Buyers always lead the market in real estate, and Sellers always follow. In the fall of 2008, when Lehman Brothers blew up and the Great Recession began, buyers sent the signal well before anyone else realized what had happened. They simply stopped buying homes. Very little happened for 90 days, and then the freeze barely thawed out for the next three years.

Well, as the late Heather O’Rourke said in the 1986 movie “Poltergeist”, “They’re baaaaaaaaaack!”

And with a vengeance. Percent of homes in contract on April 6, 2012, in Marin County for all residential properties is an astounding 54%. I went back to my records and could not find a number like that since fall of 2004.

In plain terms, there are 1,088 homes available right now, and 550 of those are contingent or pending. So more than half the “For Sale” signs you see are on homes that are already probably going to someone.

Yesterday I had six different realtors pull me aside on Broker Tour (or call me) and ask furtively, “What do you have coming on in the next couple weeks? I need ……(fill in the blank).

Demand right now is through the roof, as buyers have awakened from their three year slumber and are ready to buy again. Yes, we are seeing multiple offers. Yes, attractively priced homes are going over asking. And yes, the banks are loaning money to qualified buyers to purchase those homes!

We are starting to see some very slight price appreciation, although it is not quantifiable yet. Overpriced homes don’t sell. But good  family homes, in desirable neighborhoods and great school districts, priced well, are getting a lot of activity. Entry-level priced homes are getting multiples.

In Novato, 65% of available homes are in contract. That is not a misprint - Novato is on fire. In Mill Valley, which has higher price points, 46% of homes are in contract, and in Corte Madera, 50% of homes are already spoken for.

First time buyers are driving this market, as 68% of homes under $750,000 are in contract. That is consistent across most towns. In the mid range, from $750,000 to $1,500,000, 38% of homes are in contract. That is balanced, but very competitive.

And over $1,500,000, 24% are in contract. Great properties in this range do sell quickly if priced right, however- 30 Upland in Kentfield, a  beautiful property on one acre with pool, but in need of all new finishes, drew seven offers and went in to contract well over asking this week. Three of the offers were non-contingent; two were all cash.

If you’d like to help alleviate this crisis in the supply of available homes to sell, let us know. A lucky buyer will no doubt thank you! Call me at 415-378-1414.

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We pride ourselves on not being typical salespeople. You know, the ones who you talk to and no matter what you ask them the answer is always “Its a great time to buy a house!” And 30 seconds later they will tell you, “It’s a great time to sell a house!”

Could it really be both?

The market is clearly picking up, in terms of velocity and pricing. Most notably, the percent of homes in contract is now at 42%. This is one of the leading indicators of market strength. For the past 12 months, it has been steadily been in the 31% to 32% range, and it suddenly jumped five weeks ago. Transactions are also up. Year to date there have been 2,452 sales in Marin, vs. 2,277 last year.

Part of this is a decline in inventory. But it is more than that. I think there is a change going on in market psychology, and buyers are starting to think the time to act is now. Their reasons differ, from fear of prices rising, to worrying about missing amazing interest rates. For some, they’re just tired of waiting and think it is time to get on with their lives.

Part of it is coming from the media, which has been negative for three years:

“It’s an excellent time to buy a house, either to live in for the long term or for investment income.”
- Wall Street Journal, 10/15/11

“Now could be the best time in history to buy a home.”
- Market Watch.com, 10/03/11

“Many buyers who waited for rock-bottom prices know that now is the time to buy.”
- U.S. News and World Report, 11/1/11

“It is important for America to realize that when it comes to housing, now is a time to buy.”
- JP Morgan Market Insights, 10/20/11

There are more, but you get the picture. Whatever it is, it’s different out there right now. People are actively looking for homes, even though it’s cold and the sun is low in the sky. Our open houses have been extremely active this month, at a time of year when I usually make sure I have a really good book to read at an open house.

So does that also make it a great time to sell?

