Here’s the news you’ll be seeing on the front page of the newspaper: average sale price for the year fell to $853,390, a 20% decrease from 2008. That is the largest decline in average sales price in the 43 years of data we have available. And days on market increased, from 85 days in 2008 to 101 in 2009.

So here’s what you won’t read in the newspaper…the seeds of the housing recovery have already been planted, and many people are enjoying the benefits.

1.More people were able to buy their first home last year, and get a foothold in one of the toughest housing markets in the country. The combination of falling prices, low interest rates, and the first time homebuyers tax credit brought first time buyers out in droves.

We are proud to say that our team put NINE first time Marin County home buyers into houses in 2009!

2. The buyers of today are more qualified than the ones doing it five years ago. They’re buying homes the old fashioned way - with healthy down payments, and qualifying for loans at very high standards, with good credit scores and solid income. These are not people who are going to fold at the first signs of a downturn.

3.Despite where we were in January of 2009, when many were questioning the ability of the American financial system to survive, the number of transactions in Marin County in 2009 actually rose vs. 2008. We are still very low by historical standards, at 2,156, but that’s up 4% from last year.

And current market conditions continue to bode well. Right now 36% of available homes are in contract. That is the highest percentage in several years, at a time when the numbers are typically low.

4.If you find a good house under $750,000, move quickly, because over 50% of the ones available have a contract on them! We expect this trend to stay very strong because anyone qualifying for the first time homebuyers tax credit must be in escrow by May 1. If interest rates stay low, than anyone who can buy will be looking very, very hard at this price point.

5. Interest rates are still great. Conventional loans are still available at 4.75%. Even multi-unit loans are still available through FHA at the 5.5% range. It’s almost like Eisenhower was still President and everyone was still driving a Plymouth!

We’ve gone through a difficult correction. But we’re still a huge fan of Marin County real estate. It is still one of the best places to live in the world, with great communities, wonderful schools, unparalleled opportunities for recreation and a benevolent climate. Housing supply is pretty much fixed, so long term, this is still a great place to buy a home!

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3. Schools are more important than ever.

The reason many first time home buyers buy is because they have children approaching school age, and Marin public schools are some of the best in California, not to mention free. So areas that represent good value for homes plus good schools are doing better than those that aren’t.

For example, Sausalito schools, as measured by API scores, do not do as well as most of the districts in Marin. Home sales on a unit basis there are off 52% from year to date. On the other hand,Fairfax has good home values, and good schools. Unit sales there are up 16% this year.

San Rafael is also an interesting market. There are two elementary school districts there, Dixie and San Rafael. Dixie Schools have some of the best API scores in Marin. San Rafael Elementary varies pretty widely.

How does that affect home prices? We overlaid the school district maps onto MLS to find out. Right now, in the San Rafael Elementary district, there are 75 three bedroom homes available, with an average list price of $676,399. In the Dixie School District, there are only 22 three bedroom homes available, with an average list price of $856,763.

Interestingly, San Rafael has far more higher end homes available, because they have some very upscale areas. But for the average entry level home, people are asking a premium for Dixie schools.

4. Banks are getting better at short sales.

We are actually seeing short sales close, for two reasons. First, banks are learning how to handle these types of transactions, and are now getting procedures into place that everyone understands.

Second, they are also simply hiring more people to handle the transactions, which is helping to work off the backlog. That’s good news for everyone, because the sooner short sales are worked out of the system, the closer everyone will be to a normal market.

5. Even though foreclosures declined 18% in the second quarter of this year, expect an increase in the last six months of the year.

One big reason for the decline is the state moratorium on foreclosures, which ends in September. Unless a new law is passed that stops them, there is undoubtedly a backlog that is waiting to go through the system.

Price points, we think, will vary widely. No one is immune. For example, Sugar Loaf Drive is one of Tiburon’s most expensive streets. One house is in preforeclosure status there, and a second was recently sold at auction. In both cases, the mortgage amount was over $5 Million.

