April « 2011 « Southern Marin Real Estate Blog

Southern Marin County Q1 2011 Real Estate Update

April 14, 2011

Filed under: 2. Southern Marin — dwdupont @ 7:39 am

Q1 2011 Update:

Southern Marin consists of 4 towns: Sausalito, Mill Valley, Tiburon & Belvedere. Due to its proximity to San Francisco prices for homes generally experience greater price stability than other parts of Marin.

As you scan the data below please consider that we compile all this data personally. We don’t buy it and paste it here. Your choice to work with us will save you money as the incredible time commitment required to assemble and publish this data each quarter results in much stronger and more dynamic negotiations which ultimately benefit you whether you’re a buyer or a seller.

The DuPont Group is a dynamic real estate team active in Southern and Central Marin communities. Dave received his MBA from Pepperdine University and is a Certified Financial Planner (CFP). Please call or email us anytime for more information.

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Q1 2011 Marin County RE Review

April 13, 2011

Filed under: 1. Marin Update — dwdupont @ 1:00 pm

How do you define “Real Estate Recovery”?

Our definition for the purposes of this update defines real estate recovery as “liquidity, with fairly stable prices”. Put simply: sellers can find buyers; and prices are fairly stable with marginal changes.

The recovery of Marin Real Estate is in stark contrast to other real estate markets that pepper the national map. Where foreclosures are still very high, inventory of homes for sale is very high, where new homes gather cobwebs, and prices are 30%-60%+ below the peak with no real solution in sight.

Local real estate prices are a function of local labor markets and the future prospects of the local labor markets. The evaporation of manufacturing jobs, and the rise of the service economy has left our more rural economies and tertiary cities with few employment opportunities. Stabilization of home prices and unit sales is irrevocably bound to the diversification of employment opportunities in those locations

Nationally, “the Recovery” is uneven. In the top metropolitan economies such as San Francisco, New York, Chicago, parts of LA, Seattle, Dallas and other grade “A” cities, the recovery continues. Real estate prices are still falling in tertiary cities like Sacramento, Reno, Boise and rural locations.

The commercial real estate market for office space in San Francisco has come alive and is a prelude to increased demand in Marin County in 6-12 months. We went to a panel of commercial real estate entrepreneurs in San Francisco 3/30/11 including Maxwell Drever, Doug Shorenstein, and Stuart Shiff and they are all positioned for liquidating in the next ‘up’ market– i.e. they know the cycle has turned and are ahead of the curve. Their message about the market for commercial opportunities was : if you are waiting for “the bottom” it has already passed. The “generational opportunities” you heard about in the press were few and far between. There is a mountain of global money chasing cash flow from the best buildings in the best locations in the US—and these are trading at attractive prices. Older assets and those in sub-par locations simply aren’t trading or are going very cheap.

The residential real estate markets in Marin are very similar to SF commercial, and is a tale of two markets: Updated homes in preferential locations continue to sell at premium prices. Dated homes and or those in less desirable locations are a real challenge. The cost of building was very expensive and now has increased slightly during the recession. Most buyers in Southern Marin are families and they can’t stomach a long expensive project. More importantly, the post-construction cost for updated homes is not recoverable in the current market unless the house trades marginally above lot value.

This trend of homes trading close to lot value while updated homes trading at premium prices will make value in our real estate markets extremely difficult to discern using $/SQFT from market comparables. All automated valuation models (AVMs) like Zillow will be even less accurate then they already are (median error of Zestimate is about 12.5%).

SELLERS: Two lasting traits of the “Great Recession”:

First, home buyers are extremely value conscious. Homes need to be priced within a “Window of Perceived Value (WPV)” in order to garner offers. Otherwise, buyers will pass on to the next opportunity. If homes are priced “to get my money out”, the sales cycle may be long– especially if you bought in the last 5 years.

Second: If the home isn’t updated it will likely sell closer to lot value. The cost of construction both in terms of time and money combined with near lunacy at the Marin planning boards, is just too expensive for most buyers.

Marin County is a very transitory place with only ~45% of the population living in the same house for more than 5 years. Buyers are more rational now in their expectations of both their time horizon, and buying versus renting. If they can’t find something acceptable they just rent.

BUYERS:

This recovery is all about location and San Francisco is one of the few premium areas poised for continued recovery as commercial office building data foreshadows. New SF offices bring new jobs, and jobs bring home buyers. Demand is strong right now in the lower market segments but slow in the higher end as the charts below indicate. Your biggest concern should be inflation (or stagflation as the case may be)… The loose global monetary policy of the previous few years at some point will bring very quick spike in prices similar to what was seen in the late 1970s when inflation went from 6% to 15% in several months. The timing on this is uncertain, but will likely coincide with a significant event like a change in global reserve currency or the bankruptcy of a US state or municipality. Real estate is not a bad investment during times of inflation especially in preferential locations close to diversified employment markets. The key is locking in long term interest rate before interest rates spike. If you are keen on buying, please call me and lets put this data to good use in negotiations.

