November 2006 Marin Real Estate Newsletter

MARIN HOME SALES 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. For the 2nd month in a row, the Marin overall real estate market is in a “Buyers Market.”

Although there are fewer homes on the market this month as compared to last month (approx 200 less), the percentage of homes in contract went up slightly. My feeling is that many of the homes that did not sell have been pulled from the market, anticipating the slower months during the holiday season, or to possibly restart the Days on Market clock for that house trying to regenerate interest. It will be interesting to watch what happens over the next 2 months, which history has shown are typically a slow time for real estate sales.

Unlike last 3 month’s where homes priced under $500,000 were sitting on the market longer and are were in a “Strong Buyers” , all homes priced under $3,000,000 are in a Buyers Market, and homes priced from $750,000 to $999,999 are very close to a Balanced Market. The highest priced homes, (Over $3M are still in Strong Buyers Market, and homes over $4 Million are in an Extreme Buyers Market, where only 4% of them are in contract). I interpret this to means that the “less expensive” homes (if there is such a thing in Marin) are finally selling at a faster clip, which is probably influenced by Feds stabilizing influence on the interest rates.

Like last month, Larkspur is still in a Seller’s Market, in fact, it’s moved into a Strong Sellers Market, where 55% of all listed Larkspur homes are in contract. If you want to sell your Larkspur home, this is the time! Kentfield and San Anselmo are in a Balanced Market; Corte Madera Mill Valley, Novato, San Rafael are all in a “Buyers Market.” Belvedere, Fairfax, Greenbrae, Ross, Sausalito and Tiburon are all in a “Strong Buyers” Market. Ross, which has been in an “Extreme Buyers” market for many months heated up to move into a Strong Buyers Market (on the verge of a Buyers Market).

Days on Market (DOM): The Average DOM continues to increase by 10 days from September – 85 days for September - This means that it is taking an average of 2.5 months for houses to go into a PENDING status. A note of clarity. This does NOT mean when the house goes into contract (as it is still in a contingent state). The DOM clicker is stopped when all contingencies are removed, which is not entirely accurate at tracking how long it takes to get a house into contract. For example, a seller may have a house go into contract just 1 or 2 weeks after it is first listed, but with a long contingency period (say 45 days). This would mean that the DOM would show almost 2 months for that house to sell, whereas it was generally off the market after only a few weeks.

And for those of you who do read these stats, I’d love to know that you find the information useful! It actually takes me quite a lot of time to track, compile and post the data each month – and I’d love to know that it is being utilized! Send me an email to let me know you like getting it!
Click here to view November Stats

FREE…..You can search for Marin listings directly on BayAreaRealEstateSales.com: Search for homes

IS THE MARIN REAL ESTATE MARKET A BUBBLE ABOUT TO BURST?
Can you believe the Real Estate Headlines?
By: Liz McCarthy

In this month’s newsletter I am including a few real estate news stories spouting headlines like: “Home Sales Plunge” and “Prices Flat” which compare the number of home sales and the average sales price for the overall Bay Area, which show home prices are flat when compared to last year. BUT if you look at the following chart, you’ll actually see that Marin, Santa Clara and Alameda have all had small price increases when compared to October 2005. Marin shows 3.3% price increase although there were 27% less homes sold. So yes, the number of homes sold have dropped, but our overall prices went up slightly. On the other hand, comparing this September from September 2005, prices were 3% lower. Home prices are tee-tottering up and down from month to month.

What does this mean to you?

Is it time to finally buy that new home new home and/or sell your current home? Should you continue renting? When trying to decide, look at the overall statistics, do your research, read news stories but then actually drill down into the local data for your county and neighborhood. How long has the house been on the market? Has it had a lot of price reductions? Why isn’t it selling? If a house has just been listed, make sure that your Realtor helps you research the house to see if maybe it had been previously listed. And if you find the perfect house that fits for you, don’t let the headlines scare you, now is the time to buy it, as that house may not exist next month as it’s likely that others will think it’s perfect also.

If you are looking to sell, it’s extremely important to price your home correctly. Buyers are looking for turn-key homes that are in move-in condition. So if the home you are looking to sell needs work, make sure it’s priced appropriately. Price your home for THIS year’s market, not last year’s. Prices have overall remained flat from last year, but keep in mind that buyers are much choosier.

