Welcome to my October 2016 Marin County Real Estate Market Update! With the first three quarters of the year behind us, we can look back at our market’s performance as compared to last year at the same time. September, typically the beginning of the second busiest time of the year for our real estate market in Marin County, has been slower than expected in terms of new listings and sales. Read on to find out what is happening.
HOW TO READ THIS REPORT: Read the section below for the main market highlights and my market analysis. If you are interested in drilling down further, make yourself comfortable, grab a cup of coffee or a glass of wine, and scroll down to The Big Picture and an In-depth Study of our Market including an analysis by individual community and price-point.
OCTOBER 2016 MARIN COUNTY REAL ESTATE MARKET UPDATE
Monthly figures below show a drop in all metrics with the exception of the number of available properties and the percentage of homes in contract from the previous month.
Why more homes available for sale? Despite a brisk start, the month of September did not see as large a crop of new listings as anticipated. On the contrary, instead of the typical seasonal increase of new listings in September after the slower summer months, we saw a decrease in new listings from August to September of 13 percent and a decrease in the number of sales. As I mentioned it in my September 2016 and August 2016 Marin County Real Estate Market Update at even more length, it appears that the market is stabilizing and we are definitely seeing a plateau, especially in the high end market segment (above $2 million).
Let’s take a look at the major highlights for Single Family Homes in September, paying close attention to the year over year comparisons.
- The average number of active listings increased slightly in September to 370 from 350 in August, but was 7 percent lower than September 2015’s number of 398.
- The number of new listings dipped for the fourth month in a row from 225 in June to 220 in July, 200 in August and 174 in September, 33 percent lower than in September 2015. This year’s highest number of new listings was 294 in March. In comparison, in 2015 the number of new listings increased from 209 in August to 260 in September.
- The number of sold properties decreased to 139 in September from 174 in August, and was 23 percent lower than in September 2015. This year we have seen an overall drop in the number of sales as the market activity cools: the number of sales from January through September of 2016 is down 15% from the same period last year.
- The number of pended properties (or properties in contract)–the most accurate indicator of how the market is performing right now–jumped to 218 in September from 153 in August, and was 12 percent higher than in September 2015.
- The percentage of homes in contract increased to 37 percent.
- The average sales price decreased to $1,380,000 from $1,480,000 in August, and was 7 percent lower than in September 2015. Yet prices are well past the previous peak Median Sale Price of $1.2 million for Single Family Homes. It is important to note that average and median prices are trending a little lower this years because the high end luxury market is experiencing reduced activity: in the first three quarters of 2016 there was a 10% drop in home sales over $5 million and a 60% drop in homes sold over $10 million compared with the same period last year, which was a record year for home sales over $10 million.
- The median sales price remained essentially flat, just decreasing $2,000 from $1,200,000 in August to $1,188,000 in September. But it was up year over year.
- The months supply of inventory (based on pended properties) dropped to 1.7 months from 2 months in August and decreased 23 percent compared to 2.2 months in September 2015. Marin County Single Family Home inventory was up slightly in Q3 compared with the previous year and with the previous quarter, however, historically inventory is down considerably. From 2006 to 2011, inventory levels dropped nearly 70%, and have remained at this lower level since 2012 with the first quarter of 2016 at the lowest level in 10 years.
- While 63% of US major metro areas had decreasing affordability, Marin was one of the 37% that improved compared with the previous year, according to ATTOM Data Solutions Affordability Index. The index is based on the average wage data and median home payments which factors in mortgage interest rates. This is a function of wage increases, low mortgage interest rates and slowing price appreciation.
Why does the inventory of homes for sale continue to be so constrained? Sellers remain skittish about putting their homes on the market for multiple reasons. I had written an article about the 10 Reasons for Low Housing Inventory in Marin County back in 2015 and all the factors I mentioned in my article then are still at play today. Long-time homeowners are not moving because they are enjoying a low rate on their current mortgage, low property taxes and do not want to pay capital gains taxes. They are wondering where they can afford to move. Could they qualify for a mortgage today? Will they be able to find a desirable and reasonably priced home once they sell, and will they be able to compete with all cash or non-contingent offers. Continue reading for further analysis of this phenomenon in the Big Picture below. As the inventory of homes for sale has gotten increasingly more limited, we have even more of a self perpetuating situation, with lower inventory begetting increasingly lower inventory, and further reducing the move-up or down-size opportunities.
Despite the decreased level of inventory, the number of properties that went in contract jumped from the previous month, and was also higher year over year, a testimony to the fact that demand remains high.
