Marin Real Estate Pulse

Some communities in Marin have banned or restricted gas leaf blowers.  The original bans in Belvedere were enacted because of noise issues.  Who wants to be woken up by your neighbor’s gardener at 8:00 A.M. Saturday morning? 

I still have my old gas blower in the garage; it has not been used in years, not because I was the first to go Green or didn’t want to disturb the neighbors.  They are just too hard to start, it would take me ten or fifteen minutes just to get the blower out of the garage and started. 

My wife purchased an electric Toro blower/vacuum for the yard and she loves it.  I was somewhat skeptical, how could that machine keep up with a Tim-the-tool-man Taylor gas blower?  Well, it does and we never have to run to the gas station, worry about neighbors, and are as green as you can be without raking (that will be our next step).  Not that I have anything against raking, it often works best, but for some of those tricky areas, nothing seems to work as well as a weed blower. 

I think the trend is good, we need to learn to get away from these gas powered lawn mowers and blowers.  Not only are the noisy but they also are not good for the environment and who wants to make our oil-producing neighbors richer than they already are.

Warren Carreiro, Broker

Frank Howard Allen Realtors

www.realtyofmarin.com

Warren@RealtyOfMarin.com

“Homes You Love. Advice You Trust”

For all the headlines you would think Marin County Real Estate had fallen off a cliff but the numbers don’t reflect that.  Below is a comparison of single family homes, condominiums, and both combined.   Although the numbers reflect just a 1% drop in median home price they really are not telling the whole story.

I recently closed escrow on a three bedroom home in San Rafael for $599,000.  At the peak of the market in 2005 this home would have sold for well over $700,000.  In 2005 loans were too easy to obtain and buyers, with 100% financing were playing with funny money and many were more concerned with monthly payment than amount paid.  This resulted in some buyers paying the absolute top dollar for a home and we are seeing some of those homes selling for much less today, often as a short sale or REO.

The truth is, regardless of what the numbers are showing, prices are down especially for the lower price range and less than the most premium locations.  On the other hand, homes over two million seem to be holding up well. 

These numbers are from Marin MLS (B.A.R.I.E.S) and are current as of July 14, 2008.

                January 1 to July 1, 2008                Jan1 to July 1, 2007

Marin Overall:                 

Number of Sales                981                         1,405

Median Price                     $875,000              $900,000

Average Price                    $1,194,230           $1,210,350

Single Family Homes:                   

Number of Sales                786                         1,111

Median Price                     $1,050,000           $1,065,000

Average Price                    $1,352,877           $1,363,208

Condominiums:                              

Number of Sales                194                         291

Median Price                     $469,500              $628,926

Average Price                    $542,416              $560,000 

Fannie Mae & Freddie Mac have been in most major newspapers including The Wall Street Journal over the past couple of days but who are they and what do they do? If you Google Fannie Mae you are as likely to get the Chicago chocolate company Fannie May as you are the financial institution Fannie Mae. 

Fannie Mae and Freddie Mac have essentially the same federally charters which is to provide a market for your bank to sell their loans to. Once banks generate a loan they usually sell the loan in the secondary market to either Freddie or Fannie. Banks sell off the loans so they have a fresh supply of money to lend to someone else.

Both Fannie or Freddie are corporations owned by stockholders, not federal institutions. Once they buy have a portfolio of loans they package them into bonds and sell them to investors.  The bonds are guaranteed by Fannie or Freddie so investors feel comfortable buying them.  After the sale they have new money to buy loans from banks and the circle goes on. 

This system has worked well for years but with the financial crises in the United States both Fannie and Freddie are having problems raising enough capital to fund new loans.  This is why they have made newspaper headlines, the Fed is coming to the rescue by offering to lend them money and may even purchase some of their stock if needed. 

The house in the May 19, 2008 Forbes article is estimated to cost two billion dollars, has 400,000 square feet and a separate gym for each family member.  It is in India and owned by Mukesh Ambani, the fifth richest man in the world.

Obviously money is not the issue. The question is how much house is too much.  Yes some people can afford this but how do you rationalize wasting the energy required to heat or air condition 400,000 square feet for one family?

What about Marin County, do families need 20,000 square feet homes?  If they can afford it why can’t they have it?  No one needs that much space, that’s why. We don’t have the energy to indulge egos.  Regardless of construction or energy efficiency no large McMansion is Green and none of them add any value to Marin.  I would argue, in the aggregate, they reduce the real value of Marin and the charm that has taken decades to develop.