NEW MARIN REAL ESTATE STATS!

I’m always searching for ways to bring my clients and readers more local real estate statistics. I’m pleased to announce the launch of my new stats service: New Stats Link There are a lot of great stats here for your viewing pleasure. Once you click on the above link, be sure to mouse over the text near the top that says “Marin Statistics”. You can drill down the stats by year, month and by City. Enjoy. I’d love to hear your feed back if you like this new service!

WHAT DID YOUR NEIGHBORS’ HOUSE SELL FOR?

The Neighborhood Homes Sold listing is a weekly reader feature of the Sunday San Francisco Chronicle and is provided by California REsource, a title abstracting company. The home addresses, sales price, number of bedrooms, square footage and the year the homes were built are based on information supplied from Bay Area counties' property transaction records which, in some cases, may not be complete.

Neither The Chronicle nor California REsource guarantees the completeness or accuracy of the information. Questions or requests for additional information should be directed to Cal Resource at

Click on the following links to see what price homes sold for in your neighborhood:

November 5th, 2006: November 5th
November 11th 2006: November 11th

FREE…..You can search for Marin listings directly on BayAreaRealEstateSales.com: Search for homes

NEW POLL FINDS CONSUMERS STILL CONFIDENT OF HOME VALUES

Majority Still See Housing as Strong Investment
National Association of Home Builders - November 13, 2006 - Americans remain highly confident about the nation’s housing prospects, with more than four out of five home owners expecting the value of their home to appreciate over the next five years and nearly seven out of 10 calling it their most valuable investment, according to results from a new nationwide survey.

“The poll clearly debunks the more sensational media reports speculating on the demise of the housing market,” said David Pressly, president of the National Association of Home Builders (NAHB) and a home builder from Statesville, N.C. “It is interesting to note that other polls conducted by major news organizations have come up with similar results, indicating that despite the current housing market downturn Americans resoundingly believe that buying a home is the best investment they can ever make.”

The survey of 2,000 households, including more than 1,750 registered voters, was conducted by RT Strategies between Oct. 26-29.
The polling found that 81 percent of home owners believe that the value of their homes will rise over the next five years. Only 13 percent felt their home would fall in value, while 4 percent expected no change and 3 percent were unsure.

In addition, 69 percent of the respondents listed their home as their most valuable investment. By contrast, this was followed by 401(k) and other retirement accounts, with just 11 percent of those polled citing this as their top investment.

Looking ahead, NAHB said the housing market is poised for solid and sustained growth in the future. “We are in the midst of an inevitable adjustment following the housing boom of 2004-2005 when housing market activity soared to unsustainable levels,” said NAHB Chief Economist David Seiders. “Housing demand should stabilize in short order and the downward adjustment to housing production should run its course by mid-2007. The market that emerges from this correction will display good balance between supply and demand and move to a healthy and sustainable trend based on solid underlying fundamentals.”

HOME SALES PLUNGE, PRICES FLAT
SFGate.com

November 16, 2006 October sales down 24 percent from 2005; new houses costing less in many counties. The Bay Area home market continued to seek equilibrium in October, as prices stayed flat and the number of homes sold hovered at five-year lows, according to a report released Wednesday.

The median price for all homes in the nine-county region, including resale homes, condos and new homes, remained at $614,000 -- the same as in October 2005. A total of 7,979 residential properties changed hands, down 24.1 percent from the 10,508 sold during the same month last year, according to DataQuick Information Systems, a real estate reporting service. It was the lowest number of October sales recorded since 2001.

Most residences sold are existing single-family homes. In that category, 5,328 homes were sold, down 23.8 percent from the same month last year. The median price edged up 1.4 percent to $653,000 from $644,000 in October 2005.
"Basically it was just a hold-steady month," said DataQuick analyst Andrew LePage.

"We had a huge shift this year in the supply of homes for sale and the level of demand. It's clear there's less demand. Many buyers who are out there and interested are on the sidelines waiting to see if prices will fall more." Those buyers who do plunge in are finding that the market is still competitive, but no longer the frenzied free-for-all that characterized the price run-up.

