October 2016 Marin County Real Estate Market Report

Welcome to my October 2016 Marin County Real Estate Market Report! In last month’s market update I said, “it remains to be seen if we will see a recovery from the summer slowdown in September as we have in the past few years,” and I think it’s safe to say at this point that we are definitely seeing a plateau in the market, especially at the higher price points (above $2.0mm).

Key Takeaways in the October 2016 Marin County Real Estate Market Report:

September saw a decrease in average sale price in Marin County for single family homes at $1,386,521, down from 1,467,693 in August.
September inventory in Marin County decreased by 4.6% while sales decreased by a significant 29.3%. This is the fourth consecutive month of inventory decreases and the first month that the sales decrease is much greater than the inventory decrease.
Average price per square foot decreased from last month to $647 vs. $695 last month vs. $543 in 2015.
Average list price increased by 5.8% while average sale price decreased by 5.5%. This may indicate that sellers have not caught up with buyer sentiment in setting prices for their homes.
Percentage of homes in contract: Mill Valley held about flat at 30% while San Rafael increased from 39% to 46% and Novato increased from 41% to 49%. (I tend to ignore the smaller towns in this metric as the percentage can be distorted easily by the relatively few transactions in those towns.)

We did not see the traditional increase in home inventory that we usually see in September but we did see buyers who are more skeptical of the market and are less eager to jump in. At one open house a buyer told me he wants to “wait until after the election” to see what happens, and this sentiment is being widely quoted in articles and conversations. However, I believe it is more than the upcoming presidential election and that there are some fundamental market dynamics at play, where the supply / demand imbalance in the San Francisco market has begun to self-correct. More inventory is coming on the market in SF (see below article) and that is predicted to have an impact on pricing.

“Real Estate is the best investment in the world because it is the only thing they’re not making anymore.” — Will Rogers

On September 29th the California Association of Realtors released their 2017 market forecast, and while they predict the overall market to increase in 2017, they forecast a downturn in the SF Bay Area market: “..the San Francisco Bay Area will experience a decline as home buyers migrate to peripheral cities with more affordable options.” I believe it’s fairly safe to assume we will see a decline in SF next year, which has already begun, and that will likely impact buyer sentiment in Marin County. Having said that, while typically the Marin County market moves in tandem with the SF market, we see less-dramatic peaks and and also less-dramatic valleys. I still often refer to our market as a “blue chip stock” which is slower and steadier.

Bloomberg reported towards the end of September that UBS has placed San Francisco just after Hong Kong on their global housing bubble index. About the same time, a headline for an article in the San Francisco Chronicle screamed “Homes under $1 million flood S.F. market, most since 2012!”

The markets most affected by the 2008 subprime market bubble were Sonoma, Alameda, Contra Costa and Oakland. As you recall, that crash was caused by predatory lending practices, where buyers were obtaining mortgages they could not afford. In the past six years, the Bay Area has added 575,000 jobs — almost one job for every resident of San Francisco. The post-crash recovery was driven by phenomenal job growth in Silicon Valley (168,400 of the 575,000 jobs were in Santa Clara) paired with low interest rates. Many experts are predicting either a flattening of pricing or a more-typical market correction in the neighborhood of 10%. My crystal ball is in the shop so we will have to keep our pulse on the market together and see what happens in the SF Bay Area and Marin.

Now on to the numbers….

Month-end September figures below show a drop in all metrics with the exception of the median price. In the first three quarters of 2016 there was a 10% drop in home sales over $5 million and a 60% drop in homes sold over $10 million compared with the same period last year. Remember that last year was a record year for home sales over $10 million. (See my article The Ten Most Expensive Homes Sold in Marin County in 2015 for the complete list, including the record-setting sale of 440 Golden Gate Avenue in Belvedere for $47,500,000.)

Remember last month I said we needed to keep an eye on inventory vs. sales to make sure they’re moving in tandem? September was the first month we saw a significant divergence, with inventory down 4.6% and homes sold down a whopping 29.3%. While some of this may be carryover from the slower summer season, I believe it is also indicative of where the market is headed as we approach winter. We will keep a close eye on this figure as we do not want to see the two metrics move in opposite directions.

My business continues to be brisk with some great listings on the market in Kentfield, Tiburon, Mill Valley, San Rafael, and San Anselmo. You can see them on my Featured Properties page. Also, I have some very exciting listings coming later this month — watch this site or my Facebook page for details.

Here are more slides and graphs if you would like to drill down into the numbers:

I hope you have found my October 2016 Marin County Real Estate Market Report helpful, and I would be happy to answer any questions you might have. Please call or text me at 415-847-5584, or fill out the below contact form, and I will be in touch right away. Feel free to leave your own comments and observations in the comments section below.

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