Signs of Stability

How do we know when the market has hit bottom? We really don't until the low point has come and gone. But one of the key indicators that we are reaching stability is when the number of transactions starts to increase. We are seeing this in Marin's more affordable home property markets (San Rafael, San Anselmo, Novato). Month to month figures for units sold (say Oct '09 vs Sept '09) confirms a trend toward stability in these areas. Hard to believe, but we are seeing multiple offers, over asking price. Novato, under $500K is positively on fire, a real Seller's market. Some of our more exclusive home property towns (Ross, Sausalito) are also showing new signs of stabililty, though the number of transactions remains small and most experts still expect a bumpy ride ahead for the high end ($1.5MM+). Low interest rates for conforming mortgages and first time Buyer tax credits are in part responsible for these improving results. I expect an active 4th quarter as Buyers continue to capitalize on these conditions. See 3rd quarter stats on my Stats page.

How Trousers Explain Buyers of Marin Home Properties

We all have them from time to time, the “ah-ha” moment. Mine came to me in Banana Republic, on my way to run an errand. Now, I absolutely hate shopping; I just don’t find it amusing. I have to make my way through racks and racks of disheveled clothing in the hope of finding one decent thing. It’s frustrating, boring and more importantly time-wasting. But just to see how drastically the major stores were reducing their inventory, I walked through Banana Republic, where they were advertising “up to 70% off”. “Sure, I thought to myself—I’ll bet it's all junk”. I started in on the rack of trousers—“nope, nope, nope, hold on . . . . Wow!” A pair of wool pants, classically cut, nice subtle pattern, great fit. Originally $98.00, now marked down to an unbelievable, $13.99. This was truly a bargain. Sold!

How does this experience explain the market for Marin home properties? It is exactly this same "Wow" experience that Buyers need to have in order to make a home property purchase decision in this market. Properties simply have to represent excellent value for money, and arguably the very best on the “rack” of property choices. The property has to evoke an immediate “Wow” reaction. And then the facts show, the home will sell. As recently as last week, just such a home sold in the Dominican, priced at $699,000, it had 4 offers on it, with 3 more waiting in the wings.

Down But Not Out: Don’t Let the Headlines Put You on the Sidelines

The numbers tell only a small part of the story. Moderate weakness through Q3 ’08, then significant decline in Q4’ 08 as credit and underlying confidence evaporated (see additional statistics at my website). It takes some getting used to, the thought that indeed our properties are part of markets that can decline as well as appreciate. If you don’t have strong motivations for moving, stay put, enjoy your home and your family. If you must sell (job transfer, health, lifestyle) your well prepared home can still sell well given the reduced inventory we are experiencing. For many others, this market adjustment can spell opportunity. Opportunity to buy a home (now more affordable) for the first time, opportunity to trade up more easily than 2 years ago (a 10% across the board decline means a lot less dollars on a $1MM home than on a $500K home), opportunity to diversify your investments (including your IRA investments) to include real estate, opportunity to help your children buy and stay in Marin. There are great opportunities out there: a bank owned property for $650K in a neighborhood that was at $900K; a motivated seller who wants to downsize for health reasons. Use this market to your advantage.