Julie Davidson Rocherolle and husband Narendra, both technology executives, have been looking for a house in Mill Valley for about a year. Early on, they got caught up in bidding wars and "had our heart broken twice," with unsuccessful offers, she said. Rocherolle said the calmer market helped them finally land a three-bedroom home, which they closed on last week.

"We'd been patiently waiting for a year and things were nutty for the first nine months of that," she said. "Within the past six weeks, we felt that sellers were a little more nervous. We noticed that more-expensive homes were staying on the market for longer."

The couple, who are first-time home buyers, were up against just one other bidder this time. They ended up paying 5 percent over the asking price for their home, which sold for more than $1 million. Marin County's median price was $915,000 in October, up from $914,000, or just 0.1 percent, since October 2005.

Resale condos paralleled the trend of resale homes throughout the Bay Area. The median price declined 0.2 percent to $489,000. The number of sales fell 29.9 percent to 1,416 from 2,019 a year ago.

Peter Susskind recently experienced the San Francisco condo market from both sides. As a seller, he accepted an offer for his one-bedroom Potrero Hill condo just below his asking price. It sold for $495,000, $4,000 shy of what he had asked. "I have bought and sold properties in this country for 25 years," said Susskind, who is from England. "After a month or so, properties get stale and the agents don't want to bring their clients around. They're waiting for the price to drop. It was a very good offer and it came before I had to start thinking about dropping the price."

But as a buyer, Susskind still had to compete against other bidders. He wound up paying $740,000 for a three-bedroom condo, also in Potrero Hill, that was listed for $699,000. He is in the process of closing. "I've been watching closely for the last year, and while things have certainly cooled down a bit, prices are really not going down very much at all," he said.

New homes, which include condos, condo conversions and detached homes, experienced the biggest price decline, down 7.9 percent for the Bay Area as a whole.

In Contra Costa County, even though the number of new homes sold bounced up 9.5 percent to 472, the median price fell 20.5 percent, to $570,000. New-home prices in San Mateo, Napa, Solano and Sonoma counties also suffered double-digit declines.
DataQuick's LePage said he sees Sonoma and Napa counties as the most vulnerable to price erosion, although because they are small markets, it's harder to extrapolate from the numbers. Sonoma's resale home price was down 5 percent for October, the fourth month in a row it has sunk.

But overall, the Bay Area seems to be as steady as one could expect in a down market.

"We still don't see anything that says the Bay Area market is tanking," LePage said. "We see a lot that suggests it is flattening out. Some (areas) will see erosion in value, but so far it has been modest."

BAY AREA HOME SALES SLOW, PRICES FLAT
DQNews.com

November 15, 2006 La Jolla, CA.----Bay Area home sales held steady at a five-year low in October as buyers and sellers circled each other in a game of wait-and-see. Prices remained flat, a real estate information service reported.

A total of 7,979 new and resale houses and condos were sold in the nine-county region in October. That was up 0.9 percent from 7,907 for the month before, and down 24.1 percent from 10,508 for October last year, according to DataQuick Information Systems.
Last month's sales count was the lowest for any October since 2001 when 7,867 homes were sold. An average October has 8,445 sales in DataQuick's statistics, which go back to 1988. The range is from 5,767 in 1994 to 11,728 in 2003.

"The market is in the midst of its post-frenzy rebalancing phase. The sky is probably not falling, as some have predicted. But there will be those who bought near or at the peak, and who could find themselves in financial trouble if they need to sell and move sooner than they had planned," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $614,000 last month, up 0.5 percent from September's $611,000, and unchanged from October last year. The median hovered around $630,000 last spring and early summer, and spiked to $644,000 in June before coming down.

DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,901 last month. That was down from $2,924 in September, and up from $2,876 for October a year ago. It peaked in June at $3,183. Adjusted for inflation, mortgage payments are 14 percent higher than they were at the peak of the prior cycle fourteen years ago.

Indicators of market distress are still at a moderate level. Financing with adjustable-rate mortgages is flat. Foreclosure activity is rising but is still below average. Down payment sizes are stable, as are flipping rates and non-owner occupied buying activity, DataQuick reported.

