Beautiful pink dogwood in bloom last week in San Anselmo
Welcome to my April 2017 Marin County Real Estate Market Report! I love this time of year in Marin: the birds are singing, the trees are blooming and with the beautiful days of spring, our real estate market is coming alive. Sellers are finally putting their homes up for sale now that the weather is more clement and their gardens look their absolute best. Anxious buyers hope to find and move into their next residence before the summer, in order to ensure their children get in the right school for the following year.
Despite intermittent rains we have enjoyed a healthy level of activity in March. We’ve finally had more new listings come on the market after the storms subsided. Open houses have been very busy, and the newly listed properties are being snatched up very fast. However, despite a jump in the number of new listings in March, inventory remains limited. Supply constraints are driving prices higher, creating a heightened sense of buyer urgency, especially in the lower end of our market–under $1 million. It’s not uncommon to see Marin homes receive multiple offers and sell for 5-10% over the list price.
All indicators point to the fact that we are in a strong seller’s market, with increasing prices, lower days on market and a tight inventory. Yet, as buyers are more and more market savvy, and aware of values, sellers have to ensure they list their properties in alignment with buyers’ values and prices. We saw the market soften in 2016 as compared to 2015, with fewer multiple offers. As a result, as the difference between the average list price and the average sales price is narrowing, it appears that sellers are more in tune with the market than they were last year, when they were still thinking it was 2015. Yet, when their homes show well, are well priced and are well marketed and advertised, they are typically rewarded with very strong offers.
The reality of this market is that Marin buyers have to move fast, and be prepared to step up sometimes significantly over the asking price to get in contract as they compete with all cash offers, no contingency offers or just crazy high offers. While it can be extremely frustrating, with the right guidance and willingness to step up, it is possible to nab your dream home. I just helped a San Francisco family to successfully compete with an all cash offer and secure a Mill Valley property in a premium location (see below). Had they not stepped up, they might have had to pay even more for another comparable property in Mill Valley as the sale price of their new home is now the new “comp” for the neighborhood. I also just helped another family earlier this week write the winning offer and get in contract on an attractive Novato property in a competitive bidding situation.
My advice to aspiring homeowners: seek a pre-approval from a local, respected lender, know what your budget and limits are, begin discussions early on about your housing wants and needs with a Realtor who knows how to navigate this market. Most buyers are looking for the same amenities, and if you find a great home in a desirable neighborhood, there will undoubtedly be many other buyers who spot it as well, and you will have to move fast.
The reward for stepping up? As Carole Rodoni, a highly respected Bay Area economist, recently shared at a conference here in Marin, she is absolutely convinced that real estate as an investment can do you no wrong. Marin County property values continue to go up in the long term, albeit with some minor ups and downs, as clearly illustrated by the chart below. Your holding costs are reduced by the tax deduction on your mortgage interest, property tax deduction, and the depreciation if it is an investment property. Finally, when you sell, the appreciation is considered long-term capital gain, which you can avoid up to a certain level (read my article here about Six Ways to Minimize Your Capital Gains Tax) and enjoys a discounted tax rate. She feels strongly that stocks cannot match that. Oh, and also, you get to live in your investment!
1. MARIN COUNTY MARKET HIGHLIGHTS AND ANALYSIS
Here are the main highlights:
- The average number of active listings increased in March compared to February, and was a little higher than in March 2016.
- The number of new listings increased as well compared to February, but was significantly lower than in March 2016.
- The number of sold properties shot up from February’s low number of 77 to 123–an expected seasonal increase–, and remained just below last year’s sales for March. The silver lining for the low number of sales in February and March is that it gave a small boost to the level of inventory which was higher in March than last year despite a lower number of new listings year over year.
- The number of pended properties (or properties in contract)–the most accurate indicator of how the market is performing right now–jumped from 114 in February to 212 in March, or almost exactly to the same level as last March. It will be interesting to keep track of the number of new listings, because if it continues to trend below last year’s levels while the number of sales and pended properties remain at the same level, we are going to suffer from an increased scarcity of inventory.
