Rebounding Bay Area Job Market Leads State

The Bay Area continues to lead California’s economic recovery, and that’s good news for the region’s housing market.

The four California counties with the lowest unemployment rates in July are all in the Bay Area, according to the latest report from the state Employment Development Department. Marin County led the state with an unemployment rate of just 6.7 percent, followed by San Mateo County (7.0 percent), San Francisco County (7.6 percent), and Napa County (7.7 percent).
They all also beat the U.S. average of 8.3 percent unemployment in July.

Other Bay Area counties also posted strong numbers in the EDD’s employment report, with Sonoma County unemployment at 8.6 percent, Contra Costa County at 9.4 percent, and Alameda County at 9.5 percent — all well below July’s statewide average of 10.7 percent, which was unchanged from June.

While California’s overall unemployment was significantly higher than the U.S. average, it was a marked improvement from the state’s 11.9 percent unemployment rate in July 2011.
San Francisco posted the greatest month-over-month improvement among Bay Area counties, with unemployment dropping two-tenths of a percent from June to July. It dropped one-tenth of a percent in Napa and Sonoma Counties, was unchanged in Alameda and Contra Costa counties, and rose one-tenth of a percent in Marin County.

THOUSANDS OF NEW JOBS

Looking beyond improvements in unemployment, the Bay Area also led the state in the number of new jobs created last month — promising stronger economic growth in the months ahead.
San Francisco employers added 4,600 new jobs in July, accounting for 18 percent of all new jobs in California, according to the EDD. Alameda County had the second highest new-job growth in the region with 2,600, followed by Contra Costa County (1,700), Marin County (1,400), Sonoma County (800), and Napa County (500).

“The Bay Area remains the state’s job growth leader,” with more than 90,000 jobs created in the past year in the San Francisco, East Bay, and San Jose metro areas, according to Stephen Levy, director of the Center for Continuing Study of the California Economy (CCSCE) in Palo Alto.

“The state economy is in strong recovery mode after a deep and painful recession,” Levy wrote in a report analyzing the EDD’s July employment numbers. “The pattern of industry growth speaks well for continuing future job gains. Construction has added 27,300 jobs and the firming housing market gives hope for larger gains in 2013. Job gains returned to the finance and real estate sectors as well with the growth in housing sales.”

July marked the third straight month of strong job growth in California, and Levy noted that the state’s 2.6 percent job growth in July, year-over-year, was double the 1.3 percent recorded nationwide.

“The high unemployment rate of 10.7% reminds us that California still has a long way to go to recover the jobs lost in the deep construction led recession,” Levy wrote. “But today’s report is another sign that the state economy is on the recovery road.”

In a June interview with Pacific Union International, Levy said the Bay Area’s economic growth is tied to “the three Ts” — technology, trade, and tourism jobs — and all are continuing to expand. Our rebounding economy, in turn, drives consumer confidence and residential real estate demand.
We noted last week that Bay Area home sales are on track to record their best year since 2005. The latest jobs report confirms our optimism.

In marked contrast to the national reports, we're not seeing these gloom-and-doom numbers here in California or the Bay Area.

In fact, first-quarter results here at Pacific Union International  show a recovery well under way and all signs are pointing to our best year overall since 2005.

Please click on the image below to review the Pacific Union International Q1 Bay Area Report. 

To Get a Mortgage, Start With the Perfect Loan File

Getting a mortgage approval isn’t what’s tough for most consumers. Rather, it’s the challenge of meeting the new documentation requirements that sends most people screaming for the hills.

So says Mark Greene in Forbes. Greene argues that most lenders aren’t looking to underwrite the perfect loan (e.g., one that pays back the lender on time). Instead, they are looking for the perfect loan file. Here’s how to make sure yours is up to snuff.

Read more: To Get a Mortgage, Start With the Perfect Loan File

A Real Estate Conversation re: Listing Aggregators

Dear Friends,

As many of you are aware, there has been a burgeoning dialogue in my industry about listing aggregators such as Zillow, Trulia, and Realtor.com. We’ve closely followed the debate about how these aggregators are using our listing data, whether they’re fairly and accurately displaying our information, and how they are representing our brand.

After a few weeks of discussion,we have crafted a well-balanced and thoughtful “open letter” to Trulia that details our concerns as a brokerage and describes the changes Trulia could make that would allow us to feel like we have a mutually beneficial partnership.

I thought it would be helpful to share this letter with you so that you can also understand the pros an cons of these aggregators;

Dear Trulia,

We’ve been partners for years now. We remember when you first started back in 2005, right here in our very own Bay Area, and we joined up with you shortly thereafter.

We loved your value proposition: Put our listings in front of people we wouldn’t otherwise reach, for free. In return, you got content that would allow you to grow — and eventually monetize – that audience. It was a win-win agreement. But things have changed and frankly we’re not thrilled about it.