FREE…..You can search for Marin listings directly on BayAreaRealEstateSales.com: Search for homes

HOW TO FIND A REAL ESTATE BARGAIN
By: Dian Hymer

Everybody wants a bargain. Last year, good real estate deals were few and far between. This was due to the fact that inventories of homes for sale were at record low levels. And, there was an abundance of buyers, all looking for the same thing.

Today in most areas, buyers have the luxury of choice. So, there's less of a chance you'll overpay because you have to outbid another buyer. However, even though there is a lot to choose from, this doesn't mean that it will be easier to buy a property at a bargain price.

One reason is that most sellers aren't desperate to sell. Just because the market has changed doesn't mean that sellers are slashing their prices dramatically. Many listings that have price reductions were overpriced to begin with.

Another factor is that there is usually little consistency in pricing. Some listings are well-priced, others are overpriced, and then there is the occasional listing that is actually priced below market value.

nother complicating factor is variability. Unless you're looking at listings in a single tract development, where each house is a cookie cutter of the others, you'll find disparities in age, condition, size and amenities. Each of these variables has an affect on market value.

HOUSE HUNTING TIP: In order to find a good deal, you need to be able to identify a fairly priced property when you see it. This requires intimate knowledge of home values in the area.

A good real estate agent can help you to develop this product knowledge. But, there is no substitute for doing your own due diligence--driving the area, researching the local economy, viewing listings online and visiting open houses. This gives you the confidence you need to make an educated decision about what constitutes a good deal.

Even though the pace of the home sale market has slowed, you may have to make a snap decision or risk losing out on a great buy. Many home sellers price their homes too high for the market. They usually sit for a while before the sellers realize the house can't sell without reducing their price.

But sellers who understand the market and have a pressing need to speed the process along will price their properties at or under market value. If you aren't up on current market values, you could let a good deal slip by because you didn't act quickly enough.

Part of buying at the right price is being there when the well-priced listings come on the market. Don't wait until a Sunday open house to see a new listing if your agent thinks it will sell quickly.

It's possible to create a good deal. One way is to research the listings that have been on the market a while without any offers.

Find out why they haven't sold. If there isn't anything wrong except the price, ask the listing agent why the seller is selling and whether there's any flexibility in the price. Sellers who have a real reason for selling, like a divorce, death in the family or job transfer, will soften on price in time.

Be sure to find out the amount of the outstanding loans secured against the property. If the sellers are mortgaged to the hilt, you might want to move on and negotiate with a seller who has a strong equity position in the property. Even if he sells for less than he'd hoped, he'll at least sell for a profit.

THE CLOSING: Steer clear of listings that aren't selling because they have an incurable defect, like a location on a busy street. You may be able to negotiate a bargain price, but you'll also have to discount your price when you resell the property.

FREE…..You can search for Marin listings directly on BayAreaRealEstateSales.com: Search for homes

UNCOVERING TRUE COST OF INTEREST-ONLY REAL ESTATE LOANS
By: Jack Guttentag

Q: "You have stated that interest-only loans cost more, but how much more?"

A: Quite a lot, actually, but it tends to be obscured.

Interest-only (IO) is an option available on some loans that allows the borrower to pay only interest--no principal--for some years, usually five or 10. After the IO period is over, the payment will increase by the amount required to pay off the loan over the period remaining to term.

Borrowers pay for the option. Because of the delay in reducing the loan balance, lenders view IO loans as riskier than loans that begin amortizing immediately. Naturally, they charge for this risk. Between two loans that are identical except that one has an IO option, that one will be priced higher.

Unfortunately, this fact is often obscured. Loan officers and mortgage brokers have a bad habit of comparing the prices of adjustable-rate mortgages (ARMs) that have IO options with fixed-rate mortgages (FRMs) that don't. Since ARMs have lower prices than FRMs, this creates a false impression that the IO is associated with lower prices, when just the opposite is the case.

I recently compared the wholesale prices of 30-year FRMs with and without IO options in a variety of market niches. Wholesale prices are those quoted by major lenders to mortgage brokers and small lenders. They become retail prices after the brokers and small lenders add their markup. All prices assume the borrower has good credit and puts 20 percent down.