A word of caution to sellers however: despite inventory being low, buyers have become increasingly picky about price this year. If the price isn’t right, they won’t make an offer. Some sellers haven’t fully embraced this yet, but it’s very real. Even with inventory levels at their lowest levels in 10 years, buyers are being cautious: as our average sales price has climbed to 13 percent over the peak level of 2007 in Marin County, buyers want to avoid overpaying as they did a decade ago. Keep in mind also that today’s buyer is much more informed about prices and values thanks to all the information available at their fingertip on line on sites such as Zillow, Redfin, Realtor.com, etc…
In addition to price, buyers are exhibiting an increased sensitivity to adverse location and properties who are not in pristine condition. I am also finding that presentation is more and more important as well: as Pinterest, home decorating blogs and HGTV shows are increasingly popular, buyers are becoming more finicky and expecting the latest designs when shopping for a home, including Pinterest-worthy design: white marble counter tops, farmhouse tables, and, of course, the iconic use of ship-lap. Fixer Upper is the number one cable show in its time slot among viewers aged 25 to 54 and Joanna Gaines has become the younger, sexier Martha Stewart of our time.
What’s a seller, or buyer to do? That being said, because demand remains high–especially in the lower and mid-range price–there are great opportunities for both buyers and sellers even as they face the real challenges resulting from low inventory. If you are thinking of selling, there are creative ways to help you transition to your new home without having to write an offer contingent on the sale of your property such as using bridge loans, home equity loans, or other lines of credit and/or negotiating a rent back so that you can stay in your property after close of escrow. Worried about having to pay much higher property taxes, if you are over 55, you can transfer your existing property tax thanks to Propositions 60/90. If you are thinking of buying, you can still take advantage of historically low interest rates and win in multiple offers by offering sellers attractive terms beyond price. The market has cooled off, and is less competitive than in 2015, and even last spring. Sales prices have leveled off as well. I would be happy to discuss the best options available to you whether you are a seller or buyer, or both.
THE BIG PICTURE
What is driving our market? Where are interest rates and where are they heading? The elections? How is the San Francico Bay Area market, and how does it compare to our Marin market?
1. Consumer Confidence/Interest Rates
- Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession. The Index now stands at 104.1 (1985=100), up from 101.8 in August.
- Despite the increased consumer confidence, I am seeing a lot uncertainty, and several sellers have told me that they want to wait until after the November 8 presidential elections to sell. Buyers are equally fidgety. Brexit’s bad aftertaste is still very fresh in the mind of many people.
- The Fed held off again on hiking interest rates. See you in December, after the elections? In the meantime, rates remain at historically low levels, in the 3’s and are FLAT compared to last week, UP compared to last month and DOWN compared to one year ago.
Rate Trend – RPM Mortgage – October 21, 2016
30-Year Fixed Conforming: 3.625%
30-Year Fixed Conf-Jumbo: 3.750%
30-Year Fixed Jumbo: 3.625%
7/1 ARM Jumbo: 3.125%
FHA 30-Year Fixed: 3.500%
(All pricing above at 0 points. For reference and for real estate professionals only. Your actual rate, payment and costs could be higher. Get an official loan estimate before choosing a loan.)
2. National, California and San Francisco Bay Area Market Trends
- Existing-home sales rose 3.2% to a seasonally adjusted annual rate of 5.47 million homes sold in September, according to the National Association of Realtors (NAR). That’s 0.6% higher than the same time last year.
- The Northeast led all regions posting a 5.7% increase in existing-home sales. In the West, existing-home sales spiked 5%, as prices soared 8%.
- September marked the highest level of first-time home buyer activity in more than four years at 34 percent of existing home sales, according to NAR. This is great news because first-time buyers help existing homeowners move-up. The housing cycle — the health of the housing market — depends on new buyers entering the market at a steady clip.
- “The market fundamentals — primarily consistent job gains and affordable mortgage rates — are there for the steady rise in first-timers needed to finally reverse the decline in the home-ownership rate,” said Lawrence Yun, chief economist, NAR.
- In her 2017 California Housing Market Forecast, Leslie Appleton Young, Chief Economist of the California Association of Realtors reported that the median price of single family homes was $526,580 in August, the highest since 2007 when it peaked in May at $597,580. The bottom was reached in February 2009 when it fell to $245,230.
- She predicts that, following a dip in home sales in 2016, California’s housing market will post a nominal increase in 2017, as supply shortages and affordability constraints hamper market activity.
- We are witnessing two distinct trends with the high-end market slowing compared to last year, while the low and moderate market is experiencing continued unabated demand.
- Millennials are leaving the nest as job opportunities expand.