With size and success come challenges, and one of the challenges we’ve seen you struggle with is keeping listing data current and correct. While we were happy to lend you our information – even our own intellectual property, such as photographs and custom-written descriptions — we did so with the expectation that the integrity of our data would be preserved and that your standards of quality would be similar to those of Pacific Union’s brand promise.

That hasn’t been the case.

We work hard to build the client relationships that create property marketing opportunities (listings) and we stake our professionalism on every one. And when the information displayed to consumers is wrong, through no fault of our own, that hurts both our brand and reputation. And it sure doesn’t properly serve a consumer looking to buy a home.

We’re glad that you’re making an effort to improve accuracy with your recent pledge. But the fact is, if you had to follow the same rules we do as licensed brokers, you wouldn’t need a pledge. It would be much simpler: If your data was inaccurate, you’d be out of business.

Speaking of how hard we work to build those relationships and property marketing opportunities, it’s disconcerting and frustrating to find someone else’s face plastered all over them. Yes, we understand these are sponsored placements. And we’ll give you the fact that you identify, in tiny type, who the listing agent is and label display ads as such. And yes, we know you need to make money, but so do we.

Our real estate professionals earned those property marketing opportunities. We earned the trust of our clients. Invested years in analyzing market conditions and comparable sales and put in the long hours to clearly understand our clients’ objectives. It’s fair to say that for each property, the client has anointed us the subject matter expert.

We know the homes and the neighborhoods inside and out. As a result, our clients prefer we answer questions and receive inquiries on their homes – which is why we have an exclusive listing agreement rather than an open listing agreement. And yet, we see other smiling faces next to many of our listings. We’d guess that the average person browsing this site never notices that tiny disclaimer text. We’ll bet that most people make the assumption that this is in fact the listing agent. And that they believe the person who gets the “lead” is also the subject matter expert.

This shell game also does a disservice to the buyer. If the agent who paid for placement doesn’t know the property, and in some cases doesn’t even know the neighborhood, how can they provide relevant guidance to the buyer? That’s not win-win for anyone. In fact, it’s a losing proposition for our exclusive clients.

Look, we know this isn’t an easy business in which to succeed. And we see the value in what you offer and want to keep supporting it. But the balance has tipped too far in favor of your interests over ours, and we’d like to ask you make things right.

Here are three things that we think you should do for us, and for any brokerage that gives you their listings.
1.Take down our listings when they’re off the market. Why?
- Because presenting a sold home as an available option when it’s not is misleading to consumers (and disrespectful to the new owner). You don’t sell ball bearings. You display hearth, homes, shelter – the most emotional purchase most people make. Misleading the user with incorrect details about price, location, and status frustrates and disappoints consumers.
- Erroneous information creates undue hardship for your real estate partners. When every “lead” begins with us having to first correct a caller’s assumptions about a property they just fell in love with, we end up spending time we don’t have to defend ourselves as a result of your loose policies. This may help you sell ads, but it hurts our brand – and yours.

2. Make the listing agent’s information clear and prominent. Why?
- Because, as your partner, this is important to our business and our clients. We should not have to pay you to maintain the basic integrity of our listings. And, fine print or not, you’re leading consumers to assume the large agent photo adjacent to the listing is actually the listing agent. And most often, it isn’t.

3. Put our logo on our listings – and don’t charge us for it . Why?
- Because they are our listings. And because our logo is the official mark of our brand and has very clear standards – it must be displayed everywhere.
- Because by removing our mark you are misrepresenting our brand, which has a value in our marketplace. If you were a shopping site, you wouldn’t carry Nike shoes or apparel with the trademark swoosh airbrushed out. We’d ask for the same respect.
We’re not asking for the world here. We understand the value you can deliver. And we recognize that you’re a profit-making enterprise.

But what we want, at the end of the day, is to feel confident about how our listings are displayed.
When this happens, we’ll feel like the balance has tipped back to neutral. And that’s a win-win proposition I think we can all live with.

Jobs Are Driving Bay Area Real Estate

Things are looking up for the country’s job situation and are even rosier in the Bay Area. And that’s great news for the real estate markets – because a healthy Bay Area job outlook drives consumer confidence, purchasing, borrowing, and home buying.
The highlights from last week’s U.S. Labor Department employment report:

• The nation’s jobless rate dropped to a near-three-year low
• Unemployment fell to 8.3 percent in January from 8.5 percent in December
• The drop marks the fifth consecutive monthly decrease
• Job gains of 243,000 (net new) blew away economists’ expectations of a gain of only 150,000

As good as that sounds, things in the Bay Area are even better. There are three factors swinging our way that are pushing us onward and upward.

