If you talk to anyone who understands the current real estate market you’ll be told that until the market “stabilizes” we will not begin to see any level of appreciation. Actually, until the market is stable we will continue to see eroding values/prices.

As an example, I often mention the “absorption rate” of our current inventory of Single Family houses. That rate is calculated by dividing our active listings by the last full month’s sales. Not the most accurate long-term information but great as a “snap-shot” of the market.

Currently there are 971 active single family homes available for sale and there were 217 single family houses sold in June 2010. The rate is 971/217 equalling 4 1/2 months. (I am NOT including condominiums and townhomes in my analysis as they constitute a different market than single family homes.)

An absorption ate of 4 1/2 months would be a huge improvement if it were county-wide. However, a quick look at two Marin towns will illustrate the disparity in our market. 

Novato has 167 active single family homes and sold 49 in June. The absorption rate is 3 1/2 months. As the number of months in the absorption rate decreases the closer that market is to stabilzating and potentially becoming a “sellers’ market”. 3 1/2 months is a solid indication that Novato’s real estate market is stabilizing.

Now let’s look at the opposite end of the spectrum in Belvedere. Belvedere has 37 homes for sale and had 4 sales in June. That translates to 9 1/4 months for absorption. Quite a different story than Novato’s and one that indicates continuing price reductions for Belvedere.

Here is the breakdown of units sold and average square foot prices for the ENTIRE county:

June 2009  186 sales with an average square foot price of $478.46

May 2010   190 sales   with average square foot price of $495.13

June 2010  217 sales with an average square foot price of $474.86

To buyers this a tough market but one with trremendous opportunities - soft prices, abundant inventory and historically low 30 year fixed mortgage interest rates.

For sellers this is a hellish market. Buyers are extremely tough in their negotiations and are prepared to walk away from the transaction without getting certain seller concessions regarding inspection findings, possible undervalued appraisal, etc.

As they say - no pain, no gain. There will be continued pain in the market but, hopefully, with the understanding that the pain is necesary for us to attain the market stabilization we so desperately need.