Thursday, June 15, 2006

June 2006 Marin Real Estate Newsletter

To view the entire newsletter, click here: June Bay Area Real Estate Newsletter

Bay Area Real Estate Newsletter
June 2006


Marin Home Sales Statistics
Mixed Economic Indicators Cause Some Fluctuations In Mortgage Rates
Survey Says Number of Green Home Builders to Increase by 30% in 2006
Realty Tax Tips – Part 2
Contingent Sale Offers: How To Keep Everyone Happy
What do Liz’s Clients Say?
Fast Facts

Marin Home Sales Statistics
So see the June Stats, click here: June Marin Real Estate Stats

The overall Marin home sales market has cooled a bit from last month according to the following statistics.

These statistics show how many homes are available for sale in Marin, and of those how many are currently in contract (either pending or contingent). The average overall Marin market shows it is a Buyers Market. (Last month it was a “Balanced market”) It is very important to look at the specific category of house that fits your home or home that you’d like to either sell or purchase.

Homes priced under $749,000 are in a “Balanced Market”; Homes priced from $750,000 to $2.5 Million are in a “Buyers Market”; And homes over $2.5 Million are all in a ” Strong Buyers Market”.

Additionally, it’s interesting to note that Corte Madera, Fairfax and Larkspur are still all in “Sellers Markets”. This means that in those 3 towns, there is still a shortage of homes to purchase, which makes it harder to negotiate with Sellers on the Price.

Days on Market (DOM) and price changes when sold: The Average DOM for June is 61 days and the Median is 38 days. Sold price changes as compared to the original list price based on DOM. Although homes are sitting on the market for longer, prices are not dropping dramatically. For example, Year-to-date, homes that have “sat” for 121+ days the eventual sales price is still 95% of the original list price. Selling within 90 days, it is 97% of the original list price.

If you know of anyone who would like to receive this monthly newsletter or is thinking of either buying or selling a home please let me know. I’d love your referrals!

Mixed Economic Indicators Cause Some Fluctuations In Mortgage Rates
Rise In Rates Is Small And Gradual

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.63 percent, with an average 0.5 point, for the week ending June 15, 2006, up very slightly from last week's average of 6.62 percent. Last year at this time, the 30-year FRM averaged 5.63 percent.

The average for the 15-year FRM this week is 6.25 percent, with an average 0.6 point, up slightly from last week's average of 6.23 percent. A year ago, the 15-year FRM averaged 5.22 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.23 percent this week, with an average 0.5 point, up a little from last week when it averaged 6.20 percent. A year ago, the five-year ARM averaged 5.10 percent.
One-year Treasury-indexed ARMs averaged 5.66 percent this week, with an average 0.6 point, also up from last week when it averaged 5.63 percent. At this time last year, the one-year ARM averaged 4.25 percent.

"Mixed economic indicators are causing some volatility in financial markets. This invariably leads to the fluctuations in mortgage rates like what we have seen recently," said Frank Nothaft, Freddie Mac vice president and chief economist. "Still, there has been no drastic movement in mortgage rates and we see nothing on the horizon that would bring about any extreme rise or fall in rates going forward. Our economic forecast still indicates strongly that, even with gradually rising rates, 2006 may well be the third strongest year on record for housing."

Freddie Mac is a stockholder-owned company established by Congress in 1970 to support homeownership and rental housing. Freddie Mac fulfills its mission by purchasing residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage-related securities and debt instruments in the capital markets. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than four million renters in America.

Survey Says Number of Green Home Builders to Increase by 30% in 2006
New Report Shows How Residential Green Building Will Be Worth $19 Billion to $38 Billion By 2010

June 6, 2006 - Results of a McGraw-Hill Construction/National Association of Home Builders (NAHB) survey indicate that 2005 saw a 20 percent increase in the number of home builders producing green, environmentally responsible homes. The study indicates that number will grow by another 30 percent this year.

The new report – Residential Green Building SmartMarket Report – details these findings as well as additional information on the burgeoning green home movement.

After several years of slow but steady growth across the country, green home building — which applies innovative and environmentally sensitive construction techniques and products to reduce energy and water consumption and improve residential comfort and safety — is rapidly moving into the mainstream. By 2010, the value of the residential green building marketplace is expected to boost its market share from $7.4 billion and 2 percent of housing starts last year to $19 billion-$38 billion and 5-10 percent of residential construction activity.

“Green home building is not a fad, but a trend, and one that is increasing at rapid rates,” said Harvey Bernstein, vice president of Industry Analytics and Alliances for McGraw-Hill Construction. “The data we recently collected indicates builders will reach the tipping point by early next year, where more builders will be producing green homes compared to those not.”

