The news keeps getting worse. The continuing slump in the housing market along with the failing credit market is exacerbating the serious problems facing the US and global economies. Marin County has been known as a bastion of “old money” and “security” that ordinarily weathers economic storms better than most. Unfortunately, that is not so in these very troubled times. For instance, back in 1991 when there was a world-wide recession, we saw home prices fall. Yes, there were short sales and foreclosures in Marin County but they were a rarity. Most Marin homeowners who tried to sell their homes during 1991-1995 were, generally speaking, not in a position where they had to sell. In fact they did not sell unless they received the price they wanted. Granted, there were fewer sales, but the homes that did sell did so for healthy prices. That helped preserve Marin County home prices. The fact is that during those years Los Angeles area homes lost almost 50% of value, San Francisco lost about 16%and Marin lost 3%.

Today, however, all of the ‘funky financing’ of the past 6 years – no doc loans, NINJA (no income, no job or assets) loans, 100% financing, frantic refinancing – has created a situation where many of Marin homeowners are “underwater”  and facing short sale or foreclosure.

For home owners wanting or needing to sell it will feel as though you’re selling your home in a “fire sale”. What will seem like dramatically low pricing to the sellers is exactly what it takes to interest the few buyers out there. How will most sellers fare selling their home in this market? 

The bottom line is that buyers have some really good opportunities to buy properties at greatly reduced prices and sellers must understand that this market is not for the timid seller. Sellers must be realistic about declining values and how pricing must make sense in this market. My advice to those who need to sell is to get an up-to-the-minute comparative market analysis on their property by an experienced, reputable Realtor and listen to his/her advice. Testing the market with high prices, by not being ahead of the declining value curve and by not putting 100% into making the home as presentable as possible, are death knells to selling your home.

Regardless of what you thought of the Nov. 4 elections, I think we can all agree it was good to have some diversion from the gloomy financial news that has plagued us for months. Unfortunately, whether it was Barack Obama or John McCain who won, the times ahead will still be rough-going. I thought the celebrations and parties following the election were a thing of joy and a necessary release of the frustrations and fears that have had us in their grip for too long. I just hope that after the celebrations settle down people understand the scope of problems facing Mr. Obama and his administration. Let’s hope all parties can join together to make a unified effort to get us through these difficult times with as much grace and as little pain as possible.

 Getting back to Marin’s real estate market, I’d like to talk a little bit about our condominium resale market. In my July 11 posting I pointed out that the sales volume of condos was down from 2007 by 37% and that prices were down 13%. As I’ve mentioned in previous postings, this market is all about pricing. Buyers can smell value a town away, and until they do they will be not be submitting purchase offers. Since July there have been deeper reductions in condo pricing, and the impact on voume has been substantial. As of November 5, 2008, there have been 423 condos sold throughout Marin County vs 444 for the same period of 2007. That translates into a 4.7% drop in volume over the same period of 2007. Quite a difference from the 37% drop I reported in July. What happened? Well, condo pricing went from July’s asking price of $416.91 per square footdown to the current price of $389.19 which is almost a 20% drop from 2007 prices. Apparently, in condo sales it took/takes a drop of about  20% over 2007 prices to generate prchase offers. Again, I’m talking in Marin County generalities with each town and each neighborhood within each town performing diffierently. However, as a generalization these statistics speak volumes in helping with condo pricing.

 Feel free to contact me for a information regarding Marin County condominium activity and pricing for 2007 vs 2008.

This past Saturday’s NY Times Business Day section had a very interesting article by Joe Nocera titled “Shouldn’t We Rescue Housing?”.  In it Mr. Nocera effectively argues that the root cause of the current financial meltdown is not being addressed. That problem is the continuing decline of housing prices. He believes, and rightfully so, that until housing prices stabilize and the on-going foreclosures halt we will continue to experience financial turmoil. It’s perplexing that the Federal Government has pledged hundreds of billions of dollars to stabilize Wall St. but has thus far done little to stabilize the housing market and the lives of those Americans who are directly and adversely affected by the mortgage-lending debacle - a debacle that has crippled not only the US but the entire world as well. Is the magnitude of the problem not apparent enough in Washington, D.C.? Or, could it be that there is not as much political pressure from homeowners as there has been from Wall St. Although the solutions proposed in Mr. Nocera’s article might not be perfect they certainly address the problem and will, hopefully, be the first real step in recognizing, addressing and effectively dealing with the real cause of the current crisis.

How many prospective home buyers feel that way? Why is there no motivation or urgency to purchase real estate in today’s market?There are a number of factors involved, but the biggest is confidence . Confidence has eroded to the point where we are now enmeshed in the proverbial vicious cycle. Once people lose confidence it takes a lot to restore it. Think about the person you trusted with your money, emotions - you name it. Once they’ve abused your trust, how likely are you to believe in them again. Not very likely at all. These days, that’s where it is with all things financial. Prospective home buyers in today’s market are worried that what they buy today won’t be worth as much next month. In some cases that’s true. However, all markets are cyclical. Just as we are suffering a severe credit crunch and declining home prices today, you can be assured we will once again experience a booming real estate market and readily-available funds. When will that be? That’s the tricky part, and by waiting for what you decide is the bottom of the market  you may very well miss the best opportunity to buy intelligently now.

