Marin Real Estate Pulse

REO House

March 10, 2008

REO is a real estate term which means “real estate owned”.  The real estate is owned by bank or lender, typically as a result of foreclosure.  When a bank lends you money to purchase a house, the home is collateral for the loan which means if you don’t make your payments the bank has the right to take ownership of the property.  Mind you, this is not property the bank wanted or wants to keep, it is a drag on their balance sheet and ties up money that could be used for other loans.

Once a bank owns the home they want to sell it a quickly as possible.  This does not mean a fire sale but often the prices are slightly under market price.  The banks will use a professional appraiser and a couple of real estate brokers to help determine market price.  The bank is not legally required to complete the usual disclosure documents because typically they don’t have enough information, though they still must disclose what they do know.  For buyer’s this means the home is purchase “as is” so it is especially important to get good inspections.

 Most of Marin County Real Estate does not know what a bubble is.  Sure, the Novato market is soft with lower prices and Marin County Starter Homes have not prices like this in years but when you look at the whole picture we are doing quite well.  The chart below is for single family homes and does not include condominiums.  It looks at January BARIES MLS results for three years and was compiled by Warren Carreiro, a broker with Frank Howard Allen Realtors.  Looking at one month at a time does not show a tread, however, with three years running it suggest where the market stands.

Marin County Single Family Home Sales (using median for square feet, sales price and days on market: DOM)

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.

                                             4^th Q 2007            4^th 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.

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

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

If you purchased your home in the past few years you may be eligible to temporally lower your property taxes.  You must act by November 30^th,   so call the Marin County Assessor (415) 499-7215 to verify details.

With all the newspaper headlines you might be tempted to think anyone that owns a home would qualify but it does not work that way.  For the current tax year vales are based on what your home was worth January 1, 2007.  The assessor’s office only looks at closed sales, not how much they are asking for the home next door.  The comparable sales should be plus or minus three months from January 1.

All of this is based on the difference between the current tax value (assessment) and the value of January 1.  If you have owned your home for several years in your assessed value is LOWER (this is true for most homeowners) than the January 2007 value don’t do anything.  Even if you bought your home two years ago you likely will not qualify for a reduction, it really depends on your home, neighborhood, and city.  Novato, and in particular Hamilton have seen reduced values.  From San Rafael south values are similar to two years ago, some more, some less. 

The tax reduction is temporary, only lasting until values go up again.  You can file for a permeate reduction if you have special circumstances.  For example, you bought your home thinking it was in great condition only to find out it needed a new foundation, plumbing and electrical.  Really what that means is you overpaid for your home and it basically did not have anything to do with then current market conditions.  Call the Marin County Assessor for details.

If after reading all this and you think you have a case get the form and visit the Marin County Assessor.  By the way, this applies to all of California. For more information Google “California Prop. 8″.

Have a great Thanksgiving, and let me know if you have any questions on this.  Remember, if you ever need a contractor or service for your home, I keep a list of the good ones.

The statics shown below indicate the percentage of homes on the market that are in escrow (the higher the percentage in escrow, the stronger the market).  It is interesting to see how the market shows downs as the mortgage mess hits but have since started to turn around.  Because it usually takes a month or so for a home to sell once it goes in escrow the numbers tend to follow, rather than lead, what the market is doing.

 Considering how badly real estate is in many parts of the state and country we are lucky the Marin real estate market is doing as well as it is.  Historically Marin prices have not taken the wild swings down so this is not surprising to see this again.  If you bought your home within the past couple of years and are trying to sell it now be prepared, you may be taking a loss.  Marin real estate, like all real estate is a long term investment.  Don’t look at real estate as day-trading or you may be taking the same financial hits day-traders do.

Warren Carreiro
warren@realtyofmarin.com
http://www.realtyofmarin.com/