Archive for January, 2008

What does a Fed cut mean?

Wednesday, January 23rd, 2008

Crazy market.  Below is commentary on what exactly is happening when the “Fed cuts rates.”

Yesterday’s Fed move caused folks to think back on what Fed Funds really are. Remember that “Fed Funds” is the rate that banks can borrow money from each other to keep their reserve amounts in line.  This is a one day, or overnight rate. The “Discount Rate” is the interest rate at which an eligible financial institution may borrow funds directly from the Federal Reserve when their reserves dip below the reserve requirement. The Discount Rate is considered the last resort for banks, which usually borrow from each other. The Federal Reserve can change either, but they can’t change mortgage rates. If a borrower asks you why their mortgage lock doesn’t drop .75%, here is the simplest answer.  Moves in overnight rates aren’t directly linked to mortgage rates.  They set the stage for lower rates, but usually weeks down the road.  I like to use the analogy of steering our economy with steering a huge tanker in the ocean.  If the captain of a big tanker wants to make a left, he turns the wheel a mile or so in advance.  Same thing with the economy.  Corrections made now usually do not manifest themselves for a month or two.

Mortgage rates are dependent upon many more complicated factors than the Fed raising or lowering them. The supply of mortgages, the demand by investors for them, the value of the servicing, the credit quality of the borrower, etc. all factor into mortgage rate.

Here is something to consider.  Yesterday’s stock market opened in a free fall.  The Fed had to make an emergency cut announcement to stop/avoid a stock market collapse.  The “stock market” liked the move, came back in the end, and only closed around 128 points down in the Dow.  Now here is the thing…If the Fed did not cut the Fed Funds rate and Discount Rate, our mortgage rates would have been lower.  A simple rule of thumb is if the stock market is up, rates can be up.  If the stock market is down, rates usually follow.  So, what do you think might happen if the Fed cuts again at next weeks meeting?  If the stock market perceives the cut as a good thing and goes up do rates follow?

For those “students of the game” who are still reading, you may wish to check out the links below. may be a help to you.

Also check out

The above was written by Chris Weber of Residential Pacific Mortgage.  Chris may be contacted at
Warren Carreiro, Broker

Marin Real Estate 4th quarter 2006 vs. 2007

Friday, January 11th, 2008

Sales of residential real estate for all of Marin County were down 29% for the last quarter of 2007 compared to 2006.  I do not think that should come as a surprise to anyone.  Overall the median price is up which is somewhat misleading because there are many examples of homes that sold one or two years ago that are on the market again for a lower price. To help explain the seeming difference it is necessary to look at geographic regions within Marin County Real Estate.  Those numbers show that significantly fewer homes are selling in North and West Marin.  Home sales are also down from San Rafael South; however, the percentage decline is much smaller.  As you likely know, your Marin Realtor should tell you if you don’t, Central and Southern Marin Real Estate is more expensive than Novato and much of West Marin.

The statistics shown below are from BARIES, Marin MLS as of January 11, 2008.  I have divided Central and Southern Marin from Northern and West Marin to help explain this difference.

                                             4th Q 2007            4th Q 2006

All of Marin

Number of Sales                 484                         686        

Median Price*                     $878,000              $840,000

Median Square Feet          1,693                     1,677

West & Northern Marin

Number of Sales                110                         206        

Median Price*                   $630,000              $730,000

Median Square Feet         1,580                     1,635

Central & Southern Marin

Number of Sales                372                         475        

Median Price*                   $984,000              $900,000

Median Square Feet         1,773                     1,687

*Includes both Marin Single Family Homes and Condominiums.

Warren Carreiro, Broker

Starter Homes in Marin County

Tuesday, January 8th, 2008

Looking across California it is obvious that communities with a huge amount of new home construction over the past several years are suffering substantial price drops.  Much of the new construction was first time buyers with little money for a down payment.

Marin County has very little new construction and as a result a fairly fixed supply of single family homes.  This, I believe, is a significant part of the reason Marin real estate prices have not taken a beating like much of the state.  The other major factors that make Marin “special” are quality of life issues; weather, open-space, culture, etc.

Although the number of home sales is down overall in Marin, that is not the case for the very expensive homes indicated in my prior articles or for single family residences under $500,000 as indicated below:

Year                                     2007                       2006

Number of sales                  17                           13

Median Price                        $465,000              $499,000

Median Square Feet           1,003                     810

As you can see, Marin starter homes are more affordable than they have been in several years. 

Information from BARIES Marin MLS as of January 8, 2008

Warren Carreiro, Broker

Marin 2007 Housing Market in Review

Wednesday, January 2nd, 2008

Marin really is different, especially when it comes to housing.  We are lucky enough to live in one of the most beautiful places on earth with vast open space which is available for the public to use. Our weather is great and we are close to both the ocean and a reasonable drive to Tahoe.

These numbers show the median price of single family homes have increased in 2007 compared with 2006.  This increase in median price does not reflect the downward trend in Novato or other details which would show that homes in more expensive neighborhoods are selling faster than in less desirable areas.  Prices are down in many Marin neighborhoods, however, Marin is holding up better than most the county and state.  There are some great deals to be found, especially for starter homes.

                                                            2007                       2006

Median Price                                     $1,049,000           $955,000

Median Square Footage                   1,990                     1,882

Number of Sales                               1,990                     2,204

Information provided from sales listed in BARIES Marin MLS as of January 2, 2008

Warren Carreiro, Broker