Wholesale prices are better than retail prices for checking the price differences between different types of mortgages. Wholesale price quotes are competitive because they are directed at brokers and small lenders who constantly compare one price with another. Retail price quotes, in contrast, include much "noise" because markups vary widely and quoted prices are not always dependable. For example, when borrowers report to me that they were offered the same price for an IO as for a non-IO, I know the loan provider cut the markup on the IO (or perhaps raised the markup on the non-IO) in order to close the deal.

On a home purchase mortgage of $300,000, I found a wholesale rate difference greater than 0.375 percent. On a purchase for investment, the rate difference was almost 0.625 percent. On a cash-out refinance covering an owner-occupied home where neither income nor assets are documented (called "NINA"), the rate difference was almost 0.875 percent. And on the same loan covering an investment property, the rate difference exceeded 1 percent. Similar differences arise on ARMs.

The increasing rate differences reflect the way in which risk factors reinforce each other. Lenders view IO as riskier on mortgages that are already risky, because, for example, they are cash-out, or on investment properties, or involved minimal documentation, and so they charge more for the option on those types of loans.

Take An IO to Pay Down a Second Mortgage More Rapidly?

Q: If you take a combination first and second mortgage, wouldn't it save money if you made the first mortgage IO and used the cash-flow saving to pay down the higher-rate second?

A: If the rate on the first was the same with and without IO, you would indeed save money by taking the IO on the first and applying the payment saving to a more rapid reduction of the balance on a higher-rate second. Assuming the rate on the first is higher with than without the IO, however, which is the case, the savings from paying down the high-rate second mortgage tend to be offset by the higher interest payments on the first. Where you come out is not clear.

To get a handle on it, I constructed a little spreadsheet. The spreadsheet showed that a strategy of using the cash flow saving on an IO first mortgage to accelerate the pay-down of a high-rate second was not promising. You had to stick with it for some years before you could possibly end up ahead. Further, even over a long period, it will only work if you pay a rate no more than 0.125 percent higher for the IO as opposed to the non-IO version of the first mortgage, and only if the second mortgage rate is at least 2.5 percent higher than the rate on the IO first. These conditions are not likely to arise very often.

FREE…..You can search for Marin listings directly on BayAreaRealEstateSales.com: Search for homes

WHAT DO LIZ’S CLIENTS SAY?

“In essence I had a thoroughly enjoyable, professional and gratifying experience with a person who eventually became a friend. You were clearly interested in my personal life as it applied to the type of home I would be happy in. Even after seeing the house I ultimately bought, you were patient enough to show me additional homes so that I would be comfortable with my decision.

However, it was after we selected the house that I truly benefited from your business skills. The negotiation process, the drafting of the contract, related correspondence and handling the all the details was accomplished with thorough competence and professionalism. The entire experience was thoroughly enjoyable. I truly appreciate how difficult buying a home can be. Yet you handled each obstacle thrown our way by the sellers’ agent, the sellers and the bank with calm assurance and you resolved each issue to my complete satisfaction.

I will be happy to recommend you to all my friends and colleagues who may be buying a house in the future. “
-F Konigsberg

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:

liz@BayAreaRealEstateSales.com

“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 hire a professional photographer and market your home extensively on the internet: a personal property website (see www.417Greenfield.com or www.50milland.com for samples), she will post your home on over 50 websites.

FAST FACTS

Marin median price – Oct, 06: $844,000 (Source: DQNews.com)
Calif. median home price – September 06 $553,550 (August 06: $576,360) (Source: C.A.R.)
Calif. highest median home price by C.A.R. region Sep 06: Santa Barbara So. Coast $1,025,000 (Aug: $1,190,000) (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region Sep 06: High Desert $329,040 (Sept 06 $ 332,900) (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Second Quarter 06: 23 percent (Source: C.A.R.)

Mortgage rates - week ending 11/9/06: (Source: Freddie Mac)
• 30-yr. fixed: 6.33%; Fees/points: 0.6%
• 15-yr. fixed: 6.04%; Fees/points: 0.6%
• 1-yr. adjustable: 5.55%; Fees/points: 0.8%

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

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

Liz McCarthy
Real Estate Broker, e-PRO certified
Liz@BayAreaRealEstateSales.com
415-250-4929

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