While the Marin’s single family home resale market is down approximately 30% from last year and prices (average square foot price) are down almost 5% the condominium market has been hit a bit harder.  Currently here are 302 active condominiums for sale throughout Marin County. For the period January 1 through June 30, 2007, Marin has 291 condo sales. This year we’ve seen 183 sales representing a 37% drop in volume over the same6 month period of 2007. The average square foot price is down almost 14% ($481.70 in 2007 vs. 416.91 in 2008).All but two towns, Larkspur 11.2% up and Mill Valley 1.6% up, have seen drops in the average square foot price of condos: Corte Madera down 11.8%; Fairfax down 3.4%; Greenbrae down 7.9%; Novato down 19.8%;San Anselmo down 12.1%; San Rafael down 5.4%; Sausalito prices are flat; Stinson Beach has had no condo sales this year; Tiburon down 9.5%.

The good news is that some of these towns now have fantastic opportunities for anyone in the market for condominiums. The selection is strong and the prices are soft. What better time for buyers to take advantage of this opportunity.

Lastly, I’d like to take a moment to introduce you to a very lovely 2005 Pinot Noir. Released by R. Buoncristiani Vineyard in Sebastopol, Orentano Pinot Noir has an earthy aroma and fruity bouquet that makes this a special wine for any occasion. If you like Pinot Noir you’ll love this vintage. Ask for it at fine restaurants and local wine shops.

The Fed meeting currently in progress is not likely to
bring a change to current rates that were lowered in recent
months according to most financial analysts. The pertinent
question on everyone’s mind is how the US economy can
be strengthened without triggering inflation. Unfortunately,
speculation is driving up the costs of fossil fuels and
this is filtering through our, already weak, economy, pushing
up prices of goods as well as prices at the pump.
Karl Case, an economics professor at Wellesley College,
and cofounder of the S&P/Case-Shiller index said in an interview
on Bloomberg Television that there may be “some
surprises in the next few months that would indicate we
are at or near a bottom in probably one third to one half
of the country,”. This makes sense given our recent local
housing data. Data Quick reported that May Marin median
square foot prices increased in 10 Marin zip codes, while
they fell in 6 zip codes. When one considers the severity of
current US economic woes, Marin’s strong increases highlight
the relative strength of our local market, and seem
to indicate that the bottom may have been reached here.
The positive side to this is that once the bottom has been
reached the only place to go is up!
Congress is currently debating a second economic stimulus
package that goes beyond the one already in place.
This new package specifically targets increasing unemployment
benefits and creating a vehicle for local governments
to buy foreclosed properties in areas where a glut
of such properties is creating a drag on local tax income in
an effort to keep town budgets in the black.
What does this mean for you? Since it seems that many
potential buyers have been waiting for the bottom to be
reached before making offers, you might be able to move
them forward with strong data in hand. The same data
could help sellers to become more realistic in their pricing,
enabling you to gain sales. With rates still excellent, and
some niche loan products returning to the market, there
are many good reasons to buy right now. If you have clients
who need creative solutions to their financing needs
they are in luck! Some lenders are adding stated income
loans back to their product lines, and there are still some
great low down payment programs available.

The question I’m being asked most is “have we hit bottom yet?” That’s an interesting and complex question. If we weren’t living in the Bay Area my quick response would be “no, we have not”. 

Working real estate in the Bay Area and more specifically in Marin County the answer needs a bit more analysis. Most analysts gauge the strength of a real estate market by the number of sales (volume) and the average square foot price of the homes being sold. In the Bay Area the highest volume and the highest square foot prices were recorded in August 2005. There have been decreases in either or both volume and square foot price every month since.