1. We’re Not California
At the risk of sounding flippant, Northern California – and specifically, the Bay Area – isn’t “California.” There’s an important distinction between our state as a whole and our little slice of home. AlthoughCalifornia’s overall unemployment rate of 11.1 percent is still higher than the U.S. average, that doesn’t hold true for the Bay Area. According to the December county data from the California Employment Development Department,which were released last week, the six Bay Area counties we serve outperformed the California unemployment rate – and Marin and San Francisco rates were even lower than the national average.

Location & December 2011 Unemployment Rate
Marin County = 6.5%
San Francisco County = 7.6%
United States = 8.3%
Sonoma County = 8.9%
Alameda County = 9.3%
Contra Costa County = 9.3%
Napa County = 9.0%

California TOTAL = 11.1%

In all cases except in Napa County, the rates had dropped from the previous month — and without exception all represented decreases from December of last year.

2. The Rolling Tech TideWe have an added stimulus in our thriving technology industry, which is continuing to power healthy movement across various economic sectors. If this keeps up, we might even be willing to use the word “recovery” in tones louder than a whisper.Bloomberg reported last week that hiring in the technology sector is gaining momentum. Among U.S. technology companies with a market value of more than $100 million, almost 50 increased employment by more than half in the most recently reported two-year period. And 74 expanded their workforces by more than 10 percent – more than any other industry group measured by Bloomberg. The continuing trend of job creation in the tech industry should serve to support the declining unemployment rates and instill increasing confidence in Bay Area real estate markets.

3. The Facebook Factor
Finally, you can add the coming Facebook IPO into the mix. It’s an event expected to turn about 900 Facebook employees into instant millionaires (and a few billionaires) and will surely cause a ripple effect in spending on real estate, travel, and consumer and luxury goods.

In addition, the IPO will likely spur additional job creation, both within Facebook and in new start-ups as well as in companies already working with or leveraging the platform. The Facebook IPO effect could boost other sectors and even the U.S. economy as a whole, a position articulated by the DailyFX, a publication by the foreign exchange market (Forex), last week:

“With a history of acquiring companies that it believes could be complementary to its core business, investing in new developments and vast overseas expansion, many investors believe that the additional cash raised by Facebook could flow into other sectors such as advertising and marketing. The potential for job creation could help boost the U.S. economy, and accordingly the U.S. dollar.”

What’s Ahead for Us?T
his is likely the first time since 2007 that we have enjoyed consistent and positive trends in economic indicators. Most of our markets currently have more qualified buyers than we do realistically priced homes, and we are seeing the return of multiple serious offers on well-priced homes.
We see this optimistic economic news as a stabilizer to our local real estate markets, although it’s not yet a catalyst for price appreciation.
However, the increasingly positive employment outlook coupled with our somewhat supply-constrained real estate environment will likely encourage home owners to list their properties and make the trade-up, relocation, or lifestyle changes that they have previously deferred until now.

Happy New Year and Welcome to 2012!

The local real estate market is already off to a more vibrant start than this same time in 2011. This past year was filled with extraordinary global events including significant shifts in political, economic and social fundamentals that "normally" would have violently rocked our confidence, if not our real estate markets.

Our year in real estate effectively followed very similar movements in the equities markets, specifically the Dow Jones Index. We experienced fairly predictable, seasonal trends until late July and early August when S&P down-graded the US Treasuries. This resulted in closings falling below season averages in September before regaining momentum through a strong month of December
'11.

This could be one of the finest times in the past twenty years to be a buyer of real estate (assuming a five-plus year hold). The Marin County market fundamentals, single family home prices and historically low interest rates have created opportunity that will be reflected upon years down the road as, "the time to buy". I have provided links to four recently published economic/housing reports that support this observation.

As we see new inventory come into the market, we know that the right location, floor plan and pricing are attractive to the most motivated buyers. Our partners in the mortgage business remind us that it is the sub4% (and in some cases sub3%) mortgage rates that can create home ownership opportunities where monthly payments (principal and interest) can be aslittleas$4,000 per million borrowed on a 5/1 at a 2.5% interest rate (APR).

Marin County real estate fundamentals were fairly stable in 2011, especially when compared to the equity markets. Single family homes sold in 2011 increased by 3% to 1,912 closings. The average days on market improved by 9% for homes over $1 million, but decreased by 7% for homes under $1 million. Average and median prices for single family homes below $1 million decreased by 5% and 6% respectively; while over $1 million saw modest decreases of 2% and 1%respectively. The links below to tables and charts more specifically reflect market conditions in Marin County.

Downloadable Market Data

• Full Q4 2011 Report: http://issuu.com/lisa_norman/docs/pui.q4realestatereport?mode=embed&layout=http%3A%2F%2Fskin.issuu.com%2Fv%2Flight%2Flayout.xml&showFlipBtn=true
• January 2012 Report: http://www.box.net/shared/static/48o3kq14mdeozhh2q4re.pdf

Real Estate Downturn v2? Probably not.