Part 3 coming soon - who is really control of this market?

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The Treasury Department said it is creating a streamlined, industrywide process for short sales, and will even pay bonuses to certain borrowers, loan servicers, and second-lien holders who do them.

The plan will “provide incentives for servicers and borrowers to pursue short sales” when the borrower is generally eligible for loan modification under the Making Homes Affordable plan, but either can’t qualify (for example, due to job loss) or they have had the loan modified, but now can keep up the payments.

Treasury will pay a servicer $1,000 for completing a successful short sale, the borrower $1,500 to assist with relocation expenses, and the second lien-holder who releases claims up to $1,000. Details can be found here.

This is good news for lots of distressed sellers out there right now, and good news for the banks also. Short sales are generally better for everyone, I believe, than foreclosure, for three reasons.

1. Short sales typically sell at a higher value than foreclosures. So by selling short and taking a relatively small loss now rather than a big one later, the lender will usually get more for the house.

Foreclosures definitely carry a stigma with them, and are often in terrible shape. People who are losing their home have no incentive to take care of them, are often angry, and the condition of the home shows it. Looking at foreclosed homes can often be a very depressing experience, and the pricing reflects that.

2. Short sales are better for home values in the neighborhood. As noted, foreclosures carry a stigma and a big discount, and that sale becomes a comp for the neighborhood. Short sales will be at a discount also, but without all of the emotional trauma, overgrown lawns, etc.

3. Short sales are usually better for the owner. From a credit perspective, most experts believe a short sale is better than a foreclosure. Sellers should absolutely consult an attorney and a CPA however, because some also believe foreclosure may be a better option. In California, if the lender wants to come after you for the unpaid balance (always check that when you get the approval!) and you have never refinanced, you may be better off. That’s because in California, a loan used to buy a primary residence is non-recourse debt. So if the lender does foreclose, they cannot go after other assets.

Short sales in Marin County are quickly becoming more common beyond San Rafael and Novato, where we have seen many in the past two years. We are now seeing short sales in Larkspur, Corte Madera, Mill Valley, even Tiburon. One closed last week in fact in Tiburon, for $1.9 Million. Asking price was $2.495 Million, so that gives you an idea of what kind of discounts may be out there. Let’s hope this program is effective at helping to move these distressed sales through the system, so we can get back to a normal market!

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If interest rates being incredibly low weren’t incentive enough, the Federal government is providing up to a $7500 tax credit to first time home buyers!

To be eligible, you need to:

1. Not have owned your own home in the last three years.

2. Close on a house before June 30, 2009.

3. Have adjusted gross income below $150,000 for couples, and $75,000 for singles. Above those levels, the credit begins to phase down.

There’s more fine print (there always is) but essentially, under these conditions, you can qualify to take 10% of the purchase price, up to $7,500, as a credit against 2008 taxes. Even if you purchase in 2009, you can take the credit against 2008 taxes by filing an amended return.

The credit does need to be paid back, but can be done so over a 15 year period,starting in the second tax year after purchase. Over 15 years, the cost would be $500 a year. If you sell the house before the end of the repayment period, and there is no gain on the sale, you are not expected to pay the remainder of the credit from the proceeds.

So another way to look at this: it’s an interest free loan from the government, in which the principal is paid back over time, and the government is sharing the risk that the value of the home won’t increase over time.

We’re not accountants. Check with yours before you make any decisions on this, and how they would treat it. But do look into it! For more information, go to www.federalhousingtaxcredit.com.

Or give us a call - we’re happy to put you in touch with one of our excellent broker partners.

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Buyers have a right to offer whatever they want. Sellers have a right to sell for whatever they want. And bottom line, property is only worth what someone is willing to pay for it.

But the reality is that very, very few of these offers, to my knowledge, really come to fruition. As the person making the offer usually says, you never know - and they may be right. Perhaps the Seller will take an offer 20% off the list price. And as a listing agent, I always encourage the offer - because you never know, if the buyer gets the counter offer, they may well sign it, and getting a dialogue going is the first step to a sale.