- The percentage of first time buyers in California is lower than the national average and, at 29.5 percent, remains below the long-run average since 2005 of 38 percent.
- Listings and new units remain low.
- Affordability remains a challenge for first time and repeat buyers.
- Baby boomers aren’t moving.
- Fewer housing units are being turned over since the Great Recession of 2007, and the number of years home owners stay in their home before selling has increased to 10 in 2015 and 2016 from a low of five years in 2008 and 2009.
- Many homeowners are opting to remodel their home rather than move up.
San Francisco Bay Area:
California’s tightest inventory has been in the San Francisco Bay Area during our market recovery, with supply most constrained in the more affordable price range. No wonder: as the US economic and job growth are expanding, the San Francisco Bay Area economy has been out-performing the nation’s, with Silicon Valley leading in job growth in California. This has been the driver in the whopping demand for homes in San Francisco, as most Millenials who work in Silicon Valley want to live in San Francisco. As a result, the imbalance between demand and supply shortages has dramatically reduced affordability.
However, with a new wave of more affordable homes coming on the market, supply constraints seem to ebb. The San Francisco Chronicle reported in a recent article that “the number of properties listed for under a million dollars in the city is the highest right now since the fourth quarter of 2012.” There is also a glut of brand new luxury condominiums.
This increase in supply has resulted in less hectic market conditions these past few months and helped ease the crunch somewhat this summer in San Francisco.
I believe affordability remains the main issue. CAR President Pat Zicarelli is predicting that “[t]he San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.”
While you may not think of Marin County as affordable, it is relatively more affordable than San Francisco and attracting first time home buyers looking for better values. Case in point: while hosting an open house for a two bedroom two bath home priced at $939,000 yesterday in Sausalito (see photo above), I met several young couples from the city. Typically young families who move to Marin from San Francisco have (or are about to have) young children and are attracted by our award winning schools. However, these young couples did not have children; they told me they were attracted by the better value Marin offers: more space and more amenities than they can buy for the same price in San Francisco.
MARIN COUNTY REAL ESTATE MARKET INTELLIGENCE – SEPTEMBER 2016 DATA IN DETAIL
Average Active and Sold Price
Number Active and Sold
Inventory in Marin County tightened again in September for a three-month downward trend since June, with 347 single family Homes for Sale, compared to 367 in August. The Number of Homes Sold in September also decreased, from 174 in August to 139. Single family home sales in September remain significantly lower compared to the same month last year, by 65 units.
Homes in Contract by Area
Corte Madera led Marin County in September for the highest percentage of single family Homes in Contract at 62%, followed by Greenbrae (60%) and Novato (49%). San Rafael and West Marin both saw increases of single family Homes in Contract, while Belvedere, Tiburon, Sausalito, Kentfield and Ross saw slight decreases. Larkspur had the greatest increase, at 40%, up from 25% in August.
Home Sales in Marin
Novato, San Rafael and Mill Valley continue to see the highest Number of Homes Sold at 35, 26 and 23, respectively, though Novato and San Rafael are under August levels. Average Days On Market ranged from a rapid 24 in Corte Madera, to 93 in Belvedere.
If you are thinking of buying or selling now or next spring, feel free to contact me today. It is never too early to start preparing to sell your home and I am always happy to sit down with you and provide you with advice on the best improvements to make on your home for the best returns. Contact me at 415-505-4789 or Sylvie@YourPieceOfMarin.com.
Please note: Unless otherwise indicated, charts were prepared by the Decker Bullock Sotheby’s International Realty marketing department. All reports presented by Sylvie Zolezzi are based on data supplied by TrendGraphix and BAREIS MLS. Neither the Marin Association of Realtors nor its MLS guarantees or is in anyway responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activities in the market. Information deemed reliable but not guaranteed.
About the Author: The article October 2016 Marin County Real Estate Market Update was written by Sylvie Zolezzi. I am an award winning, top producing Realtor specializing in luxury residential real estate in beautiful Marin County, just north of the Golden Gate Bridge.
I offer a wide range of innovative and comprehensive real estate solutions for buyers, sellers and investors, attracting clients who demand excellence—in marketing, negotiations, market intelligence—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 empowers me to leverage the unique combination of Sotheby’s global resources, Decker Bullock Sotheby’s International Realty’s growing market share and local knowledge with my unmatched social media networks to provide highly personalized service and unmatched exposure to my clients’ properties locally and worldwide.
I would welcome the opportunity to work with you. I can be reached via email at Sylvie@YourPieceOfMarin.com or by phone/text at 415.505.4789.