Sales are up: According to the National Association of Realtors, 5.48 million homes sold in August on a seasonally-adjusted, annualized basis — a two percent increase from July and a 13 percent improvement from August 2012.
Existing Home Sales have reached their highest point since February 2007, a statistic which confirms this year’s recovery. This double digit increase is even more impressive when we consider that there are very few homes for sale nationwide relative to recent years. The national inventory of homes remains scarce with just 2.25 million homes for sale. This is 6 percent fewer homes than last year. At the current pace of home resales, those 2.25 million homes would sell in 4.9 months. Generally, a market with a home supply of less than 6 months is considered a seller’s market.
Luxury market greatly improved: Dan Green, a nationally respected mortgage broker and prolific blogger, reports in a recent post about Jumbo Loans and the Luxury Market that, as compared to one year ago, sales of million-dollar homes are up 33 percent. In addition, sales of homes in the $750,000-$1,000,000 range are up 39 percent. These gains are a function of the market having more “move-up” buyers, which is a chain reaction borne from a rush of first-time buyers from 2009-2011.
Another big plus for the luxury housing market, says Dan, is that jumbo mortgages are exceedingly affordable today as compared with conventional mortgages. During some periods in August, jumbo mortgage rates were lower than their comparable conventional counterparts.
What is a “jumbo” loan today? For homeowners in “high-cost areas” which include most of California, for example, Fannie Mae and Freddie Mac will allow conventional loan sizes of up to $625,500. Jumbo loans are loans that exceed $625,500 and are typically reserved for borrowers with high credit scores, a downpayment of 10% or more, and verifiable income via tax returns.
Values: The housing market bottomed in October 2011. Since then, home values have made slow, steady gains in many U.S. market and have surged in certain areas, including the Bay Area. Values have made especially strong gains in the luxury market.
But most analysts agree that the bump in mortgage interest rates in recent months–one percent since May when Fed Chairman Bernanked announced that the Federal Reserve may begin tapering its bond-buying program later this month–may be slowing those gains a bit and could lead to a more balanced market. (Click here to read my recent blog post about “What’s Ahead For Mortgage Rates After Bernanke’s Announcement dated September 23, 2013.) However, there are still enough economic reasons for prices to remain firm for now. There’s still a significant shortage of homes on the market in most areas, and despite the recent increase, rates remain near historically low levels. Moreover, prices in much of the country are still well below their previous peaks.
In the Bay Area, the median price for new and existing homes sold last month rose 31.7 percent from a year ago to $540,000, according to DataQuick, the La Jolla-based real estate information firm. However, the median did decline 3.9 percent from July’s level. A seasonal decline from July to August is normal, the firm noted. In its report, DataQuick suggested the Bay Area is moving back to a balanced market after being a strong seller’s market. “As the market pendulum swings back toward normal, trends will be affected by more mundane market factors such as interest rates, employment, economic growth, affordability, mortgage availability, and how fast demand is generated and met,” said John Walsh, DataQuick president.
Significant Recovery in the Mid to Low Price Points
The Marin market is still moving towards recovery. The Average Sale Price at $1,265,000 now exceeds the Peak 2007 Average Sale Price of $1,220,000 by 4%. However, the Price Per Square Foot, which is a better representation of value, is down from $601/sf to $537/sf, 11% off the Peak 2007 value. This indicates that Buyers are purchasing more expensive homes, but they are also getting larger homes for the price. The number of Active homes has decreased over 18% from August of last year, and shows that there are inventory constraints which are supporting higher pricing at the lower end of the market. Currently, the number of Active homes is nearly 60% less than during the peak period, when the monthly average number of Active homes was 1,017.
Luxury Market Awaiting Positive Trends
There were fewer homes sold over $5 million this month than last, 2 in August compared with 4 for July. August included one sale over $10,000,000, which was a Kentfield home listed at $14,500,000 and closed at $10,775,000, a List-to-Sale Price difference of 26%. The second highest sale was a Tiburon home listed at $7,495,000 that closed at $7,300,000, a 3% differential. The market over $5 million has a high level of inventory and is not yet experiencing the activity that we see in the East Coast, Florida and Southern California. Marin typically is slowest to follow the trends. As of the end of August, we had 49 homes over $5 million for sale with 2 closings, which equates to over 2 years of inventory if we continued with this level of sales.
Local Variations in Each Community
The Homes Sales by Area chart shows the range of sales for each locale. On a monthly basis the fluctuations, particularly in the communities with the highest price points, can be dramatic due to the small number of sales. Some towns have maximum pricing that more than doubles, while others can change downward by up to 50%. This chart, while illustrative of the general price point in an area for each month, is not indicative of the overall value which should be determined on an annual basis.
Market Activity in Central Marin on the Highway 101 CorridorThe southern part of
Central Marin is the most active market. In Corte Madera, 71% of all Active homes (including actives, contingent and pending homes) were in contract. Larkspur followed with 64%. San Rafael, Fairfax and Greenbrae all hovered around 50%. The fewest homes in contract were in Belvedere at 14% and Tiburon at 20%, due to the limited number of buyers in the highest price points.
Number for Sale and Sold
The seasonal trending is apparent in the graph of Single Family Homes in Marin for August. The number For Sale is showing a declining figure, approximately 11% less than last month, and 19% less than the same month last year. The number Sold was nearly 10% less than last month, and 7% less than last year. A comparison of the Marin market’s performance in the past three months (June to August 2013) with the same quarter in 2012 reveals a decline in homes For Sale of almost 19% and a modest 4% increase in the number of homes Sold.
Significant Pricing Improvements in the Mid-Market
There has been a slight but consistent upward trend in the Average Sales Price of homes over the last 12 months. The Average Sold Price is up nearly 25% from the same quarter last year, but only 1.2% from last month. Most of the increase took place during the months of February through May. The Average Active Price shows more fluctuation and a few larger homes account for some of the changes in the trend line. The Average Active Price is up 10% since the same quarter last year.
After the lull of the summer, the market has picked up again, but there are fewer multiple offers and it appears to be more balanced. Stay tuned for my September report coming soon.
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About the Author: The above Real Estate information on Marin County Real Estate was provided by Sylvie Zolezzi. I can be reached via email at Sylvie@YourPieceOfMarin.com or by phone/text at 415.505.4789. I am an award winning Realtor specializing in luxury residential real estate in beautiful Marin County, just north of the Golden Gate Bridge.
I offer a wide range of real estate solutions for buyers, sellers and investors, attracting clients who demand excellence—in marketing, negotiations, market knowledge—and a genuine concern for their needs. My association with Decker Bullock Sotheby’s International Realty allows me to provide a high-end luxury experience to all my clients at every single price point. It also enables me to leverage our unique combination of local knowledge and global resources, providing highly personalized service and unmatched exposure to my clients’ properties locally and worldwide.
I view it as a great privilege to be of assistance to people at very important stages of their lives—whether they are newlywed, starting a family, relocating, retiring, divorcing or mourning a loved one—because I view my job as much more than facilitating the sale or purchase of a property, but rather as helping them find their new sanctuary or part with the home where they have raised their children and created so many memories. In addition, I am always excited to help my clients discover Marin County, our stunning sceneries and unmatched lifestyle and find the right home in one of our charming towns: Sausalito, Tiburon, Belvedere, Mill Valley, Corte Madera, Larkspur, Greenbrae, Kentfield, Ross, San Anselmo, San Rafael, Fairfax, and Novato.