The good news for Marin is that although down almost 30% in volume and approximately 5% in average square foot price we have been seeing a steady increase in the volume of single family homes being sold. There has been an increase each and every month of 2008. Many areas in California and throughout the nation have watched as home prices dropped 20%-50% and volume down 50% or more with no end in sight. Not only are single family prices in Marin remaining strong, but as I mentioned, we are now seeing steady increases in sales volume. Here are the numbers of single family home sales since January 1, 2008:

            January             83 sales

            February           93 sales

            March             105 sales

            April               148 sales

            May                167 sales

Once we record 6-9 months of continually increasing sales we’ll know that we are climbing out of the housing slump. Once sales volume grows at that steady rate we will once again see pressure on home prices and the beginning of a healthy, more balanced real estate market.

So, to answer the question, “do I think Marin has seen the bottom of the housing correction?”  My answer is “yes, we are seeing all the signs that indicate we have”.

Wall Street Indexes dropped yesterday on disappointing
earnings as oil and food prices push up inflation.
The Producer Price Index May report showed inflation
hitting manufacturer’s costs and chipping away at their
future earnings potential. This PPI index is one of the core
numbers that Fed watches closely and can be a primary
influence in decisions by the Fed regarding interest rates.
However most financial analysts and economists agree
that the readings so far do not indicate that the Fed will
raise rates at its meeting next week. Inflation readings will
be the numbers to watch in weeks to come.
It’s good to remember that daily stock market movement
is, above all, an indicator of current investor sentiment.
Much of the daily stock and bond trading numbers you
hear on the news are due to short term earning projections,
not long term. One reason that real estate remains a
strong investment is that it is a tangible asset that can be
counted on to gain value over time. Sure we’re experiencing
a serious downturn right now… but 1-3 years from now
this trend will most likely reverse again, just as it has in
the past. The beauty of real estate as an investment is that
you are using someone else’s money (the lender’s) to earn
money (appreciation) and getting a hefty tax write off (for
mortgage interest) in the process. Stock investments can
never offer this!
What does this mean for you? It’s a good time to remind
clients to stay focused on their long term goals. Basic
investment strategy dictates that the time to buy is when
market values are low… so it makes a lot of sense to buy a
home right now (if they don’t already own) and reap great
earnings in the next 10 years. There are many great investment
strategies that include real estate and this is where
you can shine and gain more business too. Most people
do not have anyone who reviews their entire investment
strategy from a real estate expert’s perspective. By broadening
your focus to include your client’s entire scope of
wealth planning, you can help them tremendously. I encourage
you to widen your focus to include more than the
one property your clients may be focused on, and to show
them how to make money through multiple real estate
investments. If you’d like more in-depth tips about how to
do this just give me a call. I’ll be happy to help you.

Today the US dollar rose in the biggest one day gain
since 2005, a welcome move on Wall Street. Last Friday’s
395 point DOW sell off came in response to a negative
jobs report and soaring oil prices that point to a looming
recession. Oil prices dropped today in response to
the US dollar’s gains. This week opened with lackluster
index movement for Wall Street and more write downs
by major financial players. Last night Ben Bernanke’s
speech brought a shift in language regarding inflation that
spooked investors further. Today we’ve seen bond pricing
deteriorating, which translates into higher mortgage rates.

But let’s keep this in perspective! Mortgage rates are not
much higher this year than years past, and although we
are certainly in a credit crunch, it is not as bad as ones in
the past. Remember the 1980’s when mortgage rates went
to 20%? We’re a long way from conditions like that and
thankfully, our Federal Reserve board seems poised to
act quickly to stabilize the market further. There are also a
number of analysts saying that if we are in a recession, it’s
likely to be a small one.

Important legislation is on it’s way to becoming law and
changing the disclosure of mortgage closing costs by
lenders. A lot of mortgage originators are fighting the
proposed changes… but at Avatara we applaud most of the
proposal. Why? Because we already disclose in a manner
that matches the proposed changes. Yup. Our business
model discloses YSP rebates and credits them to our borrowers
already, and we are careful to always be accurate
on our Good Faith Estimates of Closing Costs so there are
no surprises at closing. This is simply a fair and honest
way to do business!

