Marin Real Estate Pulse

Monday, June 01, 2009

The Novato housing market is on fire, the inventory can’t keep up with buyers. At least that is the case for single family homes priced between $400,000 and $500,000. For those that don’t know that is the lower end in Marin County.

A majority of those homes are receiving multiple offers. When agents outside the area visit Marin they tell us our market is booming. The newspapers give a different impression, one that says real estate is still in a slump, and it is for most of the country and many areas of Marin.

What is it about Novato that is drawing all the buyers? Well for one, Novato got hit on prices much more than most other towns. Just a year or two the $400,000 homes were selling for close to $700,000. Novato has a history of pricing volatility both up and down. One January just a few years ago prices increased 10%. Then late last year it seemed you could not price your home low enough to attract buyers.

Today there are 26 single family homes priced between four and five hundred thousand and 20 of those homes are in escrow. That is 77% in escrow which is defined as a strong sellers market. The buyers of those homes are typically investors or first time homeowners.

While Novato may be enjoying its hay day the high priced homes in Marin are taking price reductions daily. There just are not that many buyers willing to spend a couple of million for a home.

Warren Carreiro, Broker

The number of sales and median price of Marin county single family homes has fallen dramatically over the past five years. All the numbers below are from January 1 to May 18 (YTD) for each year.

While single family sales overall are down 55% from 2005, for homes one million or more sales for the same period are down 74%. For home $500,000 or less the number of sales are up 1,300% (6 to 78).

So when we read the headlines “Median Price Plummets” don’t just assume that every house has lost half its value (some have). The truth is prices are down but what really is affecting the median price is sales at the low end have jumped while sales at the high end have plummeted. When the median price is calculated it does not take into account which homes are selling.

Number of Single Family Sales January 1 to May 18 for past five years

Source: BARIES Marin County MLS

Median Marin County Price for January 1 to May 18 for each year

Source: BARIES Marin MLS

Information deemed correct but not guaranteed.

Tuesday HUD’s Federal Housing Administration said it would allow first time homebuyers to use the Federal tax credit of $8000 toward the down payment at closing on a purchase.  WOW!  They are going to allow approved lenders and local and state governments to issue short term bridge loans to buyers for their down payment.  Once the tax credit is received, the loan would be paid back.  BUT (isn’t there always a “but”??) lenders need to figure out how to create the qualification method, the proper and legal paperwork, and have all these details approved by FHA……..the tax credit expires December 1^st so they better get moving!!  HUD predicts that 53% of the purchases in 2009 will be by first time home buyers.

PS: for a look at current Marin home sales stats follow this link.

Warren Carreiro, Broker

Propositions 60 and 90 were passed by California voters and lets you transfer your current property tax rate to your new home sell and purchase your primary residence. These propositions apply if you or your spouse are 55 or older. In some situations the rules also apply to permanently disabled individuals (prop 110).

This is not intended as tax advice, I am not qualified to offer that so please check with your accountant, attorney and the county assessor to verify you qualify.

The basic rules are:

1. The home must be your primary residence.
2. You or your spouse must be 55 or older when you sold your primary residence.
3. The replacement property must be purchased two years before or after you sell your primary residence.
4. This exclusion may only be used once in a lifetime.
5. The replacement property must be of equal or lesser market value.
   1. 100% if purchased before the sale of your home
   2. 105% if purchased up to one year after the sale
   3. 110% if purchased in the second year.
6. Prop 60 only applies if you new home is in the same county as the one you sold.
7. Prop 90 allows transfer to a different county if the new county allows. Most counties do not follow prop 90 so check with the assessor before you count on this. Counties change their rules so check again even if you have previously done so.

The counties take the rules very seriously so don’t think or try to “beat the system” because it will come back to bite you. Also, the rule refers to market value and in some cases counties are looking at REO (Bank Owned Homes) as not selling at market value. For more information look at the Board of Equalization web site.

Warren Carreiro, Broker.

Of all the farmers markets in Marin, the Civic Center on Sundays is my favorite. The focus is on food, not crafts, which is what I think a “farmers” market should be. The other plus is the wide variety of lunch and food vendors.

This Sunday after shopping I had a bowl of Green Curry with rice that was out of this world.

The web site for the various Marin farmers markets is well put together and lets you see if your favorite vendors participate.

My kids like the downtown San Rafael farmers market because it is more of a party. They have live music, and an eclectic mix of people. It is also walking distance from our house which means they don’t need mom or dad to pick them up.

Warren Carreiro, Broker

The front page of the Huffington Post had an interesting article regarding Short Sales and why banks do not like them. The focus of the article was that if the bank sells Short they have to write off the short portion of the loan. If they prevent or ignore a Short Sale they can keep the full value of the loan on the books. I am not sure this is true if the owner is behind in their payment which most Short Sale owners are. Here is the link to the Huffington Post article http://www.huffingtonpost.com/2009/05/08/short-sales-banks-blockin_n_199099.html

Paul Hickman of Stewart Title feels banks don’t like Short Sales because they fear getting scammed by the home owner. An example of this is the owner sells to a friend or family member as a Short Sale and then in a year or two buys the house back (pre-arranged) from the “friend”. The result is the original owner gets the house at a much reduced price and the bank has lost a lot of money. All the Short Sales I have been involved with have a form required by the Short bank saying there are no secret deals. Usually they require that the new owner can’t have any pre-arrangement to rent back to the sellers.

Either way, the article is correct, banks can and often do take months to respond to an offer and by the time they do the buyers’ have given up and found another house.

Warren Carreiro, Broker

On Monday May 11^th first class postage rates increase from 42 cents to 44 cents. You can order Forever stamps online at http://www.usps.com and save yourself the increase. Forever stamps are valid through rate increases so it makes sense to stock up.

The cost of most other shipping with the post office goes up as well on Monday. Must be nice to be able to increase your rates because your cost goes up or utilization down. Not the way the private sector works.

Happy Mother’s Day