In Mill Valley the Luxury Market Takes Off
In our summer newsletter we wrote about how the market was shifting from a buyer’s market to a seller’s market…at least in Northern Marin where affordability was the key driver. In the Southern Marin luxury market it was still largely a buyer’s market, but we thought that for highly desirable areas like Mill Valley we would see the market stabilize and move towards a seller’s market by the end of the year. In this edition we’ll take a look at 2009 and see where market is this fall and weigh in on what the considerations would be if you were considering buying or selling a home in Mill Valley.
The Basics of Economics: Supply & Demand
With the exception of December the median price of a home being sold in Mill Valley in 2008 was almost $1.4m. The median price in 2009 is $992K thus far. Wow! That’s a ½ million dollar drop off in home sale value in one year. In the first quarter of 2009 we also saw a huge drop off in supply as people took their homes off the market and those considering selling held off. In Mill Valley there were nearly 200 homes on the market in September 2008 and by January 2009 is was down to only 125. In conjunction with the rapid withdrawal of supply was a corresponding withdrawal in demand in the first quarter of the year as evidenced by the dramatic fall off in homes going into contract.
Let’s face it, though, Mill Valley is a great place to live and with average selling prices down below $1m for the first time in many, many years you could expect that buyers who could *would* swoop in to make the deal of a lifetime. And they did. From March to June a lot happened: The average selling price jumped up above $1m, inventory flooded back on to the market and deal volume jumped dramatically. As the best-of-the-best properties were sold it was not surprising to see the deal volume subside along with the traditional “summer swoon”.
Was the Spring 2009 a Blip or a Trend?
In terms of unit volume supply and sales, we are clearly seeing a stabilizing market as evidenced by the trend lines moving from summer to fall. One way to measure if the market favors buyers or sellers is to look at the ratio of properties for sale vs. those being sold. At the height of the buying market in 2007 the ratio was about 18%-20% meaning that nearly 20% of the available supply was being sold. That’s a healthy chunk of the available market and was clearly a seller’s market then. Looking back at the 2008 it’s hard to fathom that the ratio in May was a strong 18% and by November it was an unheard of 5%! That’s a 2/3 drop-off in 6 months. 2009 did not start much better and we began the year much like 2008 ended with an anemic 7%. In fact by the end of winter it sunk even lower to 6%.
As we pointed out when looking at the unit volume figures the sales activity quickened dramatically from March to May and we saw a jump to a healthy 14%. What leads us to believe that the buyer’s market is very likely behind us now is that the subsequent ratio has stabilized and in fact if you look at the rate of change in the last couple of months it is increasing and leading the market toward a stronger seller’s market.
What to Do Now?
If you are considering buying, it’s safe to say the days of finding a move-in quality, high end home at a bargain price are now largely behind us. There are still good opportunities out there, but it’s likely that a buyer’s leverage is ebbing as we look to the spring of 2010 when demand traditionally picks up. Sellers now have a better market to operate in, but a key component of being successful is smart pricing. As mentioned earlier, in 2008 the average price was $1.4 and is now closer to $1m. Thinking that your 2008 value will stand up in the market today is not a good strategy. Your home will linger on the market and loose appeal if overpriced. As of September there was a 2 year record of 211 properties on the market. So while the desperation that many felt in the earlier part of the year is behind us, the buyer has a lot of choice and will choose the best combination of quality AND price. Be smart and price to get interest and action.
Sharon Kramlich
Top Producer
Pacific Union Real Estate Estates Division
415-609-4473
skramlich@pacunion.com
www.sharonkramlich.com
No comments:
Post a Comment