This finding is a powerful one, Bernstein said. “With more builders creating green homes, and more consumers buying them, the rest of the industry will follow and increasingly begin to incorporate green features or practices into their homes and home building products.”

“It’s clear that more and more of our members are incorporating environmentally sensitive and resource efficient techniques into traditional home building practices,” said Jerry Howard, NAHB executive vice president and CEO. “It is a natural progression as home builders stay atop market trends.”

FREE…..You can search for Marin listings directly on Search for Homes

Realty Tax Tips – Part 2
By: By Robert J. Bruss

*For Part 1 go to last month’s newsletter:

CONFUSION ABOUT SALE OF HOME IN YEAR OF SPOUSE'S DEATH. When a principal residence is sold in the year of a spouse's death, IRC 121(b)(2) permits full use of the tax exemption up to $500,000, if qualified. The tax reason is a surviving spouse can file a joint tax return with the deceased spouse in the tax year of that death but not in future tax years.

However, surviving spouses should not rush to sell their principal residence within the same year as the spouse's death. The reason is when the surviving spouse inherits the deceased spouse's share of the home, the surviving spouse receives a new "stepped-up basis" for at least 50 percent of the home's market value on the date of death. In community property states, the surviving spouse usually receives a new 100 percent stepped-up basis to market value.

LITTLE KNOWN TAX BREAK FOR DIVORCED AND SEPARATED HOME SELLERS. Most divorced and separated couples are not aware they can still qualify for up to $500,000 total tax-free principal residence sale profits. In a little-known provision of IRC 121, if one divorced or separated spouse (called the "in spouse") qualifies for the $250,000 tax break by owning and living in the residence at least 24 months, the other spouse (called the "out spouse") can also qualify for up to $250,000 tax-free profits when the home is sold.

This tax break is frequently used when one spouse stays in the home until the children become 18 or 21 and the home is sold. Even the non-resident co-owner ex-spouse can then qualify for up to $250,000 tax-free home sale profits.

PARTIAL EXEMPTION IF YOU DON'T MEET THE 24-MONTH OCCUPANCY TEST. Even if you don't fully meet the 24-month occupancy test within the last 60 months before the principal residence sale, you may qualify for a partial exemption. Acceptable reasons for the home sale include (1) change of employment location qualifying for the moving cost tax deduction; (2) health reasons; and (3) unforeseen circumstances.

The change of work location and health reasons exceptions haven't caused problems. But "unforeseen circumstances" are more difficult as acceptable reasons are still evolving.
The IRS says these reasons are acceptable: (1) divorce or legal separation; (2) death in the immediate family; (3) unemployment; (4) decreased income leaving the taxpayer unable to pay the mortgage or basic living expenses; (5) multiple births from the same pregnancy; (6) damage to the home from a natural or man-made disaster or terrorism; and (7) condemnation, seizure or other involuntary conversion of the property.

If you meet the partial exemption test with one of the above reasons for the home sale, a percentage of your $250,000 or $500,000 exemption is available.
For example, suppose you owned and occupied your primary residence for 12 months before you moved due to a qualifying change of employment location. You would therefore be entitled to a partial exemption of 12/24 or 50 percent of $250,000 or $500,000.

HOW TO AVOID TAX ON MORE THAN $250,000 OR $500,000 HOME SALE CAPITAL GAIN. Thanks to large recent increases in market values, many home sellers have the nice problem that their home sale capital gains exceed the IRC 121 tax exemptions. The only way to make a fully tax-exempt property sale in that situation is to make an Internal Revenue Code 1031 tax-deferred exchange.

To do this, the home seller must (1) move out of their home and rent it to tenants (most tax advisers suggest at least six to 12 months); (2) then sell your former home rental property, and (3) use the sales proceeds to acquire another rental or investment property of equal or greater cost and equity.

Be sure to comply with IRC 1031(a)(3) (known as a Starker exchange) which requires designating the replacement property within 45 days after the sale and taking title within 180 days. Meanwhile, the sales proceeds must be held by a qualified intermediary exchange accommodator beyond the trader's "constructive receipt."

CONCLUSION. Internal Revenue Code is a very generous tax exemption allowing principal residence sellers to earn up to $250,000 (up to $500,000 for a married couple) tax-free every 24 months. But the easy qualification rules must be followed. For full details, please consult your tax adviser.

FREE…..You can search for Marin listings directly on Search for Homes

Contingent Sale Offers: How To Keep Everyone Happy
By: Dian Hymer

As the home sale market turns from a strong seller's market to a more normal market, we're bound to see an increase in offers that are contingent on the sale of another property.
This is good news for buyers who must sell first before they can afford to buy another home or who just don't want to own two homes at once. Keep in mind that an offer made contingent upon the sale of another home still is unlikely to work in markets where the inventory of homes for sale is low and where buyer demand remains high.
Prime candidates for a contingent sale offer are listings that have been on the market for a while or listings in areas that are bloated with inventory.