August 2011

Since 2008 both the economy and the real estate markets have been put through a roller coaster of both real and perceived threats. It is safe to say with a large degree of qualitative and quantitative hindsight the ’08 crisis as it related to real estate was very real and there is some lingering, although greatly diminished, effects of that today. So what does the current crop of economic news mean to the real estate market?? That is the question we will try to better understand here.

The first thing to do is look at the 2008 market. The cause of the Fall 2008 crisis was predominately driven by two colliding failures:

1. The residential housing bubble finally collapsed deflating values by 25% - 40% depending on the region of the country.

2. Many of our financial institutions were undercapitalized and near a state collapse. Largely as a result of poorly underwritten residential mortgages.

The good news from this is that our country’s economic fundamentals are far stronger today than those present during the Fall 2008 and Spring 2009 financial crisis. We have consolidated our financial institutions into larger and arguably healthier banks due to more internal and government oversight. The Federal Reserve has made access to capital both plentiful and affordable. The residential housing market remains unpredictable; however, new home building is nearly a zero in our GDP so clearly the broader real estate market is not poised for a collapse.

In fact the volatility we are now navigating is not from a lack of economic confidence; it is one of a complete lack of political confidence. To quote Moody’s it is “the risk of political polarization and uncertainty that are among the drivers of our negative outlook”…on the USA and its debt. The Chief Investment Officer shared thoughts illustrating that our underlying real (or adjusted) GDP growth might be 3% v the recently reported 0.8%. Three phenomena seem to have constrained GDP from 3% to 0.8%. They were:

· The disruption in global supply chains as a result of the Japan earthquake (.25%)

· The increasing cost of oil which resulted in reduced consumer spending (1%).

· USA government fiscal policy, or lack thereof (1%).

If we believe the above are somewhat temporary and political rhetoric can be channeled to fiscal responsibility, then we may see GDP increase in the second half of 2011 to over 2%.

While all of this macroeconomic news is interesting, it certainly affects our local real estate markets. In the San Francisco Bay Area, we are a largely supply constrained market. In the six counties Pacific Union serves, only two counties really experienced over building in the pre-2007 housing boom. As a result, inventories are manageable and not causing downward pressure on pricing. Pacific Union (PUI) has representation across all of the Bay Area’s major markets and our regional managers weighed in with the following observations from our San Francisco, Marin and other selected regions:

· San Francisco – The market seems stable with typical light activity as expected in summer. Multiple new escrows in process and mainly in $1.25 to $2.25 million range.

· Marin – High-end of market is performing well. The larger share of sales activity is priced over $2m and all buyers seem stable, committed and feel values are still appropriate.

· Napa – The high-end of market is very active with multiple deal closing in excess of $7m.

· Sonoma – Like Napa there is no evidence of stress in this market as well.

As we look forward hopefully our politicians have read a few recent headlines and now feel the demand for fiscal responsibility to start stabilizing the markets. As for local real estate, as our children return to school we expect to see an increase in listing inventory and increasing units sold through Thanksgiving. Interest rates remain at historic lows (mortgages are “on-sale”) and real estate is relatively inexpensive. While many will retreat and wait for the comfort zone (near the next peak), now is the time to seek opportunity and buy! That said, for those who have high quality homes in good locations that are looking to sell expect price pressure, but nothing like we saw a couple of years ago.

The Cost of Waiting for Prices to Fall

Reproduced by permission of Adam Wise of MSP Loan

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point…

Prices
The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year. The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009. A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.

Interest Rates
The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said: “Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.” So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.
Let’s show you what the news means:


By sitting on the sidelines for the last 90 days a purchaser lost:
• $ 439.78 a month
• $ 5,277.36 a year
• $ 158,320.80 over the thirty year life of the mortgage

The Bottom Line
Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year. Work with your local MSP Loan Mortgage Consultant to customize flyers for your buyer's that will illustrate the effect that the still rising interest rates will have on their home purchase.

2010 Was the Year of the Missing Spring

As the year ended I decided to look back on the year and try to make sense of what was *not* a normal year by any stretch of the imagination. By that I am speaking of how we in the real estate world look at cyclical trends throughout the year. Take 2009 for example: It looks like how real estate cycles typically play out over the course of any given year. To gauge performance I looked at the percentage of homes in contract as a measure of how the market was absorbing inventory across all 13 major Marin county cities. A measurement of over 35% in contract is usually indicative of a sellers' market. 25% in contract is usually indicative of a buyers' market. 25%-35% in contract indicates a balanced market. If we look at the 2009 numbers we saw a real estate market in the midst of a reasonably strong recovery. That shouldn’t be all that difficult to imagine in contrast to the truly difficult years of 2007 and 2008.