Too many cute homes in Marin have been torn down to make room for the latest, greatest McMansion.  Unincorporated Marin and some Marin cities have enacted a maximum size for new home construction.  This is the result of some common sense and a combination of “not in my backyard” or “we don’t need any homes larger than MY McMansion”.

Is there really anything wrong with a family of four living with less than 5,000 square feet?  I don’t want to take away from anyone’s success or living standard I am just saying at some point the extra space is more about ego than requirements.  Sure, some may realistically use the space, large family, in-laws, home office, etc., and those don’t bother me I just don’t want Marin to be only for the wealthy.

No, this article was not written ten years ago, these are Marin condominiums from Sausalito, San Rafael and Novato all currently on the market with an asking price of less than $200,000.   The lower price point has taken a significantly larger hit than the average Marin house.

If you have an interest in looking at this type of investment property let me know.

While I am on the subject of lower priced homes there are 105 condos in Marin priced under $300,000 and what I find interesting is while 31 of those are in escrow the numbers don’t add up to all of them closing.  For example for February, March, and April 2008 an average of 3 units per month closed.  That would imply we have over 30 months of low priced condo inventory.  If you look at the over thirty in escrow the number should be closer to just over three months inventory.  So what gives here, is May going to be a super month or are these just not closing?  Because I have not been following this statistic I can’t say for sure but when probing a little deeper I find that the vast majority of these condos in escrow are short sales.

In prior post I have written about the large percentage of short sales that fall out of escrow.  Part of the reason for this is sellers and listing agents are not always realistic about the asking price.  After all, it is the bank that has to agree to take something less than the full loan payoff, they are the one short at the end of the day.  I am not defending banks or their prior practices by any streach, just pointing out that short sales fall apart for many reasons; lack of or untimely bank response to offers, and unrealistic asking and offer prices just to name a couple.  That being said, I feel if you are willing to put up with what it takes to close a short sale you better have gotten a very good price on the property.

First time buyers have not seen numbers like this in years. For the past few years (looking at the first quarter of the year for single family homes in MLS), 2005, 2006, and 2007 specifically; only 7% to 9% of Marin County homes sold for less than $600,000. For the first quarter of 2008 28% of homes sold for under $600,000.

It is an interesting number because it is more difficult for new buyers to get loans.  Most buyers tend to spend as much as they can afford when buying a home which means these were not buyers looking at $700,000 homes and then deciding they could get what they wanted for under six.

Where are these buyers coming from?  There is not a statistic to answer that question but here is my take.  In the past there were so few homes available at that price and those that were on the market did not offer much appeal.  Now when a buyer goes looking for a home and can’t spend over $600,000 they have some nice homes to choose from.  In Marin the lower price homes were hit the hardest with the mortgage mess.  This put price pressure on sellers to lower prices and they have.

If you thought you could not afford a single family home in Marin that may not be true any longer.

Reading the newspaper and watching television I could assume that my home town of San Rafael, California has experienced a meltdown as well.  Well, I hate to pop your bubble but the Marin County B.A.R.I.E.S (MLS) statistics don’t show that has occurred as you can see from the chart below.

Does this mean this is the best time to buy San Rafael real estate? As a real estate broker you would expect me to say, don’t wait, this is the best time to buy Marin real estate.  Well, I don’t want to disappoint but I don’t know when the bottom (or top) of the market has hit.  I recently heard someone say that those who will make money in real estate in the next ten years will be buying in the next two years and I agree with that.

Additionally, why are you buying a home, is this going to be a place to put your roots down and stay for many years or are you trying to flip it with perfect timing?  When I purchased my home in 1992 prices were soft for a couple of years after.  If my intention was to flip it I would have lost money.  That was not my intention, I was looking for a home for my family. The home has increased in value tremendously and has been a fantastic investment. It really did not and does not matter if the value goes up or down for a few years because I am not selling, this is my home.

So, if you are in the market for a home and plan on spending over five years there, Marin history says it will also be a great investment. If interest rates were to rise, and they are still low, it would make that purchase all the more difficult.  If you are waiting for the “bottom” of the market we may already be there and if you wait until the market turns it is too late to negotiate while you still hold the cards. 

Here are the statistics for single family homes in Central San Rafael (zip 94901) for the past three years

Homes are are taking longer to sell and if you can qualify for loan, you have great negotiating power.