Is Marin a Buyer’s Market or a Seller’s Market? Surprise! It’s Both!

For what seems like a long time now, it has felt like we have been in a firm buyer’s market here in Marin. That has and continues to be the case for a lot of the county, but not all of it. If you look at the most recent data, the northern end of the county is in a full fledged housing boom, while the southern end is still an emerging market. To understand what is happening here you need to know what defines a “buyer” versus a “seller” market. The real estate industry’s measure of a seller’s market is when the percentage of available housing inventory is above 35%. Conversely when 25% or less of available inventory is in contract it is a buyer’s market. The range between 25% and 35% is considered a normal market. Now lets see how these figures play out in the various real estate markets across Marin….

Affordability Rules!
The credit market is now considered ‘back to normal’ by most economist’s standards and with low interest rates for conforming loans (that is the key) the past couple of months have been a great time to buy less expensive and/or foreclosed homes. In fact over the last 90 days we are seeing price stabilization in properties up to $700K This is bearing out in the northern end of the county dramatically with more affordable communities like Novato swinging into a strong seller’s market, where the median price of a single family home has jumped from a low of $492K with 9.3 months of inventory in February to $612K and only 2.6 months of available inventory in June. Other more affordable communities like San Anselmo, Corte Madera, San Rafael, Fairfax and Greenbrae are quickly trending in the same direction. The key is that in many of these communities it is very possible to purchase a home with a conforming sub-$729K loan with reasonable interest rates and less stringent loan criteria.
The Luxury Markets and Jumbo Loans
Remember when it seemed that listings in exclusive communities like Ross, Belvedere and Kentfield would sell even before they hit the market…and at a premium!?! Those days are long gone as evidenced by high inventory levels and the percentage of homes in contract at an anemic 10%. To understand why this is happening I’ll quote Pacific Union’s CEO Avram Goldman who had this observation about the higher end of the market;

“There are still challenges in the million dollar plus price range. Inventories are building and days on market are increasing. The million dollar plus market is hampered by lenders’ apprehensions over value. The lending industry feels prices will continue to drop and are requiring larger down payments, solid gold borrowers and, in some cases more than one appraisal. They are also concerned about the potential inventory that will be created when lenders begin to foreclose on homes whose mortgages are currently delinquent.”

When Will the Higher End Emerge? A Look at Mill Valley.

You can count on the fact that as the economy recovers and the housing market gets stronger the trend toward normalization will continue from the left (Novato) to the right (Sausalito) over time. How long that will take is anyone’s guess, but it’s a safe bet to predict that Mill Valley will be the first of the higher end markets to emerge into the “normal” range. As of June the median price in Mill Valley was a relatively high $1,200,000 which is well up from the January lows of $812K. The upswing in prices reflect buyers coming in and taking supply down to a 12 month low of only4.8 months, which is well off of he 16.6 month high from last November.

While the surge in property sales were a welcome trend the corresponding reduction in inventory was probably a factor of those sales along with weary sellers taking their properties off the market and waiting for better days ahead. Although there are no figures to support this, you can bet that there is a good supply of inventory in Mill Valley and other high end markets that are simply waiting to go on the market when sellers feel that they stand a better chance of getting their price. The good news is that this new inventory will filter into the market over time and not flood the market much like what we saw happen in last fall and early this spring. Despite this ‘phantom inventory’ the stage is likely set for Mill Valley to emerge from a “buyer” market and into a “normal” market in a reasonable amount of time.