When you look at the below Real Estate charts you are seeing most data points hitting news lows. Please reference each town page for more specific and pertinent data for each town in Marin.

The long-term direction of Marin County home prices is positive and shows a bottom placed in 2009. The rate of improvement county wide is slowing. The health of the real estate market is less about price increases than about continued liquidity.

Marin County Real Estate Prices having a fair quarter. Prices of Southern Marin homes for sale are fairing a bit worse.

Liquidity for Marin County Homes is struggling more in the high end.

The data below shows that 35% of the homes on the market are in contract. This is a very high statistic and representative of a healthy real estate market… however homes priced above $1m are not as liquid but much better than its been for several years.

Mill Valley CA homes, Tiburon CA Real Estate and Beveledere CA property had a tought Q1.

Sausalito CA real estate however did better. Please read the Sausalito homes page.

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Tiburon CA Real Estate Q1 2011 Update

Filed under: 2. Southern Marin,Tiburon — dwdupont @ 12:48 pm

Tiburon CA Real Estate Trends

Tiburon weathered the recession with less volatility than any town in Marin County due to its preferential location, family friendly homes, world class views, and Reed School system. Similarly, sellers in Tiburon generally have deeper pockets that can withstand downturns longer. That said, prices are still falling Tiburon as dated inventory sits, stagnates and eventually sells. The average year during the last business cycle (2004-present) 105 SFR homes trade in Tiburon with median price around $1.9m or 715$sqft. We are currently running about 10% below that pace on price and about 5% below on unit sales. 20% of the homes on the market are in contract anything below 20% is generally considered weak and representative of a buyers market.

Employment leads real estate which is why it is so important to measure regional economic data together with statistical trends to find opportunities or anomalies in our markets. The more recent the “comp” the less it tells us about these trends in real worth, and the more it tells us about buyer psyche and current market value. From this perspective at the top of the market homes were trading no closer to their inherent value than they were at the bottom of the recession. We use a full business cycle of data to determine “fair value” and trailing 12 month data to show where homes are trading in relation to fair value.

For most towns of Marin County including Tiburon CA Homes, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months.

20% of the homes on the market are in contract which is on the weaker side of balanced but still OK. However, there is only 1 home above $2.5m that is in contract which tells a different story for more the expensive homes in Tiburon CA.

**The line graphs data below and orange bar graphs above represent RESI prices which includes Condos and Single family homes. The green bar graphs at the bottom represent only Single Family homes without condo prices.***

The % in contract above and unit sale data below is very important. This is the “recovery” we are talking about. Its all about liquidity– sellers able to find buyers and keeping homes out of foreclosure. Many parts of the county do not have this kind of liquidity and the result is that 1 in 24 homes are in foreclosure and in many areas like Reno, Sacramento, Boise and many small cities in Florida the number is 1 in 10 homes in foreclosure. When you measure Southern Marin County Real Estate in relation to these other areas what you see is a recovering market here and that is confirmed by commercial real estate movements in San Francisco forcasting new jobs and increased demand on the horizon.

Price-wise Q1 in Tiburon CA was quite different:

It doesn’t take much to scare the turtle back into its shell and that is exactly what happened. this was a blip exacerbated by several global events including revolution in the middle east and the resulting spike of oil, earthquake and tsunami in Japan. The national real estate data especially for new home sales and non-core cities certainly hasn’t helped. In a deflationary cycle everyone waits to buy homes. The strange characterisitc in this cycle is that inflation is already here in food, energy, health care, education; almost everything but housing. And the pace of inflation is likely to start accelerating in the next few years.

The dichotomy of core and non-core markets will likely continue for several years as the changes to our economy over the last several decades (from manufacturing to service industries) has left tertiary cities and rural locations with few economic opportunities.

The green bar graphs below are just SFR homes data.

The TDG Price index below is a combination of median prices, average prices, $/sqft and home size ans is more telling than either average or median prices alone. By this measure the trailing 12 month data is slightly better than 2010 data which actually is good as the winter is always slow with weaker demand/prices, and the trailing 12 months data at the end of Q1 includes 2 winter periods. I think prices this Spring with bounce given the liquidity in the market, the activity in SF resi, and commercial real estate activity in SF.

SMREB and www.TheDuPontGroup.net is the only place you can find lot values for Tiburon. How valuable do you think that might be as a buyer?

Where can you get the average depreciated value ofv homes in Tiburon CA? Only here or at www.TheDuPontGroup.net . Please call us. We are eager to ear your business?