The key sub components of this graph to note is where the buying cycles typically occur. I think we are all used to seeing “for sale” signs going up as the days get longer and the weather gets better in March. This is the official start of the spring selling season and 2009 indeed shows a nice healthy upswing in inventory reduction from March to June much like and other typical year. Then comes the summer lull from June to September and again 2009 does not disappoint in terms of meeting typical expectations. The secondary sales cycle starts in September and runs through October and is usually a weaker upward trend compared to its spring brethren. In 2009, though, that expected trend took and unique turn. A general feeling that the worst of the economic downturn coupled with pent up buying demand and low inventory created an atypical surge in buying that propelled the market into what was beginning to look like a seller’s market for the first time in 3 to 4 years. Maybe both the economy and the real estate market was back on track? Not so fast. Read on…

The Spring 2010 Selling Season That NEVER Happened

Having been in the real estate market for 17 years I am hard pressed to remember a situation that I witnessed in 2010. There was literally NO spring real estate selling cycle this year. As mentioned above, we started the year hopeful, but many realities came home to roost. Let me see if I can rattle of a few of the key drivers that shattered the nerves of anyone considering buying a home this last spring: Huge deficit concerns, a meltdown in European banking across multiple weaker member states like Greece, the fallout from passing the Healthcare bill, the stark reality that job growth will not happen in 2010, the return of home foreclosures, continued war in the middle east and so on and so on. These factors are clearly reasons for people to rationalize sitting tight. The result: A steep decline in activity this last spring that totally eliminated the typical and expected upward sales trend from March through June. Even in 2008 when the market was still reeling from the recent banking collapse we saw this expected upswing, but not this year.

Does a Stronger Fall Mean An Improving Market in 2011?

The fall actually got off to an early start with an early upswing in activity starting in the typically slow June/July timeframe as inventories were being absorbed across the county. Once all of this bad news was digested and most people understood that although things we tough, they actually were getting better (albeit with expectations set that it will likely be very slow but steady) then the market got back in gear. With news that job growth was looking better, European banks stabilizing, inflation well in check and the Fed committing to low interest rates through 2011, the market experienced a stronger than average upswing in the typically tepid Fall selling cycle. One could assert that those buyers that were looking to buy in the fall and deferred in the Spring got back in the market. So as we close 2010, we are almost where we were last year! We are edging up and through a balanced market with trend lines pointing towards a more robust new year. That is what we saw last year and if we have all learned anything it is to expect the unexpected. The overall economy and real estate markets will continue to surprise us in both positive and negative ways, but if/should things actually continue to improve across the board in 2011 with no big surprises disrupting advancement then May/June 2010 may have been the recent bottom. That of course is speculation and I will keep you abreast of where the market continues to go in the coming year.

I’m looking forward to working with you in 2011!

Sharon Kramlich
Top Producer
Pacific Union Real Estate Estates Division

415-609-4473
skramlich@pacunion.com
www.sharonkramlich.com

How Low Can Rates Go?

I have to admit that I really did not see this coming. What am I referring to? Well, mortgage interest rates that is and their recent and dramatic slide. First, a little background on the basics; The Fed has kept the Federal Funds Target Rate at a historically low .25% since the beginning of 2009. That is compared to 6.5% in June of 2000 at the height of the Dot Com market which went down to a then historically low 1% by January of 2004 as we were digging ourselves out of the first recession of the decade. It was that condition, of course, coupled with relaxed regulatory constraints that set us up for the next and bigger Great Recession in late 2007 when the Fed rate topped out at only 5.25%.


Rates Falling Faster Than Gravity
I think it was fair to say that the overall consensus was that as we entered the spring of this year that the country was on a slow but predictable growth curve that would strengthen as we got into the second half of the year. In fact the market saw it that way as well. Below is a chart that shows the 2010 trend for the 30 year fixed interest mortgage interest rate for conforming loans. The valuation of the interest rate started out at just over 5.00% in January and increased as the spring selling season hit its cyclical stride in April when it topped out at 5.10%. But then something happened. Was it the expiration of the first time home buyers credit on April 30th? Perhaps, but that was not a likely big influencer. No, it was unemployment and fears of a double dip recession. Remember the notion that the second half of the year would bring accelerated economic growth? Well, it didn’t happen and the market predicted a much slower demand for loans…which were already tough to qualify for. Hence the rates slid off a cliff and by August were down to its lowest recorded rate ever: 4.43%!! (Source: Freddie Mac Monthly Average Commitment Rate On 30-Year Fixed-Rate Mortgages).

And What Happened to Marin Home Sales?
So what happened locally in the post-April time frame? Before we get into that, it is important to acknowledge that the average Marin buyer qualifies for loans more frequently than the rest of the market. That means that more buyers can actually take advantage of these low rates and get a loan to purchase a house. This is not the case in the broader regional and national market as a whole. The net result is that, despite the expiration of the first time buyer credit and news of impending economic doom in the form of a double dip recession, buyers continued to buy. Before the market headed into its predictable summer slump sales continued to accelerate through May and June as we see in the chart below.

