Bubble, Bubble, Toil and Trouble…
Bubble, bubble, toil and trouble,
If I buy now, will prices double?
We’ve already talked about the fact that we’re in a buyer’s market in Marin. Inventory is high (although declining), percent in contract is less than 22%, and days on market is increasing.
The Marin Independent Journal caught up recently, with the usual bombast - a major headline pointing out that volume is down 25%, and median price fell 8%.
Well, I’m not sure where they’ve been, but volume has been down 25% all year. I also don’t pay huge attention to median price. Changes in the base size, or some large or small sales throw it off pretty easily.
Yes, the market is down, but guess what? People are still buying homes, and selling them too. This is anecdotal, but my wife was on the phone the better part of two days recently, putting in an offer on a house and negotiating for a client. Her offer was one of five. She got it for our client, he ended up paying more than asking, but he was very happy to get it.
Buyers market? Tell that to the four people who thought they were getting the house. There’s plenty of other examples, in Larkspur, Sausalito, Corte Madera, Mill Valley, every town in Marin. Houses that are priced correctly, i.e., that reflect the price of what is actually selling and not what the owner thinks it is worth, move quickly.
Here’s what I’m telling anyone interested in buying property right now in Marin.
- If you think you’re going to buy something, hold it for two years, and sell it at a huge profit, please find another agent. It won’t happen, barring some unforeseen circumstances. We’ve had a very strong market for five years, with double digit appreciation. It’s going to have to stop for a while, and I think it has.
- If you think you can wait, prices will fall precipitously, and you can swoop in and get a great deal, you could still find yourself waiting for prices to fall five years from now. I’ve charted average sales price in Marin County for the last forty years, and it has declined twice. In 1991 and 1992, average sale price declined 1.2%, and 1.4%, respectively. Hey, this time could be different - but forty years of history is a long time. Prices could tumble, but it isn’t likely. One story I heard yesterday from another agent encapsulates it. Her client has had two “lowball” offers on their home, and they’re not countering. Why? They don’t really have to sell. They have moved, they own this house outright, and they don’t need it. So they’ll wait. I’ll do another entry on what other factors make Marin housing prices so stable later.
- If you really want to live in Corte Madera, Larkspur, Tiburon, Mill Valley, or any of the towns that make up Marin County, and you find a house that suits your needs, and the price seems fair, buy it. Why? Because this is about as difficult a place to buy a house as there is in the entire country. We have buyers who we have been working with for over a year, waiting for the right opportunity. Assuming you’re thinking about this as your home, and you plan to stay in it for several years, I think you’ll be fine. Legal disclaimer: past performance is not a guarantee of future gains, so you need to make your own evaluation.
At the risk of sounding like one of those “it’s always a great time to buy” agents, I also can’t help pointing out the 30 year fixed mortgage is going for about 6.5% right now, by historical standards, an excellent rate.