The DuPont Group is a dynamic real estate team active in Southern and Central Marin communities. Dave DuPont received his MBA from Pepperdine University and is a Certified Financial Planner (CFP). Please call or email us any time for more information. We are eager to earn your business.

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Mill Valley Real Estate Update Q1 2011

Filed under: 2. Southern Marin,Mill Valley — dwdupont @ 12:47 pm

Mill Valley Real Estate Trends
Employment leads real estate which is why it is so important to measure regional economic data together with statistical trends to find opportunities or anomalies in our markets. The more recent the “comp” the less it tells us about these trends in real worth, and the more it tells us about buyer psyche and current market value. From this perspective at the top of the market homes were trading no closer to their inherent value than they were at the bottom of the recession. We use a full business cycle of data to determine “fair value” and trailing 12 month data to show where homes are trading in relation to fair value.

For most towns of Marin County including Mill Valley, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months. The current double dip we are seeing in prices in Marin is more reflective of the cost of construction, the dated nature of many homes and sellers of those dated homes becoming acclimated to the new pricing structure—i.e. dated homes are selling closer to lot value given the costs inherent in bringing them up to current trends in buyers tastes and wants. In many case the cost of tearing down and rebuilding is only 20-30% greater than the costs of remodel.

In a typical year during the last business cycle (2004-present) 305 SFR homes traded in Mill Valley with median price around $1.14m or 524$sqft. We are currently running about 13% below that on price and about 20% below on unit sales. Mill Valley and all Southern Marin towns are still clearly struggling. The bright side is that they are struggling less than other Marin towns and there is liquidity in the market and jobs in San Francisco. There are many other places in the nation and world much worse off, and very few that have our stability, lifestyle and career opportunities. The trend of marginal recovery will likely continue barring any other major shocks.

27% of the homes on the market are in contract. This is representative of balanced market.

The % in contract above and unit sale data below is very important. This is the “recovery” we are talking about. Its all about liquidity– sellers able to find buyers and keeping homes out of foreclosure. Many parts of the county do not have this kind of liquidity and the result is that 1 in 24 homes are in foreclosure and in many areas like Reno, Sacramento, Boise and many small cities in Florida the number is 1 in 10 homes in foreclosure. When you measure our real estate market in relation to those what you see is a recovering market here in Marin confirmed by commercial real estate movements in San Francisco and new jobs on the horizen.

Q1 2011 is starting off well by unit sales, but price in Mill Valley is now approaching post recession lows. Selling $/sqft is at post recession lows. Many homes have been sitting on the market– either officilally listed on the MLS or as “Pocket Listings” for several years and just now finding buyers and equilibrium prices. On the one hand one could say that prices hit new lows (which is true) on the other hand you could also show that prices haven’t changed in the last year, it just that more sellers of dated homes have finally gotten realistic about price and are accepting those prices.

**The line graphs data below and orange bar graphs above represent RESI prices which includes Condos and Single family homes. The green bar graphs represent only Single Family homes without condo prices.***

The green bar graphs below are just SFR homes data. The above data incluses CONDO data as well.

The TDG Price index below is a combination of median prices, average prices, $/sqft and home size ans is more telling than either average or median prices alone. By this measure the trailing 12 month data is slightly worse than 2010 data which is fairly normal as the winter is always slow with weaker demand/prices, and the trailing 12 months data at the end of Q1 includes 2 winter periods. I think prices with bounce given the liquidity in the market, the activity in SF resi, and commercial real estate activity in SF.

2003-2007: The good old days for sellers (and realtors) in Mill Valley.

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Belvedere CA Real Estate Q1 2011 Update

Filed under: 2. Southern Marin,Belvedere — dwdupont @ 12:46 pm

Belvedere CA Real Estate Trends

Belvedere 2010 was the busiest year since 2005 by unit sales, but like other S. Marin towns prices are still falling and have reached new post recession lows in Q1 ’11. Belvedere real estate is a tale of two markets: wonderful homes in preferential locations continue to sell at premium prices as the 12/23/10 sale of 67 Belvedere exemplifies.

In an average year during the last business cycle 30 homes sold in Belvedere at an average price of $3.2m or $992.sqft. The trailing 12 months topped this pace in unit sales, but at 7% lower prices. The biggest hit to Belvedere real estate are lot values—off almost 18%.

Of all Southern Marin County towns Belvedere has the fewest homes in contract. At 18% Belvedere is still stuck in a difinitive buyers market. o% of the homes in the top quartile of listings are in contract. Interestingly when compaing the lot value and structure value charts at the bottom you see that buyers are looking for finished homes and not so much looking for a project on a great lot. In fact– the depreciated structure value of homes that have traded in the last 12 months is very near the business cycle average, which is strong. Unfortunately, lot values are off -18% right now– with the cost of building on the island combined with the near lunacy at the planning board, one can understand buyers reluctance to embrace a property that needs a makeover.

