Mortgage rates are under pressure from Treasury Bond selloffs, further complicating recovery for the real estate market. We’ve seen home purchases of existing homes rising in volume for the last few months, which is a welcome sign of a possible turn around. But this is largely due to “fire sale” pricing on foreclosed properties combined with the availability of extremely low mortgage rates. Rates have been low because the Fed has been buying treasuries to keep yields low. But now it seems questionable whether Bernanke et al will continue to do so and this has investors spooked. So corresponding mortgage rates, especially for 30 year fixed rate loans, jumped suddenly last week to whopping increases of .5% or more. I’m hopeful that a pending announcement by the Fed regarding it’s buying of additional treasuries will be made this week, and that the Fed will, indeed, continue to buy them. If this happens, rates should go back down. However, if the Fed declines to do so we may see rates continue to climb, bad news for an already struggling real estate market.

 
The national average decline in median home prices stands at -26% since the peak of July 2006. While this is obviously a troubling number, it could be far worse. Here is Marin we are faring better than many parts of California. Median home prices for all of California in April stand 54.3% lower than in the spring of 2007, which was California’s high point in the market. But in Marin Country, as of April, our median declines are -20.13% from this time last year. When one considers that more than half of the properties changing hands these days are foreclosures and short sales (with drastic price reductions), this number is not all that bad.

 
With this in mind it would seem that Marin continues to hold it’s value exceptionally well in the face of the worst economy in a century. Sales volume is steadily increasing in 2009 thus far, a welcome trend. When will prices stabilize and (gasp!) rise again? Once foreclosed property inventories have been sold, provided unemployment rates do not rise further, and wages do not deteriorate, we should see a return to a more balanced market. It’s good to remember the basics of economics so that you keep perspective, the law of supply and demand. And if there’s one thing that’s true in Marin, it’s that this area is in demand and likely will continue to be for many years to come. We certainly have a superlative location, location, location…!