- The average active (or list) price decreased from $2,779,000 in February to $2,599,000 in March, while both the average sales price and median sales increased month over month. As I mentioned it earlier, when the active price trends down and the sales price trends upwards, and the gap narrows, it is a sign that the market is more balanced, that sellers are more in touch with the reality of today’s market. In 2016, sellers were expecting to sell their properties at the very high 2015 levels, and it appears that this year that they are more in line with buyer’s values.
- The months’ supply of inventory (based on pended properties) decreased compared to February’s number and increased a tad compared to March 2016’s number. At 1.4, this number is another strong sign that we remain in a seller’s market. The months’ supply of inventory (reflecting the market’s absorption rate) indicates how long it would take for the market to absorb current inventory if no new listings came on the market. As a rule of thumb, an inventory level of less than three indicates a strong seller market while an inventory level greater than six indicates a buyer’s market.
2. THE BIG PICTURE
While it is important to remember that real estate values are hyper local in nature, and that they move up and down with the local supply and demand for similar types of housing, they are also influenced by national and regional factors.
The National and San Francisco Bay Area Markets
It appears that the entire country, not just Marin and the San Francisco Bay Area, is suffering from a shortage of inventory of homes for sale. Lawrence Yun, the National Association of Realtors’ chief economist, said at the end of March that the number of sales retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. Now is a good time to sell, and until an increase in the number of listings actually occurs, home prices will continue to move hastily.
The Bay Area is experiencing some of the quickest pace of sales in the U.S: homes in Santa Clara County found a buyer in an average of 21 days, the shortest days on market in the country, with San Mateo a close second with 23 days, followed by Alamada (24 days) and San Francisco (25 days). Wow!
Economic Market Overview
“After six consecutive monthly gains, the U.S. Leading Economic Indicator (LEI) is at its highest level in over a decade. Widespread gains across a majority of the leading indicators point to an improving economic outlook for 2017, although GDP growth is likely to remain moderate,” according to Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “Only housing permits contributed negatively to the LEI in February, reversing gains over the previous two months.”
Meanwhile, the Conference Board Consumer Confidence Index®, which had increased in February, also improved sharply in March to its highest level since December 2000. The Index now stands at 125.6 (1985=100), up from 116.1 in February.
For now, the high consumer confidence index, and improved job and income prospects should prove excellent for our real estate market, as well as the very healthy stock market, especially for the high end of our Marin market. The Dow Jones Industrial Average has been trending over 20,000 in the first quarter.
The in-fighting in Washington and resulting challenges for the administration to reach its ambitious goals, combined with the tensions with North Korea may dampen consumers’ enthusiasm down the road; stay tuned to see what happens next.
Meanwhile, mortgage rates are now at the best levels of the year and remain just above historic lows. Conforming rates for a thirty year fixed are at about 4.00 percent, and conforming high balance rates are a tad higher at 4.125 percent, down compared to a week ago, up compared to one year ago.
TheMortgageReports.com reported this week that, in an unexpected rally earlier this week, mortgage rates fell below the important 4% barrier to a five month low. Most experts were predicting several interest rate hikes this year, so why are they trending down?
Well, the honeymoon appears to be over, as I hinted earlier. That’s what investors are saying, anyway, denoting their curbed enthusiasm about the new administration. In late 2016, the election pushed up mortgage rates to multi-year highs. Investors built in massive economic growth before it actually happened, and economic growth causes interest rates to go up. Now, tax reforms and infrastructure plans have failed to materialize.
Add that to the fact that world conflict is heating up, and you have a recipe for falling rates.
3. MARIN MARKET STATISTICS AND COMMENTARY
Percentage of Single Family Homes in Contract by Area
Number of Single Family Homes Sold
Single Family Home Sales by Area
Average Price Sold
Sales by Price Point
About the Author: The article April 2017 Marin County Real Estate Market Update was written by Sylvie Zolezzi. I live in Marin, work in Marin and LOVE Marin!!! 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 Golden Gate 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, Golden Gate 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.