Everyone is looking into their crystal balls right now, trying to figure out where the market is going in 2007. Is it going to get worse? Is the bubble popping? Or are we having a “soft landing”, and a return to normalcy?
As usual, the Marin Independent Journal takes it to extremes, with a recent headline screaming about a 5% average price decrease for the month of December.
I’ll put a stake in the ground right now. I’m figuring this year will level off in terms of transactions, minimal if any appreciation, and in general, a balanced market. What leads me to this conclusion?
1. Anecdotal evidence. There’s plenty of activity right now. We have been getting lots of showings on our listings. Well priced homes sell fast - one home in our office went out last week, well priced, and had eight offers, another one had four offers. We work in the largest office in Marin County, so we get a pretty good idea of what the market is like, and there’s plenty of activity here. Don’t kid yourself - there are plenty of buyers out there
2. Interest rates are holding steady. They’ve climbed a bit in the last few weeks, but the 30 year fixed for a jumbo is still around 6.35%. That’s great by historical standards.
3. The numbers. What the IJ did not point out is that relative to last year, the number of closed sales in December - 226 - was nearly the same as a year ago -238, and that’s the way it has been trending. Percent in contract (24% as of January 15) still shows we’re in a slight Buyer’s Market, and that number has barely changed in three months. We’re in a Balanced Market for Homes under $1MM, with 27% in contract.
4. History. Looking back at 40 years of pricing in Marin County real estate, and the pattern is pretty typical. A few years of rapid appreciation are usually followed by several years of no change in appreciation to slight increases. I think we’re right where we were in the early 90’s, which was the beginning of a long period of price stability.
More later from Carol Rodoni, a Bay Area real estate veteran who spoke at our office the other day and had some great insights on the market.
Here’s the numbers:
Total Homes Available: 721
Homes in Contract: 120
Percent in Contract: 24%
Under $1mm In Contract: 27%
$1MM-$2MM In Contract: 20%
$2MM-$3MM In Contract: 18%
Hottest markets are still Larkspur (33% in contract), Greenbrae (44% in contract) and Kentfield (36% in contract). These bases are small, but the trend for homes for sale in these markets have been strong for the past several months.
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