a quick reminder that we regularly update your favorite real estate blog with helpful info and links. Rather than bug you with an email for every new addition, we encourage you to check back often to see what's new. This week, without telling you, we posted a note about the impact of the Fed rate cut (see post below) and added new links to recycling resources in Marin (see link list to right). Lastly, don't be afraid to leave comments about postings that you found helpful, interesting, or even confusing. Your feedback will help us tailor your favorite real estate blog to your needs.

Now without further ado, some illuminating data on the SF market.

First, for those who don't know (and why would you?), the City is broken up into MLS districts (by numbers) and subdistricts (by letters). For example, the central part of SF is Disctrict 5. Noe Valley is district 5C. Click here to see a map of all City districts and subdistricts.

Second, one way we measure the temperature of a local market is by looking at the percentage of active listings under contract. In other words, how many listings have sold, but not yet closed? Generally speaking, when 35% or more of active listings are under contract, we consider this a seller's market. (This was widely experienced over the past five years.) When 25%-35% of active listings are under contract, we consider this a balanced market. When less than 25% of active listings are under contract, buyers are in the driver's seat.

On Friday, September 22, 2007, here's what the market looked like:

District 1 (Northwest) - 27% under contract

District 2 (Central West) - 32%

District 3 (Southwest) - 21%

District 4 (Twin Peaks West) - 29%

District 5 (Central) - 33%

District 6 (Central North) - 35%

District 7 (North) - 32%

Distrcit 8 (Northeast) - 32%

District 9 (Central East) - 29%

District 10 (Southeast) - 21%

Citywide, active listings spend an average of 48 days on the market prior to selling.

(Statistics include all single family homes, condos, lofts, and TICs. Multi-unit listings were not included.)

We will track this data over time so that regular readers can get a sense of which way the market is moving. Remember, markets are seasonal. Expect Decmeber to be cooler (read: more buyer-friendly) than September.

Comments welcome...

When Sales Go Down, Prices Go Up

Only in Marin...

Faithful readers of Thanks for Your Referrals, the occasional newsletter from Next Generation Real Estate, will recall an article from our January, 2007 issue, in which we encouraged nervous properties owners to maintain a long term outlook on their investments. To illustrate that point, we offer newly available data to support a buy-and-hold strategy.

These statistics strongly suggest that major fluctuations in the Marin real estate market have a greater impact on housing units sold than on sales prices. Translation: In "down markets," Marin County home owners simply stop selling, rather than selling for less. The first chart below tracks average Marin County sales price from 1975-2006.

This next chart shows average units sold per year in Marin County over the same period.

We find these two charts highly illustrative. When it come to stocks and bonds, we've often been told that trying to time the market is a fools errand. It appears the same edict applies to Marin County real estate, as well.