There is also a lot of national press about the next wave of foreclosures, expected to hit next spring. If that happens, prices are expected to drop as the correlation between increasing foreclosure sales and declining home pricing is incredibly strong. But in Southern and Central Marin, the number of foreclosures, or notices of default, just don’t appear that high. It does not look like there is a ton of inventory waiting to innundate the market.

Hence our conclusion: great time to buy, and a great time to sell. Sellers who get out there quickly will be able to take advantage of the lack of inventory. They will get lots of traffic, and probably offers.

What about pricing? Most sources predict minor price increases in the latter half of 2012, in the 3% range, and then small increases after that. That fits the pattern history shows in Marin as well, based on data from the 1991-1993 downturn and 2000 dot-com recession. Expect velocity to increase, i.e. more sellers AND buyers, then pricing to slowly recover.

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Employment

Moodys shows that jobs have consistently grown in the Bay area throughout 2011. They project job growth over the next year to be 1.4% over the next 12 months, with larger growth in 2012. Bureau of Labor statistics show Bay Area unemployment is at 10.1%.

However, it the city of San Francisco appears to be vastly different. “The office market in San Francisco is on fire right now”, said Tony Zucker, a commercial real estate agent for Jones, Lang, LaSalle. “Rates are moving up, mainly from social networking and gaming companies.” (this article is actually for Tony - he’s been threatening to buy for a long time!)

That also checks with what he hear about the rental market in the city - apartments are difficult to find, and when they’re available, rent quickly with multiple offers. Recent San Francisco Chronicle articles have also talked about all of the hiring in the city.

Credit

If employment has been the weak spot in the recovery, mortgage interest rates have been the engine keeping things going. Rates continue to flirt with historic lows, and there is plenty of money for borrowers with good credit scores, solid employment histories, and down payments. But for buyers who don’t fit the traditional profile, credit is still difficult to obtain.

According to Gina Kemsley of Terra Mortgage, the biggest issue right now is the change in jumbo conforming loan size, from $729,750 to $625,500. That will force some people into a jumbo loan, which is typically a 1/4 point higher. The resulting increased payment will make it difficult for some buyers to get as much house as they want.

Typically in a recession, prices have fallen but interest rates are high. For example, in the 1990-91 recession, rates were 9.5%-10%. In the dot.com bust of 2000, rates were over 6.5%. This one has been different: rates are at historic lows, and prices are around 25% off their high point.

Psychology

The portion of Americans who believe homeownership is a safe investment dropped to 66% in the first quarter, the same as it was one year ago, but down from 83% in 2006, according to Fannie Mae, the government controlled mortgage company.

What’s not clear is whether that is a long term attitudinal shift or a short term reaction to the economy. The Fannie Mae survey also showed that 87% of people preferred owning to renting, but their reasons for doing so are changing. Access to schools, control over the home environment, and other quality of life issues are seen as the key benefits to home ownership, with building wealth and other financial factors viewed as less important. That checks with what we see in Marin. This market continues to be driven by families with children, looking for great public schools and walkable neighborhoods.

What does the future hold for Marin? Hard to say, but as noted every month for the last six, the market here continues to be stable. Transactions year to date are even vs. last year, average sale price down 3.5%. So despite Greece, stock market gyrations, and political turmoil, people are still buying and selling homes in Marin!

Sources: Wall Street Journal; Fannie Mae National Housing Survey; BAREIS MLS.

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Our new listing there, 5 Madrono Avenue, is an example of Hidden Valley at its best. The home faces south, and is bathed in sunlight all day. Nearly every room of the home was built facing south, and nearly every room enjoys large sliding glass doors to access the beautiful, wraparound deck (new four years ago) or yard space at street level. The home has 2,312 sq feet of living space and is located on a nearly one-third acre lot. Three large bedrooms, three full baths, a large living room (with vaulted ceilings), and wide, low traffic streets make this a great house for families who want terrific schools, a wonderful community, and easy access to Corte Madera’s Town Center and Village Shopping Center. Priced at $1,179,000.

Watch the video here.

Call me for a private showing at 415-378-1414, or come to our Open House on Sunday, Mar. 20, from 2-4 pm.