In the chart below we see the above trend mapped against the interest rates trend. Are rates headed down some more? That is something no one can predict but certainly rates are very attractive these days.


So What Will Happen This Fall?
As most of you may know the largest volume of home sales in a year occurs from mid-march to the end of June. That is followed up by a smaller, yet not insignificant, “fall selling season” which typically runs from mid Sept and up to early November. In terms of rates, they very well could continue to be soft through the fall. I also am seeing properties, especially at the higher end of the market, moving as well. If you are looking to upgrade into a new home and you can qualify for a loan, then I think it is safe to say that this is a rare opportunity to secure a loan at a historically low rate. That said, do not be surprised that when you find that ‘must have’ move-in quality home with a view and high end finsished that competition is there to bid up your offer. For those of you who are thinking of selling, the premium is on “done” properties so make the investment to fix things up, stage and put your best foot forward into this unique market.

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

Demystifying the “Pocket Listing”

This may be an observation about human nature more than anything else, but most buyers that I work with always ask to be notified of any new listings that I may know of before it goes on to the MLS. “MLS” by the way stands for Multiple Listing Service and is the centralized system that provides information about all listed properties. You can actually look for listings yourself based on specific criteria on the MLS which can be accessed from a link on the left hand side of my web site. This is a fairly recent development as it used to be that only professional realtors had access to the system. I digress, but the point is that with information in this industry becoming more pervasive so has competition for prime properties as they come on the market. Why do most people ask about these unlisted properties? Why, to get a good deal on a great property of course! Without competition there is always the hope/chance that something special will pop up and a good price can be negotiated.

Defining the Pocket Listing
There is actually a mechanism in our business to market properties that do not go on to the MLS and that is called a “pocket listing”. In short pocket listings are when there is a signed listing agreement between the broker/agent and seller to sell a property but without the exposure through the MLS and usually without any other exposure except word of mouth. As a percentage of all listed properties it is minuscule, but that said I am aware of a decent number of pocket listings in prime communities here in Marin. So why do sellers opt for this type of listing? The reasons vary, but the listings typically apply to higher end properties which involve more complex transactions. Reasons why sellers might choose to go this route include;

• Testing the market value and interest level of the property.
• Sellers might not be 100% ready to sell but if the right buyer is ready, willing and able they would.
• There may be a strong desire for privacy and a quiet sale.
• Do not want unqualified buyers wandering through their home .
• Sellers might be in the process of looking for a home to move to-but not yet found one.

Weighing the Upside and Downside for the Seller
Ultimately, the seller must decide if exclusion from the MLS is in his/her best interests and does not limit exposure on the market. Sometimes sellers ask about treating their property as a pocket listing. People have often heard the term, but don’t always understand either the benefits or downside to having their property sold off the market. When a property is marketed directly to other agents and their buyers I am usually only showing the property by appointment and there are no open house showings.

There are benefits. Perhaps the sellers don’t want to do, or pay for the preparation work involved in bringing the property to market. As their agent, I want the property to show its best and sometimes that means the sellers are looking at some extensive and potentially expensive work to prepare the property for market including; packing and placing their items in storage, dealing with both structural and cosmetic repair work, and staging for their property. Then during the marketing period there’s personal disruptions including multiple open houses a week, evening showings, private showings and often people peering into the windows and ringing the door bell because there is a for sale sign on the property. Or perhaps, it’s a couple with young children and they just can’t tolerate that process, or a seller who just wants to quietly sell without all the neighbors knowing or coming through the home. They want to sell, but they don’t want the public exposure that comes with the marketing of the property. An off the market sale or pocket listing can make sense for them.

What’s the downside? Well, I always tell sellers that they will never know what the property would have sold for on the open market. There’s always a question as to whether they received the highest and best price. But each property sale is a snapshot in time, and perhaps the difference would be small. But if the home had been properly prepared and marketed, would the seller have received a better price? They will never know, and they need to be okay with that. It’s a trade off, but if it works for the client, that’s fine.

So How Many Are Actually Out There?
Let’s start with the top level numbers. In all of Marin County there are 1,095 single family homes currently listed. The actual number of pocket listings is not a known quantity as different firms have different ways of communicating and tracking them. Many firms have no way of tracking them. At Pacific Union we have a means to track internal pocket listings and currently we are tracking 33 pocket listings, which equates to 3% of the market. The average listing price comes in at a whopping $2.7m, which backs up my earlier point about these being typically higher end properties in higher end communities. In the mix is one $10m property with a couple $7m properties right behind. Below is the breakdown by community for the pocket listings available:

• Belvedere: 1
• Fairfax: 1
• Kent Woodlands: 2
• Kentfield: 3
• Larkspur: 1
• Mill Valley: 8
• Novato: 2
• Ross: 4
• San Anselmo: 2
• San Rafael: 3
• Sausalito: 1
• Tiburon: 5

So if you are interested in learning more about pocket listings, feel free to contact me and I’ll be happy to explain more and discuss these unlisted opportunities and your real estate needs. I am always grateful for your referrals.