I just checked the ratio of sale price to list price for a number of Marin markets, and the story is almost exactly the same. This ratio measures how much of a discount property actually sells for - so if it is 90%, that means on average, property sells for 90% of the asking price.

In Mill Valley, for the last six months, the numbers are all in the 96% range. In Greenbrae, homes have been selling for 96% to 98% of list price. In Corte Madera and Larkspur, homes are selling for 96% to 97% of list. And in Novato - the toughest market in Marin all year - average sale price is 96% to 97% of list price.

So the vast majority of the low offers don’t go through. The reason, as noted in an earlier post,  is that when properties are overpriced (and plenty of them are!),  the typical pattern is that there is a series of price reductions. When the home hits the magic number, boom - off it goes, sometimes with multiple offers.

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These are 1bd/1ba, with large private patios, and most are townhouse-style two-story units.  Read more about them in the Marin Independent Journal here.

The price is terrific: units began at $250,000, and the most expensive one right now is $315,000. That gets you 545
square feet, newly remodeled with hardwood floors, granite slab counters, stainless steel appliances, recessed lighting, and lots of other details you wouldn’t expect in a unit that cost twice this much.

Located just off Shoreline Highway in MIll Valley, the complex is quiet, with lots of trees, yet is still 10 minutes from the Golden Gate Bridge.

The closest Mill Valley comp I can find right now is a 1bd/1ba condo in Shelter Ridge, for $425,000.

The first sale closed last week. Three more will be on MLS within the next couple days. Call for more information - this is the best deal in Southern Marin, and a great chance for first time buyers to stop paying rent.

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Fear of Loss.

This house in Larkspur, on the lagoon, has been going through the normal sales cycle in Marin right now.

It’s been on a little over 100 days, and had a couple of price reductions. It went into contract recently with two offers.

This has been happening quite a bit lately. It also happened on a fourplex on Mission in San Rafael this week.

What happens is that buyers wait and watch, wondering if the price will fall, but they still really want the property. Suddenly, someone else decides they want it. They have to have it also - either they really do want it, or the fact that now someone else does also makes it more desirable.

Boom. Multiple offers, even after 100 days on market.

Remember, if you’re watching a property, you may not be alone…….

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Currently, percent in contract is 15%. That’s up slightly from last week when it was at 14%.

We are getting the sense that it bottomed out. Besides the rise in the stats, we also had vastly increased traffic at our open houses last weekend. In our sales office, activity has picked up a lot in the last seven days. (We work in the largest office in the county, so while not a perfect statistical sample, it is often on target).

And there are other stories. We strongly considered a house in San Anselmo for a client, 124 Woodland. It went into contract with eight offers!

It’s a great lot, great location, and that story holds true throughout the Southern and Central parts of Marin.

As of 9/14, when we pulled stats by town, Corte Madera and Mill Valley continue to be the strongest markets in Marin County. Both were at 23% in contract, so they are technically buyer’s market’s also.

Novato is a tough place to sell a house right now, as 10% are in contract.

This is a great opportunity to be looking. Deals are out there, everywhere, at all price levels, as the numbers are about the same for all price ranges.

As always, for more detailed information, please feel free to contact me.

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Hot topics to be sure, but the leader cited a remarkable statistic:

97.4% of all mortgages in the US are current.

You don’t hear that on any of the news channels, because it’s not news.

Maybe it should be.

Undoubtedly, in Marin County, that number is higher. There are some foreclosures, but they are few and far between.

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As noted here a few days ago, the Fed rate cut has not affected interest rates.  My good friend Rob Chrisman, who is big hitter at a local mortgage company and issues a great newsletter every morning sent this link, which helps explain the relationship, or more importantly the lack of a relationship, between the Fed’s discount rate and long term mortgage rates.

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