Yes it is true that qualifying for a mortgage loan is more difficult than it’s been for several years. It better be. The ease with which loans were made in the absence of any documentation or qualification is one of the biggest causes of this mess - from the ballooning real estate prices to the Fed’s bailout of the troubled American International Group (AIG) . All do to reckless lending practices and an over-zealous Wall Street. Keep in mind that home prices, especially in Marin County, are lower and softer than they’ve been in decades and interest rates are still historically low. Does this qualify as the bottom?

Soon you may look back and realize the bottom of Marin’s real estate market has come and gone. These next few months may or may not be the bottom, but buying conditions - soft prices, low interest rates and a large housing inventory - are certainly optimal! Buying conditions haven’t been this favorable in Marin County for almost two decades. What are you waiting for?

I believe the confidence, both domestically and internationally, generated by the government’s takeover of Fanny Mae and Freddie Mac, along with the long-term profit that will be generated makes the take-over a very positive move.Check out our in-house mortgage broker, Ana Trueman’s, take on it.

Short sales, REOs and foreclosures. We sure have been hearing those words more often lately than we did for the last 10 years or more. Unfortunately, we’ll continue to hear them for many months to come. Some experts predict another 18 months of these types of real estate sales before we see them, for the most part, come to an end. Well, at least not here in Marin, right? Wrong. Unfortunately, Marin is not exempt from the real estate downturn. We are more protected than the majority of California and the rest of the country, but we are seeing plenty of short sales, REO, and foreclosures.

As of August 20 there were 1120 active listings of single family homes and condominiums/townhomes throughout Marin County. Of those listings, 203 were either a short sale, REO or foreclosed property ranging in value from $171,900 to $1,398,000. Those 203 listings account for 18% of Marin’s current inventory. That means that almost 1 out of every 5 listings is a financially distressed property.

Of the 776 sales since May 1st, 107 of them were either short sales, REOs or foreclosed properties. Those sales ranged in price from $144,500 to $1,162,500.

The overwhelming majority of these listings and sales have been properties in San Rafael and Novato. Those towns (at least parts of those towns) have seen and will continue to see declining property values. Whenever distressed properties are being sold in large numbers in any given neighborhood they set the value for future sales. The appraisers then use these lower sales prices to determine the value of upcoming sales. Hence, the declining values.

However, it may be a costly mistake for buyers to think that by staying on the sidelines and waiting to purchase until prices go down. The other part of the equation that must be factored in are mortgage interest rates. Even if a potential buyer might see a 4% drop in asking prices, they may also see a .25 or .5 point increase in mortgage rates, thereby negating the slight drop in home prices.

Whether you’re a potential home buyer or home seller it is important for you to know how your real estate market is performing before making a decision. As you can see, each area of Marin and even areas of the same town are performing differently. Your decision should be based on real estate information pertinent to your property, not information based on the overall market or the nationally reported real estate news.

The most challenging aspect of the slowed-down real estate market is dealing with people’s perceptions. Sellers still refuse to believe their homes are not worth quite as much as they were a  few years ago and buyers believe there  are free-falling prices. Both have a kernal of truth to them but both are blurred by their perception of reality. The SF Chroncle published a very good article regarding real estate perceptions. Check it out.

What an interesting, challenging and fun time to be a Realtor®! Fun? That’s correct. Remember, those of us who love this business got into it for one reason and one reason only. That reason is to help people. Now, that may sound like complete BS but, sorry, it’s true. We are at a point in real estate when there are a lot of people who need our help. Anyone who got their real estate license to make lots of quick cash, work a little and only when you want to, or for of the wrong reasons, must be very disappointed. Actually, most of those types are no longer in the business or are planning their exit from the business as I write this. As a matter of fact, California Association of Realtors has lost about 11% of its membership from 6/30/2007 to 6/30/2008, while nationally there has been a loss of about 6.1% and there will be many more to follow.

These days we have to be friend, foe and psychoanalyst to our clients  and it’s great. It’s such a pleasure when you can advise people in ways they haven’t yet heard and give them some relief from their worries. There is so much stress, anger, disappointment and confusion amongst home sellers and buyers that it’s a great feeling to give helpful counseling and to have a positive impact on them.

As they say, every cloud has a silver lining  and our silver lining in this cloudy real estate market is the great satisfaction we derive from helping our clients.

 In my last entry I said I believe Marin has seen the bottom of the housing slump and is starting its slow climb back to a healthy market. It’s interesting what we think a healthy real estate market is. After the blazing last five years of real estate sales we tend to lose a bit of perspective as to what exactly is a healthy market. Historically, in most parts of the country a 6 - 8 month stock of housing inventory indicates a healthy market. Currently Marin has just over 5 months inventory of single family homes, making our current housing market stronger than most areas at their strongest. One thing areas like Phoenix and Las Vegas do not have is intrinsic value. They have miles and miles of cheap dirt where thousands upon thousands of homes can be built, subdivision by subdivision, with no intrinsic value at all. Each new subdivision squashing the home prices of the subdivisions that came before. Certainly not the story in Marin.

Unfortunately, with the year’s 2^nd quarter reports the recent news has been pretty negative, the latest being the closing of IndyMac, the nation’s second largest wholesale lender, and the concerns with Fannie Mae and Freddie Mac .

Rest assured that we’ll be hearing negative news for the balance of the year but remember that “real estate is a local business” and, as I said in my last entry, our local market is definitely on the mend.

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.