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2015 Year in Review!

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It’s so like us Realtors to analyze the past year and try to predict the future. But, bear with us…it is what we do; we actually do try to make some sense of all the data and information we receive. And, although no one has a crystal ball, we can certainly learn from the past and site trends that might help us figure out the future. Before I get into a deeper analysis, let me break it down simply:

  • Inventory = low
  • Prices = high
  • Days on market = few
  • Economy = continues to chug along with intermittent good and bad news
  • Interest rates = slowly rising
  • Global buyers = for some properties, not all
  • Bidding wars = yes
  • Overpriced properties sitting on market = yes
  • Overpriced properties eventually getting sold at a reduced price = yes
  • Opportunities for 2016 = limitless!

It’s no secret the Marin Market (and most markets in the Bay Area) have been affected by low supply and heavy demand. But, in the real estate world, this has come to be our mantra…same old, same old. When have we not had low inventory and high demand in Marin – it’s almost a way of life. The fact is that Marin remains more affordable than San Francisco and most of the Peninsula, and it seems buyers are taking note, adding to the 60% of buyers who generally come from the local market. Long thought untouchable, SF buyers are realizing they can get more for their money here, better schools and the opportunity to live in paradise. While they may not be able to find fancy new construction, or even the perfect house, the bounty of Marin property is available to those with patience and vision.

Single Family Houses Sold in 2014 vs 2015

Marin is a hodgepodge of housing styles in varying levels of need for upgrades and improvements. I’ve always contended that most everyone “settles” in Marin to some extent. No matter at what price point, your dream home is always in the next higher price bracket. But, if you can understand that just getting into the Marin market is a feat unto itself, you’ll save yourself a lot of angst. Marinites tend to make their home – in whatever condition – their castle. Every shack can have double-paned windows, designer finishes, a Bosch dishwasher and crown molding… you just need to have the vision. However, if you’re like most buyers who require a turn-key property (I mean, who wouldn’t want to have everything done for you before you move in?), expect to pay top dollar and lose a few bidding wars.

Marin agents sold more than $3.7 billion dollars of residential real estate in Marin County throughout 2015. That, for a total of 2963 properties, fewer than in 2014, but at a higher price tag. 2254 of those homes were single family, and 705 condominiums. The median price in Marin County rose 8% to $947,000 from $875,000. Most of the activity happened in the first half of the year, tapering off July through December.

2015 was a year of acceptance. Acceptance of the idea that the economy will continue to go up and down, but that we must still go on with our day-to-day lives. Perhaps we don’t need to get so caught up in the short blips and look at the market from a more long-term perspective. It was a year of realizing it may be time to move on, time to upgrade to the larger house that provides some more room, or time to downsize to a living situation that is more manageable. Basically, 2015 was a time for homeowners and prospective home owners to say, “What am I waiting for?!”

This acceptance and acknowledgement has made it easier for people to consider getting their house ready for sale in 2016, or easier to bite the bullet and just buy a house, and not wait for the market to drop…because it might not drop. And, worse, it may continue to rise. But again, why wait, because it will probably do both. I’ll be blunt: if you sell high, you’re likely going to buy high. If you sell low, you’ll buy low. If you’re cashing out, you cash out. But, if you’re looking for a short-term profit, it’s definitely a gamble.

So, just deciding to buy or sell is not the end of your worries. A lot goes into buying these days: research, finding an effective agent who understands what it is you want/need, and being prepared to spring into action as soon as you see something you like. Conversely, sellers need to be realistic about price. Yes it’s a good market, but that doesn’t mean your house is worth $200,000 more than the market comps. Buyers are savvy; they look at the same comps that Realtors look at to determine price, and won’t pay more than a home is worth.

When you get to the point of securing a home to purchase, or securing a buyer for your home, there’s still more negotiating. 2015 could be called “the year of the deal.” Once in contract, buyers and sellers continued negotiations. Anecdotally, at least a third of our transactions involved some kind of seller concessions or “fixes” before the buyers would agree to move forward. The attitude of today’s buyer is, “Yes, we’ll pay a premium for your property, but it better be in good shape or we’re walking.”