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

Marin County Schools Rank at the Top in California

The results are in and the word is out that Marin’s schools are tops in the state. According to a May 14, 2010 article from the Marin Independent Journal, “Marin had 21 schools with API scores of 900 or greater - including every school in the Kentfield, Larkspur, Lincoln, Mill Valley, Nicasio, Reed Union and Ross school districts - up from 15 last year. The Reed District's Bel Aire Elementary and Reed Elementary tied for Marin's highest score with 951. Other top-scoring schools included Kentfield's Bacich Elementary, Mill Valley's Old Mill and Park Elementary and Novato's Rancho Elementary School.”

Families Are Moving North
Factors such as great weather, a reasonable commute to San Francisco, a beautiful environment and top notch public schools are fueling a mass migration of families north of the Golden Gate. In Mill Valley, for example, every school in the district received a statewide rank of 10. The above mentioned migration is resulting in an unprecedented increase in student enrollment in recent years. The current level of elementary student enrollment is at about 2,700 students which represent an amazing 20% increase from 2006 when it was only 2,288. These increases, though, do not come without a down side. The county schools do not receive additional state funding as a result of such enrollment increases, which when combined with the state budget cuts are causing great pressures on these schools. To counter the budget and associated program cuts in areas such as arts, drama and athletics, many school districts have private fundraising efforts that are counter-balancing these cuts.

It is difficult to know how long parents and the rest of the communities can plug the gap, but for the time being the schools continue to perform and provide a very high quality education. See the Marin IJ chart below to get the specific details about each school from every district in the county.

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
http://www.sharonkramlich.com/

The $2m+ Market Finally Awakens: The Tale of 35 Bigelow in Mill Valley

For the last 6 months I have been chronicling the slow improvement in the Marin real estate market. If you may recall, about six to nine months ago we saw the sub-$1m market in the northern part of the county show some initial life. Since then we've seen a slow creep of similar improvement south and finally in properties at higher price points. In my last newsletter that trend was showing signs of becoming a reality as homes in southern Marin in the $1m-$3m price range were showing signs of increasing at a rapid rate and edging towards becoming a seller's market. In this edition we'll recap on today's data and then I'll talk about a property that I was listing last year at 35 Bigelow in Mill Valley that initially came on the market in 2008 at $2.85m and just recently sold after the listing price had worked its way down to $2.15m. I think the sale of this property is fairly emblematic of what is happening in the market and I'll provide a case study on the history of the property's 2 year journey from initial listing to eventual sale.

Today’s Market
First, the hot-of-the-press data. I have often called out in recent newsletters the way that we measure buyer or seller markets as being the percentage of homes actively being listed on the market vs those in contract. My last newsletter pointed out that the $1m + market was gaining momentum and recent data is only reinforcing that trend as shown in the chart below. Across the county single family homes in the $1m - $2.5m market space especially are trending up,

Another way that can measure how 'hot' the market is becoming is shown in the chart below. For 13 higher end communities in Marin we're seeing a trend towards a higher volume of active listing, while in parallel seeing a trend towards properties moving off the market faster. While the volume of "Active Listings" is now increasing towards 900, the "Days on Market" (or DOM) metric, which measures how long properties are actually on the market from the time that they are put on the market, is declining rapidly from almost 100 days to just over 90 in a span of only a month. This means that despite the increasing rate at which inventory is being added, demand is strong and outstripping the supply. This phenomenon is exactly the opposite situation from what was going on a year ago as properties languished on the market.

So what to make of all of this? First, as with any data, you have to read between the lines to get the full picture. While it is great to see the DOM decline like it is, it is very likely that a good percentage of those "new" listings are actually listings that came off the market earlier and have come back on. A property's true cumulative DOM would therefore be much higher. That said, I think the buying public is really beginning to see that the continued decline of prices in better communities in Marin are probably over with prices largely stabilizing. Furthermore we are seeing a trend towards higher interest rates for 30 year mortgages in conjunction with a more fluid market for actually getting loans. Combine these factors with a cautiously optimistic economy and its prodding buyers into action and thus the market is seeing a corresponding rise. The scenario above is something I have experience first hand and a real world case study may help illustrate what is happening. Last year I had a listing in Mill Valley that recently went into escrow and in the second part of my newsletter I'll detail its listing history. Read on...

The Triumphant Tale of 35 Bigelow in Mill Valley
This is a wonderful remodeled 4 bedroom/4 bathroom Craftsman style home that has been extensively remodeled and in typical markets would have only been on the market for only a couple of weeks at most. It is located on a street to street block in the highly sought after Blithedale Canyon area just 3 blocks from downtown Mill Valley. It is easily accessed from both West Blithedale and Bigelow streets and overlooks a charming and private garden on one side and majestic redwoods on the other. You can easily walk to school, to many of Mill Valley's restaurants & to hiking trails. It's an easy commute to San Francisco and close to Mill Valley's award winning schools. Like I said, this is a great home in a great location and should be highly valued.