Pending sales of existing homes rose again in April by
more than 6% as buyers pounced on advantageous pricing.
Locally we’ve seen a steady increase in buyer interest
and sales for over two months. Well priced homes are getting
lots of attention from buyers… and with interest rates
still low, this spells sustainable purchases that are wise investments.
It’s good to always remind clients that a home
is also an investment, and that in this area of the US it can
yield as much as stocks or other investment vehicles. This
approach can also set you apart from other Realtors.

 Discount real estate brokerages are now part of the real estate landscape. I think a well-run brokerage with experienced agents, which can offer its clients all the services necessary, especially in a market such as we are currently in, and do so at a discount to the client is great for the consumer. It serves to keep commissions and Realtor services competitive. That’s the theory. Let’s talk reality.

I recently oversaw a transaction in my office in which we represented the sellers and Redfin, a discount brokerage, represented the buyer. I have to tell you that as a broker I was stunned at the lack of service, counseling and support the Redfin agent provided his/her “client”. What a disgrace. As a Realtor/broker who takes pride in the service I and my agents provide our clients, I was appalled at Redfin’s lack of involvement and motivation. The agent did not accompany his client to the home inspections. He did not counsel the buyer through the transaction. He was woefully lacking in communication with the client and with the listing agent. The buyer, working without the support and guidance needed, got “buyers remorse” and cancelled the deal. Did I mention she has done this a number of times in the past with ‘guess who as agent’? That’s right, Redfin.

There’s an old saying - “you get what you pay for”. Ain’t it the truth. It seems incredible to me that a person who is willing to pay hundreds of thousands, even millions of dollars for a home will cut corners when it comes to hiring the professional who can guide them through the complexities of home buying (or selling), who can council them with their years of real estate experience and who can ultimately save them much more money with their negotiating skills than they will ever save by “shaving the commission” and using an unmotivated, salaried real estate agent .

There’s another old saying that aptly applies, “buyer beware”.

Reports of “touching bottom” seem to be increasing
among media analysts in their comments about the housing
slump and credit crisis. The San Francisco Chronicle
recently reported an increase in properties being bought…
citing April sales in the Bay Area increasing by the largest
percentage in 20 years, a 30% from March. A group of 52
professional forecasters agreed that the worst of the credit
and housing crisis is over. I’m seeing loan options increasing
again. Some new lenders have sprung up in spite of
the market and I can again offer stated income jumbo
loans with decent rates. The new “conforming jumbo”
loans have come down in rate too, to the 6% range.
Locally we’re seeing a shift that signals better times are
just ahead. In January of 2008 my parent brokerage, First
Priority Financial, charted 35% of all loans being closed as
purchase money (as opposed to refi’s). This percentage
has increased to 60% in the months since. The number of
FHA loans being originated also rose dramatically. Both of
these trends seem to support hopes that some of the new
loan programs recently born from Congress’s intervention
are actually having a positive impact on the larger real estate
market. When these trends are added to others we’re
seeing on Wall Street, and among financial analysts, the
picture takes on a decidedly rosy glow… especially given
the rough ride we’ve had lately. It may not be time to dust
off that hammock yet… because your summer as a realtor
may be busier than you thought!
It’s “local heart felt service on transactions that counts,
not call center sweat shops”, wrote Tim Kearns, CEO of
First Priority Financial. He certainly has a point! The great
thing about real estate as a career is that you can literally
create the quality of business you want. Sure, we need to
follow impeccable ethics and have excellent training, but
in the end it’s your presence, demeanor, and unique ways
of conducting your business that makes you stand out…
and in these areas there is lots of room for creativity. If you
haven’t given your past clients a call recently to see how
they’re faring this is a terrific time to reach out with a heart
that genuinely cares. One thing may lead to another and
gain you valuable referrals. As you find unique ways to
reach out to others, you open doors for more business to
come your way. Enjoy the ride as your business grows!