This article concerns itself with the relative price and value of one of Marin's most affordable towns-Novato. In other parts of California (and certainly across the country), real estate prices are down by 30% and foreclosures sky-rocketing. Yet, such phenomenon are very limited in Marin. In fact, much of Marin is experiencing a remarkably resilient home sales market trending upwards (even if just incrementally) in price. 
Yet, in Novato (Northern Marin) many home buyers (especially those in the entry level and move-up markets) are firmly entrenched in "wait and see" mode. They are waiting to see what happens with prices. They are waiting to see what happens with interest rates. They are waiting to see what everyone else does. But, time may be running short. Some time soon people will be talking about how with the benefit of hindsight they should have done this or that, bought this home, or that fourplex. It's inevitable.
Although the real estate market in Novato is gripped by lethargy (and home prices have dipped by 12 - 15 percent), it is for this reason that buyers should start taking aim and firing in the weeks and months ahead. As stated by Warren Buffet, "the time to get interested is when no one else is." While Mr. Buffet's commentary generally focuses on stocks and corporate governance, his observations and musings often apply in other areas, and certainly apply here. Real estate cycles create opportunity.
Buying A Novato Home
For buyers who are looking to buy their own home in Novato, there is great value out there RIGHT NOW. The question many are asking is "are prices at rock-bottom?" Who knows. Truth is, I don't think that is the only, or even the most important, question to ask.
Even if prices did come down another 2 - 5 percent, who can GUARANTEE that interest rates are going to remain as rock-bottom low as they are right now? You can get jumbo, interest only loans at 6.25%! Indeed, interest rates remain very close to their historical lows. And it seems to me (and many analysts) that the recent problems relating to the alt-A loan meltdown will inexorably lead to higher rates in the future as lenders try to recapture lost profits. So, today's rates may be lowest we will see for a long, long time. And those low rates are very likely to have a larger impact on your monthly mortgage payments than the price you pay for the house.
Mortgage math is important to understand. Let's assume that today you could get an interest rate of 6.25% and that prices will go down (which is not happening in most of Marin, nor is it expected to happen). Let's also assume that you "wait and see," and eventually buy a $1 million home for $950,000 (5% less than its current price). But, when you finally end up buying, rates go up just a bit to 7.25%. You will pay more money out of pocket each month, even though you paid 5% less for that home! The difference in your monthly payments on your loans would be approximately $350/month. Why? Because with today's low interest rates, the cost of borrowing the extra $50,000 is very low. As interest rates go up, the magnitude of increased monthly payments increases very rapidly.
The opportunities in the Novato market are extraordinary. Two years ago there were very few homes priced under $600K on the market at any given time (maybe 2 or 3, and they would sell quickly). Today there are 23 such entry-level homes, 3 of which are under $500K. In Novato's move-up market segment, between $600K and $800K, there are 84 homes currently on the market. Granted some of these homes are not priced correctly for today's market. But, many of these homes represent very good values. And those who need to sell, need to sell-their prices are SOFT. Remember, "price is what you pay and value is what you get" (another Buffet quote).
Investing in Novato, Marin County
As for investors, Mr. Buffet's words again provide insight, "we attempt to be fearful when others are greedy and to be greedy only when others are fearful." Clearly, right now, fear is high. Capable buyers (e.g., those that can document their income and have good credit scores) are "waiting to see," and everyone else is a renter. Thus, rents are up. And I can personally attest to a strong demand in the rental market in Novato. I recently helped investor clients secure tenants for two Novato properties. My voicemail was bursting with inquiries and my inbox was packed with applications. And these were strong applicants, many of whom are former home owners with lots of money in the bank who are "waiting to see" (e.g., they are fearful). In addition, many retirees seeking to retain their tax base are selling their Southern Marin and Central Marin homes and relocating to Novato (where they get more bang for their buck), which will certainly boost appreciation at the higher price points.
The great deals are not limited only to Novato, but can also be found throughout the North Bay. And this applies not only to single family residential properties, but also to multi-unit complexes. In fact, there are currently several large multi-unit complexes for sale with very attractive terms. Remember, those who need to sell, need to sell. Indeed, if you have money and would like more money, call me for ideas.
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