This home initially came onto the market in May of 2008 at $2,85m and at 2,500 sq ft this equaled $1140 per square foot. That was certainly expensive, but given the recent run up in value over the prior 3 years, I can see how the price could have been rationalized. In May 2008 I seem to recall not having that much anxiety about the future of the economy, but like many others I was concerned about where the lending market was heading and the horde of speculators operating in the real estate market. The property came on late in the spring season and no concrete buyer stepped up so the owners took it off the market and made some improvements to property. These included a 2nd main entrance added to access the home from the West Blithedale side, which increased its overall value and appeal. It came back on the market again in the spring of 2009 at a reduced price of $2.4m and that price reduction spurred a lot of traffic at the Sunday open houses. As I hosted those events myself I regularly saw many repeat visitors, but if you may vividly recall that was a very tough time for many people to step up to purchase a new home. On top of that many buyers thought perhaps that prices would continue to decline.

And yes in fact prices did continue to decline as they did at 35 Bigelow and in the market overall. The property came off the market again in late 2009 and came back on this spring at 2.15m and in March finally was sold. That final sale price of $2,149,000 was nearly $700k off of the original 2008 listing price. As I mentioned above, it was not uncommon to see repeat visitors at my open houses and indeed, in the end, the new owners were one of those repeat visitors that obviously were waiting for the best time to go ahead and make their move. Good for them and the above story is being repeated at a number of other listings in Marin.

My Parting Thoughts
So has the market turned the corner? My personal opinion is yes, but that only means that the market is climbing its way back from a long hard slide. I don't expect to see prices sliding at the rate they did before and I don't expect to see prices rising quickly either. That said, if you have been sitting on the sidelines like the buyers of 35 Bigelow and have had your eye on a high quality property in a great location, now may indeed be a great time to make the deal of a life time. And for sellers it is by far the best environment to list in the last 18 months.

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

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

January 2010: Pacific Union's Q4 and 2009 Year-End Review

January, 2010

Welcome to 2010! To kick off the year I have Pacific Union's Marin County 2009 fourth quarter and year end review for you. I hope you find the information valuable and I look forward to working with you this year.

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

When Will Marin County Real Estate Markets Return To Normal?
We are approached daily by our clients with requests to predict what will happen in our local real estate markets in the near future. To shape our perspective, Pacific Union researched Marin County single family home (SFH) sales and indexed them (on a units-sold basis) to multiple benchmarks including: interest rates (10 Year T-bill), unemployment (SF Bay Area) and an absorbability index (income vs. cost of ownership). We continue to struggle to find direct correlation between Marin County real estate and these available indices.

We have found a relationship worth noting between the total number of Marin County SFH (supply), the total reposed sales (demand) and the annual rate of appreciation (%). The chart below illustrates the following: Supply, since 1999, increased an average of only .38% per year; Demand (closed sales) averages 2,352 units, or 3.62% of total supply; Appreciation averaged 6.50% over the past eleven years but has decreased -.35% over the past five years.

The rate of demand is a key variable for Marin County real estate. In four of the six years where demand has exceeded the average (3.62%), we have experienced double-digit appreciation. In 2002 and 2003, the demand exceeded the eleven-year average, but we did not realize double-digit appreciation. Demand for SFH in Marin County has fallen 52% since the peak in 1999. Our SFH sales in 2009 are 1,650 Units or 70% of the eleven-year average making 2009 the 2nd slowest year in the past eleven.

In our view, recovery to a normal market (demand of 2,352 units or 3.62% of supply) will require substantive shifts in the overall financial landscape including, but not limited to, stability in financial markets, a strong local employment trend, affordable interest rates and strengthening consumer confidence. It is difficult to predict the future and ''normal'' may return with a somewhat new definition. As for our outlook, we are prepared to do business in current market conditions throughout 2010.

Year-to-date, Marin County continues to see substantial decreases in demand (units sold) vs. 2008. To our benefit we see only pockets (both price ranges and geography) of average or median price erosion (see chart below). We are encouraged to see Marin County QTD volume up in all segments. By contrast, California markets with significant excess inventory (supply) are experiencing prices and units sold down by well over 40% year-over-year.


Pricing a home in this market is clearly our most important role and a significant challenge. We rely on rigorous methods of analysis and proven results to demonstrate our success. How all of these dynamics relate to you, your desired neighborhood or specific home requires a focused analysis similar to the one above. If you have questions or concerns, please do not hesitate to call on me.

Year to Date Key Metrics

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Fall 2009: In Mill Valley the Luxury Market Takes Off

Fall 2009 Marin Insight Newsletter

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