The leading indicator of future sales is the number of homes in escrow at a given time. We have experienced over 60 new escrows in five of the past seven weeks and over 70 for the past three weeks. May 2009 new escrows will likely surpass the levels of April and May 2008. As you can see from the below chart (which goes back 6 months), the number of escrow is up 105% and sales are up 30%.
The upsurge in sales and escrows is seasonal, but also due to low 5% interest rates on conforming loans right now. We are also seeing a spike in home sales at the low end due to the increased FHA loan limit (now at $729,750). Given the activity we are seeing, it seems likely that the traditional Summer slowdown in home sales will be modest as buyers continue pursuing those "value" properties through the Summer. This year is shaping up to be one defined by "value."
The chart below shows a 90-day rolling average of Mill Valley's new listings and absorbed listings (e.g., sales), comparing current numbers with those of last year. Note that each is about equal to 2008. If you would like to review a similar chart for any other town or city in Marin or San Francisco, please let me know.
Countywide, inventory is up to 830 single family homes for sale (we had about 643 last month) in the Highway 101 corridor (this number excludes Western Marin inventory and condos). Open houses this past Sunday (an unseasonably hot afternoon) were busy. I had 13 groups filing through my open house in Corte Madera. I also heard that an agent in my company had 50 groups come through her $2 million plus listing. There is definitely a sense that with a little positive media and some further anecdotal evidence (and actual closings) that buyers are jumping because they believe the bottom is here or near, the market will surge with pent up demand. Certainly, well priced, updated homes in great locations are selling.
The following graph breaks down the current number of homes for sale and price ranges in Marin County in March 2009, along with the price ranges for each town and/or city.
|Town/City||Homes for Sale (Active Listings)||Price Range|
|Mill Valley||137||$474,000-$6.5 million|
|Corte Madera||23||$699,000-$3.6 million|
|San Anselmo||62||$525,000-$2.995 million|
|San Rafael||172||$360,000-$6.5 million|
Notes from our letter to Mill Valley sellers (but, applicable to all sellers):
On the buyer side we are noticing a shift in the selection and valuation of homes. From 1998 - 2008 buyers place a high "prestige" value on certain neighborhoods and were very focused on "I want to live in Sycamore Park". Now we see buyers seeking "value". They are comparing like priced listings in multiple Marin communities and seeing what value they can get for their dollar. Essentially, a buyer shift in focus from "prestige" to "value". Sellers must be priced for perceived value.
Two other clear messages from buyers are: 1) A trend away from major remodels. This is likely a result of the changing credit markets and the loss of capital buyers experienced in the stock market meltdown. 2) A lack of willingness to write an offer on a property that is not priced in appropriate "strike zone". Buyers seem to wait for appropriate pricing before coming forward with an offer vs. writing a low, more competitive offer. The rationale seems to be, "what if I write an offer and the seller accepts it? We will clearly have paid too much". 3 - 5 counter offers are not unusual. These dynamics are not easy to anticipate much less manage. We manage these issues every day. Only closings and comparables will add clarity and consistency.
Notes to sellers: 1. If you do not need to sell, this will not be the time in the market to maximize gains. While we feel the "bottom is forming", we are not projecting high-single digit year-over-year appreciation until we see the number of homes closed exceed the ten year historical rate of 377+ per year. 2. Be informed; tour the competition in your price range. 3. Be realistic about your asking price. Serious buyers are generally represented by talented, knowledgeable agents. If you are selling in Spring '09, time on the market is not your friend. The "perfect home" for the "right price" should trade in its first 30 days.
For a detailed executive summary providing statistics and trends relating to the Marin real estate market (or any specific zip code), please call me any time (I am Kyle Frazier, Marin Realtor & CRS, Morgan Lane Marin Real Estate) at (415) 350-9440 or e-mail me at Kyle@NorthBayRE.com . It is always my pleasure to be of service.