Like clockwork, the market gets hot in Spring and Fall and slows in the summer and around the holidays. But is the market truly soft in those “off peak times?” Aren’t people still looking for houses? And, don’t houses still get sold? Yes, and plenty of them. Our statistics show that a total of 633 houses (and an additional 184 condos) traded hands in Marin this past quarter (July through September) as compared with 623 homes (and 199 condos) in the same period of 2014. In comparison, this quarter was just as hot as last year’s third quarter market!
This Quarter’s lowest Single Family Home sale was an auction property in San Rafael for $252,843 – less than the land value. The luxury markets of Belvedere and Stinson beach saw huge median price gains this quarter, helped by the highest SFH sale at 440 Golden Gate Ave in Belvedere for $47,500,000. The towns of Corte Madera, Sausalito, and San Anselmo also saw minor increases in the price of homes sold this past quarter. Mill Valley and Novato remained at the top (as compared with third quarter of last year) with plenty of inventory switching hands, while San Rafael increased in amount of homes sold substantially compared with last year’s third quarter.
What do we say about the fourth quarter? More of the same. No matter how “soft” a selling season may seem, there will always be a demand for homes in Marin, at every time of the year!
Marin will most likely always have an inventory shortage. We’re just not building enough homes to keep up with the growing demand. But, our annual bump after Labor Day did something interesting this year: it paralyzed the buyers. What to do with all these choices? Why not wait for the perfect home? Because of this lack of urgency, many homes actually sat for longer – can you believe some more than two weeks before an offer? With the new influx of homes, buyers felt they were back in charge. They could take their time and only bid on the homes that were perfect for them!
Is there a perfect home in Marin? I’ve always contended that no matter at what price range, there will be some type of sacrifice. When you have the ideal view, you’re missing the flat yard. When you are just a short walk to town, you may not have the square footage you like. A quintessential Marin craftsman home may look incredibly cute, but the plumbing is shot. Those who grasp that it’s not a perfect housing county (and we actually love it for that) will start seeing the beauty in today’s current inventory. The best thing about buying a home in Marin, is that you get to live in Marin!
Prices may stabilize (and perhaps even drop a bit), but certainly not while interest rates are still at record lows with the economy showing sporadic signs of strength. The Fed held off raising rates when it had the chance in September. The dismal jobs report in October may have also stopped the FED from raising rates until December 2015. Even if the FED raises short-term rates, long-term rates should remain low because of market factors, including: slower growth in China, weakness in Europe in spite of quantitative easing there, and lower consumer confidence in the US. Almost everyone agrees, however, that rates will rise next year.
September 2015 year over year sales show very similar numbers to September 2014. There was a -2% change in supply with 233 homes sold this year compared to 238 in 2014, and a 0.6% increase in the sales price of this year compared to last year.
There seems to be a window of opportunity right now. With 235 homes on the market in September, an average 57 “Days on Market,” and low interest rates, all signs point to a healthy Q4. Any perceived slowness may be attributed to a false sense of the market falling. Mark my words though, the market will heat up again. However, some sellers are panicking and thinking that this slowdown may last so they are eager to accept an offer. Hence, a real window of buying opportunity, but one that probably won’t last long. Inventory that was plentiful after Labor Day is slowly dwindling. Properties are getting snatched up and there is less and less from which buyers can choose. The laws of supply and demand are pointing to another strong selling season in the last months of 2015! Sellers, this absolutely is a great time to list your properties!
Deciding whether to rent or buy is another consideration for buyers. The longer you plan to stay in a home, the more purchasing it makes good financial sense. In some Bay Area markets the cost of a mortgage, insurance, and property taxes can actually be lower or similar to rental prices. Remember too, that mortgage interest and property taxes are tax-deductible.
Of course there is the down payment to consider. While many lenders want to see 20% down, there are a number of programs available that allow: 10% down with a first and second mortgage, only 3.5% down through FHA, and equity sharing programs that give borrowers 50% of the down payment in exchange for sharing appreciation at the time of resale.
Future appreciation significantly sweetens the attractiveness of owning verses renting. Although historically real estate appreciates 3% per year, the Bay Area has seen much higher rates of appreciation in the last few years. While there is no guarantee that property prices will appreciate at the same rate, long-term ownership will generally help soften the impact of the market’s volatility.
The Marin Luxury market ($3 million and above) had 40 SFH sold this quarter with a median price of $3,680,000. The highest priced home was the aforementioned Belvedere house for $47,500,000. The hottest areas for luxury homes this quarter were Belvedere and Tiburon, compared to Tiburon and Kentfield last year. During the third quarter last year, 41 SFH luxury homes were sold with a median price of $3,850,000, and the most expensive sold at $12,250,000.
Advice for Sellers: Try, try, try not to list your home for more than it may be worth in the market. Review the comps in your area with your agent and be realistic about the value, possibly even underpricing it against the closest matching comparable property. Believe me, if it’s worth more, the market will take it there! If your property has been on the market for a while, you must either be very patient and wait for that perfect buyer, or consider a price reduction. Consult with your agent about a strategy to move forward, and be open to making some changes based on feedback you’ve received to date. You do want to sell your home, don’t you?
Advice for Buyers: Don’t hesitate. There’s a window of opportunity in the market right now and we just don’t know that it’s going to get any better. Sure, you can wait around for prices to drop and the market to bottom out, but I’m not betting on it. Historically, Marin homes have always held their value. While there may be blips of price drops, they always seem to rise again. So, if you’re looking for a family home and plan to stay in your house for more than 5-7 years, chances are you’re going to be just fine. If you’re looking for an investment and a quick flip, timing may or may not be in your favor, depending on whether you’re in a dip or a spike. Like any short-term investment, there’s always a lot more risk involved.
Advice for those sitting on the sidelines: What are you waiting for? Call me today and let’s get you into escrow!
And don’t worry, I will gladly explain what escrow is all about!