Marin County Real Estate Market Report December 2009

The Market Has Bottomed

The indicators are all pointing positive for the market right now. We are finding the bottom in residential home sales in Marin County.

Here’s our latest Marin County Market Report.

1. Sales volume is increasing. For the first time all year, month vs. month sales volume actually increased in October. In October 2008, there were 204 closed sales, vs. 246 this Ocotber. Average sale price is down, from $908,620 to $862,674, but the median sale price is virtually unchanged at $650,000. And days on market has leveled off, at 97. That number has been increasing every month for nearly three years.

2. Percentage of homes in contract has increased dramatically, at a time of year when it normally declines! We’re now at 35% of available homes in contract, which is almost a balanced market. This number has been slowly trending up for months, and this is the highest it has been in several years. It is a number that tends to move slowly, so the gradual increase is a good sign.

3. There’s more activity in all price segments, not just the entry level. The entry level market, under $750,000, is still on fire, as 50% of those homes are in contract. More importantly though the move up market, $750,000 to $2,000,000, has 26% of homes in contract. That’s the highest that number has been all year, and much higher than the 15% level we were looking at in mid summer. Luxury homes over $2 Million are also starting to move, as 12.5% of those homes are in contract. That’s more than double the rate six months ago. So overall, these are not incredibly strong numbers, but they are all trending much higher than they have been in months.

What is causing all of the activity?

First, interest rates are just plain insane. Recently Gina Kemsley, the RPM broker in our office,  locked in a conventional $417,000 loan at a five year fixed rate of 3.7%! That’s practically free money! Conventional 30 year fixed loans are readily available at 4.75%, with conventional jumbos in the low 5% range. And jumbo money is loosening up - Doug Burrows at Wells Fargo put a client into a 5.75% 30 year fixed on a jumbo loan recently. (If you’re even thinking about refinancing, look now. We can put you in touch with some great brokers and bankers!)

Second, sellers are getting realistic about pricing. They’ve watched homes not sell for too long. People bringing listings on now have been hit with two years of bad news about real estate pricing, so many are coming to the table with realistic price expectations.

Finally, there is pent up demand out there. The transaction level has been abnormally, abysmally low for two years now. This year we’re on track for 2300 transactions, which would be the lowest number since last year - which was the lowest number since 1982!That can not go on forever. In those two years, people have still gotten married (or divorced), had more children, changed jobs, or retired. All of those events drive housing needs, and they need to do something about it.

Add in the renewal of the first time homebuyers tax credit, and we expect more positive numbers in the first half of 2010.

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