The condominium market in Marin (which accounted for 24% of sales this past year) acted very similarly to the single family home market, but with more sales: 705 in 2015 vs 687 in 2014, with the median condo price in 2014 $495,000 vs $560,000 in 2015 (so a 13% increase). Condominiums are a growing segment of the Marin market as most new developments are trying to maximize housing options and provide greater options for affordable housing in Marin.

According to the Marin County Community Development Departments October 2015 presentation, “Preserving Housing Affordability” delivered to the Marin Association:

  • Our housing stock in Marin is just over 111,000 units countywide
  • About 30,0000 of those are in the form of apartments and multi-units
  • Approximately 2,000 are mobile homes
  • 83% of our housing is single family (about 7,000 units)
  • 96% of the housing is deemed market-rate housing
  • Sadly, 19 percent of households are low income and paying more than 50% of their income on housing. This includes approximately 20,000 persons that they listed as “disabled.”

Marin’s housing issues are not going away, and developers are looking for ways to provide more affordable units to house Marin’s growing service population, particularly as we look at the increase in commercial activity in the County.

There was nearly 12% increase in pricing for A-class commercial office space – an unusual amount of activity. In August Kaiser Foundation health purchased a 148,000 square foot office building in San Rafael. Several other office buildings in San Rafael and Novato were sold this past year. Rising rents in San Francisco has pushed companies to seek more friendly commercial rents in the North & East Bays. The vacancy rate is just 15.5%, down from 20% during the recession. There is good job growth in Marin, and confidence in the market. Rumors are circulating regarding Google in Fireman’s Fun (still unsubstantiated, but widely speculated) and the Facebook water ferry is in full operation, as well as other tech shuttle buses that are making the commute much easier for Marin residents. A strengthening national economy, steadfast growth in the tech sector and limited new construction are contributors to 2015 booming real estate performance.

Economy and interest rates:  Average mortgage rates actually decreased eight percent for the year, coming in at 3.85 percent, but we expect this to rise as indicated (but not directly affected) by the Feds’ raising of interest rates in December, for the first time since 2006. But since mortgage rates had been at a historic low, this rise should still be manageable for buyers, and rises in longer-term rates in 2016 are expected to be modest.

If you want more info on the rates, click on the image below to see the video:

Fun Facts:

  • The most expensive home sold in 2015 was for $47.5 million in Belvedere
  • The least expensive home was sold at auction for $252,843 (condo: $107,000)
  • There are currently 13 homes above $5 million in Marin on the market
  • 43 homes in the $2 million to $5 million range
  • 37 homes under $1,000,000

The year ahead will be an exciting one. It’s an election year. It’s a leap year. We have the Olympics in Rio and it’s the year of the monkey! The big news in real estate for 2016 according to the National Association of Realtors is that prices will mostly stabilize, rising slightly but not by the dramatic amounts we’ve seen in the recent past – maybe 4% or so nationally (about 6% for the state). Inventory will remain tight, so align yourself with a good real estate agent who will work to overcome that small market detail.

Note to Marin Agents: This is where I usually insert a paragraph for agents that provides a call to action and/or a wrap-up about why that particular agent would be a great choice as the end-reader’s Realtor. These reports are written each month for Vanguard agents specifically to send to their sphere of influence. They are meant to be conversational in tone and easy to understand – not too statistic heavy as we believe that most of our readers are looking for more of an analysis and straight-talk on what’s going on in the Marin real estate market. They don’t want to have to do the analysis themselves. Putting it in easy-to-read language helps them follow along with what’s truly going on in the Marin real estate marketplace. All agents are given a custom masthead and can tweak the verbiage however they like, or just use as is. Just one more tool we provide, in addition to a free RealScout account, free DocuSign account, free photography and the use of our in-house marketing department for custom marketing and branding materials, to name a few.  If you are looking to increase your business and are willing to break out of your comfort zone to do it, I invite you to call or email me for an appointment today. We are active participants in this real estate market, and do not wait for things to happen. We make them happen!

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