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Want to see more? Watch the video, with great shots of the neighborhood, here.

Contact me for private showing, or we are open Sunday, Mar. 20, from 2-4 pm.

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To put that in perspective,  we’re at, I believe, the highest level since before the crash in 2008. The number has been trending up for the last six months, but was in the mid 20% range throughout most of the fall and early winter.

What’s going on? Good weather, good prices, and concern about rising interest rates have buyers out everywhere, and they are snapping up inventory. Inventory is also at it’s lowest level in a while, as only 1,051 homes are available for sale.

Family homes in good school districts continue to be very popular, and that demographic continues to drive the market. We are also starting to get requests from people that want to list their house to downsize, as they realize that now is a good opportunity to sell their home quickly.

It’s hard to say whether this will last, as we expect a lot of new inventory to come on the market in the next few months. We have several new listings that will be coming on in Larkspur, and at least one or two more in Corte Madera, and some in San Rafael as well. All are being worked on now, but contact us if you’d like a preview or to know more.

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- Five bedrooms

- Over 2000 sq feet - 2.088 according to tax records!

- Giant backyard - the lot is just over 1/4 acre

- Access to the bay via San Clemente Creek, which borders the backyard

All this for $965,000!

The house has a terrific floor plan, with the center of the home a huge great room, leading directly to the backyard.

Cost per sq ft is $462, and the average sold price per sq ft in Corte Madera for three bedroom or more homes over  the last six months is $517.

If you have lots of kids, or always wanted to own the home that all the kids came over to play at, then call us at 415-925-3261 and we’ll get you in to see it now!

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What’s a first time home buyer to do? Well, 60 Heather Way is a great house - and the least expensive single family home in Larkspur. If you want a real walk to town location in Larkspur, this is it. And it meets the criteria for the $8,000 first time home buyers tax credit as it is less than $800,000 - current asking price is $759,000!

It is two bedrooms, one bath, and 956 sq feet of charm, according to an appraisal (not the charm part!). With vaulted ceilings, an expanded and remodeled kitchen, great floor plan with an excellent flow to the large, sunny deck, this south-facing home gets tons of sun and is in one of the best walk to everything neighborhoods in Marin.

Not much to do on this one unless you want to expand (and we have plans drawn by an architect that show how to easily convert to a 4bd/2ba), as the current owners replaced the deck with a trex deck, installed a new furnace, air conditioning, and had custom cabinets built for both sides of the fireplace.

Open Sunday 2-4 pm. Oh, the $18,000 - in escrow by April 30, and if you are a first time home buyer you qualify for the credit. Add in $10,000 for California tax credits - be in escrow by May 1 - and you’ve got tax credits to pay for all kinds of upgrades, not that you need them. See your CPA as individual situations will affect applicability. Call 415-925-3261 for an appointment to see this house, and get ready to walk to school, Rulli’s, the Left Bank, and more!

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To be eligible, the contract needs to be signed by May 1, 2010. The deal needs to close by July 1, 2010, so if you’re thinking of taking the credit via a short sale, you should be in contract in the next 30 days!

If you have not owned a home or a primary residence in the prior three years, you qualify. If you own a vacation home and have not lived in it for 36 months, you may still qualify.

The credit amount is up to $8000, or 10% of the home’s value, whichever is less, so that includes nearly every purchase in Marin.

There is also an existing homebuyer tax credit, which is new. This is for current homeowners that have lived in their current home for at least 5 years.

Both credits phase out based on income. For single taxpayers, it begins at $125,000, and for couples, $225,000. Talk to your CPA for exact information on your particular situation, and whether or not you qualify.

This is a great opportunity for first time buyers, and we expect it to continue to spur demand in the entry level through the first half of 2010.

We put three first time homebuyers into new homes in November, and will put at least one more in in December. Between Pat, Bob, and Rick, we know the entry level inventory extremely well in Marin. Let us know if you have a friend or family member who is hoping to buy for the first time - with interest rates at historic lows, this is an amazing time to do it!

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