Monday, March 12th, 2007 in Blog, Market Trends, Buying & Selling Homes
This is a copy of the March 12, 2007 Editorial Opinion from the Marin Independent Journal (http//www.marinij.com/editorial/ci_5417980). I thought you would find it interesting. If you are looking for a Marin home and your timeline is not short term the article ends by saying “If you are waiting for a better time to buy in Marin, good luck”
Warren Carreiro
Marin’s fixation with the price of real estate Staff Report Article Launched: 03/12/2007 08:22:54 AM PDT SO JUST WHEN is the real estate bubble going to burst in Marin? After all, how can home prices just keep going up? Marin’s median home price remains close to $1 million.
Marin residents love to talk about home prices – theirs and their neighbors. “Conventional wisdom. Supply and demand. Peaks and valleys. Interest rates. Interest-only mortgages. Time to refi again. A weakening economy. Longtime residents looking to cash out. What happened to all the buyers?”
Renters often are envious – and feel as if they are watching a train that keeps pulling away from the station. “We should have bought last year. Last year. Last year.” So much of Marin’s wealth is tied up in real estate that talk of the bubble bursting, of prices collapsing, makes many residents – and businesses – nervous. We can’t predict the future, but recent history tells us that perhaps we should stop fretting so much. As the investment gurus are fond of saying: Think long term.
The IJ’s Gary Klien took a close look at Marin house and condo prices for the past 10 years – for the county and city by city – along with the number of houses and condos sold each year. Since 1996, the median home price has increased 152 percent in Marin. That’s probably not surprising to anyone who has lived here or shopped for a home here. And some years there have been some big jumps. In fact, the median home price has increased every single year since 1996. Even last year, when the housing market was taking a beating in many parts of the country, Marin’s median price, which is among the highest in the nation, increased 1.5 percent. Let’s go back even further. Marin home prices soared in the late 1980s and then cooled off. The result: Several years when the median price remained flat, moving up and down in a narrow band. In 1990, the median price was $360,000; in 1993, $351,000; in 1995, $365,000. It was up to $380,000 in 1996 and off to the races for the next decade.
If you bought in the early 1990s, on average you had to wait at least a few years before prices started to climb. And on paper, your home could have been worth a little less than what it cost during that period. People who bought then and had to sell a few years later probably didn’t make much money – if they made any. Since then, Marin’s housing market has been remarkably strong. Sure, people who have bought homes with little down and interest-only mortgages can run into trouble if they are forced to sell. There often is a fine line between speculating and stretching to afford your dream house. Prices seem to have flattened out in Marin again. How long that will last is anyone’s guess.
The county’s housing market seems to defy logic in a related area. The number of homes sold often seems to have no consistent correlation to prices. The number of homes sold in Marin in 2006 dropped 21 percent from 2005 after a large drop in 2004. Prices went up 1.5 percent. Homes are taking longer to sell, which would seem to indicate a buyer’s market. But prices are holding steady. There have been periods over the past 20 years when the number of homes sold soared or dropped sharply – but seemed to have little impact on prices. Talk of a bubble has some buyers on the sidelines. That pushes some sellers to the sidelines. Many sellers are longtime owners who have huge equity in their homes. They often are reluctant to sell for what they consider a low price. Many don’t have to sell. If they don’t get their price, they pull their home off the market. They don’t move – or they rent it out if they bought another home. Fewer homes being sold also means many people are making less money – real estate agents and all those businesses that depend on home sales. And home remodeling. Marin’s economy certainly benefited from a sustained strong real estate market over the past decade.
Now, everyone is trying to figure out what the market will do next. When the market was roaring and homes were getting multiple offers – those famous bidding wars – buyers got swept along. That emotional tide has changed. While emotions are hard to quantify, numbers may offer some solace for those trying to make a decision or trying to figure out what might happen in the next few years. Recent history indicates that a home in Marin is a remarkably stable – and profitable – investment. If you are planning to keep your home for a reasonable period, and can afford to buy one in Marin – and the sobering reality is fewer people can – the Marin “bubble” has shown it has a pretty thick wall. If you are waiting for a better time to buy in Marin, good luck. �
