This year average sales price in Marin County may actually decline. It would be the first such decline since 1992, and 1991. They didn’t fall far then, just 1.2% and 1.4%. If it declines this year, it would probably be of a similar magnitude.

So will prices start to rapidly increase again? We predict several years of price stability, not rapid increase. Here’s why.

After the decline in 1991 and 1992, average price increased, but very slowly - about 3% annually, or slightly higher than the inflation rate. And just like the period we’re in now, the prior 14 years had seen average price triple.

Marin is a very special market. It really is different, because the supply of housing is fixed. But it can not continuously rise, as housing affordability is directly related to income, employment, and the overall economy.

We don’t pretend to know when the market will turn. But we do believe that when the market stabilizes, pricing won’t come roaring back. Instead, expect it to follow the path established in the late 90s. Prices will stabilize and stay there for a while, as incomes catch up to housing prices, before other macro trends drive pricing up.

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As noted by Carol Lloyd in the San Francisco Chronicle, the book explains in a very rational manner why Bay area home prices are far more stable than the national average. And of course, that has implications for Marin County real estate as well.

Is it the cappuccino? The cabernet? The politics?  None of the above, although they all help. Florida demonstrates that the Bay area is a center of economic innovation – as measured by the number of patents filed, the number of “star scientists” that reside here,  and the concentration of  big universities. Other measures such as health, education, culture, and safety add to the allure.

The result is that Florida believes the Bay Area, like other “superstar regions”, will go up and down in real estate values, but is far more resilient than other areas in the country.

Regarding real estate investment, here’s what he told Lloyd: “If I had to give advice, I would say to buy single-family homes closer to the core, not in the outlying areas where the more affordable housing is. The really knowledge-driven people have to be more effective, so they have to use their time more efficiently, so center locations have become more valuable.”

Hmmm…..sounds an awful lot like Marin County, doesn’t it?

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I heard a great quote the other day:

“The time to buy is when there is blood in the streets. Not when everyone else is buying, when you’re fighting with five other offers to get accepted. It’s when nobody else is doing it.”

There’s plenty of blood out there right now, lots of deals are emerging too.

For example, there are a bunch of condos for sale right now in Southern and Central Marin, as well as some TICs, that make better sense as investments than anything we’ve seen in a long time. Prices have held steady, or even declined in some cases, and rents have risen. The result? You could be breaking even at 30% down, which was unheard of on anything in Marin County a few years ago.

And even if appreciation is ONE HALF of the historical rate of the last 41 years,  that $400,000 condo is worth $600,000 in ten years.

Can your stocks do that? And deliver income along the way?

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There will be three big effects on consumers that will positively affect house-buying activity.

1. Home Equity Loans. If you have one and it’s linked to prime, you’re monthly payment just went down substantially. All those 100% finance deals a few years ago? Well, 20% of that is probably a home equity line, and everyone just got a break.

2. Adjustable rate mortgages. Again, many of these are indexed to LIBOR, which is linked to this rate. So anyone with an adjustable indexed to this rate just got a huge break on what the adjusted rate will be. Our in-house mortgage broker estimated it could be of a magnitude of two interest rate points. That’s huge - it means more people will be able to hang on, and won’t end up in foreclosure.

3. Credit card debt. Anyone not paying off the balance every month will now pay less on a monthly basis.

All in all, the net positives here are potentially very large. Combined with the lowest interest rates since 2004 for mortgages,  it would be surprising not to see the market heat up a bit soon.

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When we purchased our first home in Corte Madera in 1990, we put in an offer 10 % below asking. The Seller countered, $15,000 away from our price. We immediately……did nothing. A month later they asked if we would buy at the original price. We said yes.

The pace these days is different. We’re negotiating on two of our listings right now, and the differences are amazing between now and three years ago.  On one,  I receieved an offer earlier this week that gave us three days to respond. We submitted a counter, and gave them three days. This is a process that actually started with an initial offer from them a month ago.

And just one year ago, I was in a conference room at 11 pm with a client, and we literally had minutes to submit a counter offer.

The pace is very different now. Sellers and Buyers need to be patient. This is a great market for great negotiators, whether you are buying or selling. Get used to it.

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Simple - Seller Financing.

This is a great house, incredibly charming, great yard, and an easy walk to the Ross School.

The seller is willing to finance, for five years, at the same rate as the conforming loan. It works like this.

Sale Price: $1,199,000

20% Down: $239,800

Conforming Loan: $417,000

Seller Financed Second: $542,200

The Seller will offer the rate at the same rate as the conforming loan, for five years. Right now that’s around 6 3/8%. With jumbo mortgages at 7.5%, that’s a huge savings on your monthly payment!

The kitchen has been beautifully remodeled.

This is a great home for a small family that really wants the Ross School, considered by many one of the best in the State of California.

For more pictures, go to our website, Or feel free to call for an appointment!

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He purchases remodel projects, scrapes them, and builds new homes in their place. He’s done very well over the years, and we’ve done a number of transactions with him.

When he called, he said, “I want to make sure you’re looking really carefully at property right now. This is the time to buy, and there are going to be some great deals the next few months.”

I totally agree. In fact,  we closed on a remodeling project two weeks ago that we are sharing with a partner.  (Marin County real estate sales were down 26% in August, by the way.)

But don’t take it from me. Take it from an expert, my client, who has made a enough money over the years to be very comfortable.

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