Here's how a contingent sale offer works. The buyers include a contingency in their purchase offer that says the purchase is subject to their existing home. If the buyers' property sells, the sale goes through. But, if it does not, the sale is off and the buyers' deposit is usually returned.
Given the choice, most sellers would prefer a non-contingent offer. It's less risky. However, there are ways to structure a contingent sale offer to make it appealing.

HOUSE HUNTING TIP: One way is to include a release clause in the contract. A release, or kick-out, clause allows sellers to continue to market their home in the hopes of finding a better offer. If such an offer comes along, the sellers notify the buyers that they must remove their contingent sale contingency by a certain date and show that they are able to close. Otherwise, they must withdraw from the contract. The sellers are then free to proceed with the other offer.
A release clause usually includes a time period--often 72 hours. But, it can be any time period that the buyers and sellers agree to. If you're dealing with obstinate sellers, you might shorten the time period to 48 or 24 hours.

This means that you'd have to move quickly if the sellers exercise the release clause. You may want to line up interim financing if you're confident that your home will sell and if you don't want to lose the new home to another buyer. This way, you would be prepared to remove your sale contingency and provide proof of your ability to close.

A contingent sale offer should include a time period of the buyer's home to sell. Some contingent sale contingencies are structured so that the time period runs until the closing date. This is advantageous to the buyer, but it ties up the sellers' home without giving them certainty that the sale will close.

Sellers might be more receptive if you structure your offer with two deadlines: one for the sale of your home and another for the closing of the new home purchase. This gives the sellers the option to cancel the deal if your home is not sold within a certain time.
Ideally, the release clause would expire as soon as you have an accepted offer on your home. This will preclude the seller from selling to another buyer after you've sold your home.
Buyers who have already entered into contract to sell their home are in a better position to negotiate. This is particularly so if the contingencies in this offer have been removed. In this case, you can make your offer contingent on the close of that sale. This is a stronger offer than one made contingent on the sale of your home.

THE CLOSING: Sellers who are entertaining an offer that's contingent on the close of the buyer's home sale should make sure that this sale is not contingent upon the sale of yet another property.

What do Liz’s Clients Say?

“In the best of circumstances it is not easy simultaneously selling and purchasing a home. It is particularly difficult when you have 3 kids, the oldest being only three years old! We cannot thank Liz enough for the extra work she put in on our behalf. The calendars she created to help remind us of important milestones, appointments and so forth was unbelievably helpful and critical to the success of both transactions.

Her contact list of industry experts such as electricians, plumbers, inspectors of every nature , financial advisors and so on was ever so valuable during our due diligence process. Her willingness to act as a delivery person, a moving person, a baby holder and playmate to a toddler when necessary exemplifies the extra miles she took to help us out and speaks volumes about her character and professionalism. The whole process was made much easier and less stressful because of Liz. And, because of her hard work, we sold our house for top dollar and we bought the house we wanted. Thank you!”
-David and Daryl Henzl

If you would like to have Liz help you sell your Marin home or help you in finding a home, or you know of someone that could benefit from her services, just send her an email:

“High-Touch through High-Tech”: Did you know that Liz McCarthy is ePro Internet Certified by the National Association of Realtors and that 70 percent of home buyers today use the internet in their home search? Why are you still working with a Realtor who isn’t a technology expert?

What this means to you:

Home Buyers: Liz is an expert in helping save you time by using the internet, email and other technology resources to help save your valuable time and money. She knows how busy you are!

Home Sellers: Liz will market your home extensively on the internet: a personal property website (see or for samples), she will post your home on over 50 websites, including Wall Street Journal, AOL, SF Chronicle,, and many other sites.

Fast Facts

Calif. median home price - April 06: $ 562,380 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region April 06: Santa Barbara So. Coast $1,250,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region April 06: High Desert $ 334,860 (Source: C.A.R.)

Mortgage rates - week ending 6/15/06: (Source: Freddie Mac)
· 30-yr. fixed: 6.63%; Fees/points: 0.5%
· 15-yr. fixed: 6.25%; Fees/points: 0.5%
· 1-yr. adjustable: 5.63%; Fees/points: 0.8%

FREE…..You can search for Marin listings directly on Search for Homes

If you are thinking of selling your home, I would be more than happy to give you a free home evaluation. I also create property specific websites for all of my listings: visit: for an example

Be sure to check out all the other great content & features of my website:

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The Bay Area Real Estate Newsletter is provided to you by:

Liz McCarthy
Real Estate Broker, e-PRO certified
415-250-4929 (cell)