February 2010: Looking Towards Spring 2010

February 2010

In recent Marin Insights I have talked about how properties are selling in different regions of the county with those cities with a higher percentage of lower priced properties seeing the highest level of sales volume. In the Fall newsletter I pointed out the average selling price for a home in Mill Valley had fallen below the one million dollar mark for the first time in many, many years. While volume has indeed seen a fair amount of improvement it has come at the expense of property values. While lower price-range properties still account for the majority of sales volume across Marin County, we are beginning to see upper range market segments beginning to show some vigor as the market gets ready for the (typically) higher volume spring real estate season. In this edition of Marin Insight, I’ll be looking at the sales activity for different market segments in recent months and how they related to last year and I will offer some insight into what the market may look like later this year.

The State of the Market
To get an idea of where the market is, we need to understand what the market is doing. The table below illustrates the comparable volumes of active listings for the market segments that the real estate industry tracks. What is noteworthy here is the comparatively large jump in new listings in the higher end brackets of the market. Based on my experience in the market, I see a couple of reasons for this. The first has to do with pent up supply as prospective sellers chose to “ride out the storm” in hopes of a more conducive market emerging in 2010 that would a) be a better financing market enabling buyers to buy an upper-end property and b) be less prone to discounting with the expectation that there will be more buyers in the market than in the previous year or two

So What is Actually Selling?
In past newsletters I have talked about an industry metric wherein the ration of properties in contract vs, the available inventory measures 30% or above is classified as a seller’s market. I have cited this by region and in this newsletter will look at the data by market segment. As the chart below signifies, the sub-$1m dollar properties are still enjoying robust sales activity with about 50% of the available inventory in contract, which is fairly remarkable considering the high volume of supply. What about the rest of the market? The $1m-$2m properties are seeing decent gains with 30-40 properties in contract representing about 21% of the inventory, while in the $2m-4m market roughly 10-15 properties are in contract representing about 17% of the inventory. At the very high end of the market, the $4m+, it is still relatively weak with only 2-3 properties in contract. You have to understand, though, that in the year prior there were NO sales at all in the same period! This brings us to our next point which looks at the change from last year to put these figures in some context.

A High End Market Slowly Digging Itself Out
So we have talked about how the low end of the market has been driving the market for the last year and also seen how the higher end segments are beginning to come to life. But to what extent have they come to life? The chart compares the properties actually in contract this year vs. last year. I could not include the $4m+ segment as last year there were no sales at all meaning that you cannot even compare the increase in percentage terms! That said what we see is that the percentage of change in the low end has remained relatively constant compared to the year previous. Where the biggest jump has occurred is in the $1m-$2m range as buyers are snapping up the highest quality properties that may have even been valued in a higher bracket in years past. The $2m-$4m market is seeing a strong gain. It is in these numbers that we can begin to form some perspective on the coming spring.

A “Better Than Last Spring” Spring
We in the real estate profession are not feeling like it’s going to be a banner spring, but certainly one that will be better than the year previous. As the data points out, we are anticipating a lot more inventory coming onto the market in the year at the higher end price categories and more buyers coming in to shop for them. Like we saw in the sub-$1m sales activity of the last year, buyers will be focusing on the highest quality properties and will expect to have some leverage at the higher end price points. For high-end sellers the good news is that buyers may actually be looking at properties in those segments, but anticipate buyers that are still expecting a deal. As the data points out, it is still a buyer’s market and will likely be so for the high end market throughout 2010. For buyers the capital markets are normalizing which means you may have more purchasing power and homes in the high end of the market are at historic lows. It all points to a chance of a lifetime to purchase a unique and high quality Marin home.

As always, feel free to contact me about your real estate needs and I am always grateful for referrals.

Sharon Kramlich
Top Producer
Pacific Union Real Estate Estates Division
415-609-4473
skramlich@pacunion.com
www.sharonkramlich.com