All towns in Southern Marin react to business cycle changes differently. Belvedere usually leads the market as generally the folks who have made it onto the island are there for a reason (i.e. they don’t waste time writing real estate blogs that no one reads)– Belvedere home owners understand the phases of the business cycle and can postion themselves for the upcycle. It is interesting that there is so little activity happening on the island one must consider that pricing could be a factor… why:

There are a number of incredible properties listed for sale but at eye-popping prices. The truth is that it can cost thousands of dollars a square foot to build in these dramatic Belvedere locations– one seller claims to have over $3500/sqft invested in their home.

This is the “recovery” we are talking about is all about liquidity– sellers able to find buyers. Many parts of the county do not have this kind of liquidity and the result is that 1 in 24 homes are in foreclosure and in many areas like Reno, Sacramento, Boise and many small cities in Florida the number is 1 in 10 homes in foreclosure. When you measure Southern Marin County Real Estate in relation to these other areas what you see is a recovering market here and that is confirmed by commercial real estate movements in San Francisco forcasting new jobs and increased demand on the horizon.

Belvedere CA Real Estate, like Tibruon and Mill Valley has just hit a new recession price low.

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Sausalito CA Real Estate Update Q1 2011

Filed under: 2. Southern Marin,Sausalito — dwdupont @ 12:46 pm

Sausalito Real Estate Trends

Sausalito was lost in the fog to buyers and struggling more than any S. Marin town for several years and just emerged in the last 6 months to lead the recovery. The demographic of Sausalito home shoppers is different from other Marin towns—only 15% of households have children, and is more reflective of a San Francisco buyer’s alternative than a Marin lifestyle choice. Prices and sales in SF best neighborhoods are recovering ahead of Marin which is normal and Sausalito benefits from SF demand. In a typical year during the last business cycle (2004-present) 60 SFR homes trade in Sausalito with median price of $1.275m or $610sqft. We are currently running about 6.5% below on price and about 9% below on unit sales.

For most towns of Marin County including Sausalito CA Real Estate, the outlook is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months.

25% of the homes on the market are in contract. This is representative of a balanced market.

Sausalito home prices are having their best year in 3.

But… prices are certainly still well below the peak by $/sqft.

Q4 2010 was a great quarter for Sausaltio real estate. The winter pull back is to be expected especially with all the rain this year

Q4 2010 was the best quarter ever by $/SQFT. Unfortunately Q1 ’11 is one of the worst of the recession!

The TDG Price index below is a combination of median prices, average prices, $/sqft and home size ans is more telling than either average or median prices alone.The trailing 12 month data is slightly better than 2010 data which actually is good as the winter is always slow with weaker demand/prices, and the trailing 12 months data is only 2.5% below the business cycle mean which means many homes in Sausalito homes are trading very near “Fair Value”.

This is interesting data in the below two graphs: Lot values are very close to the business cycle mean while structure values are not as strong. This shows buyers are looking for Sausalito CA homes in good lots/locations and are less worried about the quality of finishes. This would make sense as the average Sausalito home buyer is not a family and can stomache a project better than 2 parents with a home full of kids.

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San Anselmo CA Real Estate Update Q1 2011

Filed under: Central Marin,San Anselmo — dwdupont @ 12:43 pm

San Anselmo CA Real Estate Real Estate Trends

For most towns of Central Marin County including San Anselmo, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months. The current double dip we are seeing in prices in Marin is more reflective of the cost of construction, the dated nature of many homes and sellers of those dated homes becoming acclimated to the new pricing structure—i.e. dated homes are selling closer to lot value given the costs inherent in bringing them up to current trends in buyers tastes and wants.

For more information about San Anselmo, please visit www.TheDuPontGroup.net .

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Corte Madera CA Real Estate Update Q1 2011

Filed under: Central Marin,Corte Madera — dwdupont @ 12:38 pm

For most towns of Central Marin County including Corte Madera, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months. The current double dip we are seeing in prices in Marin is more reflective of the cost of construction, the dated nature of many homes and sellers of those dated homes becoming acclimated to the new pricing structure—i.e. dated homes are selling closer to lot value given the costs inherent in bringing them up to current trends in buyers tastes and wants.

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Ross CA Real Estate Update Q1 2011

Filed under: Central Marin,Ross — dwdupont @ 12:18 pm

Ross CA Real Estate Trends

For most towns of Marin County including Ross & Kentfield, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months. The current double dip we are seeing in prices in Marin is more reflective of the cost of construction, the dated nature of many homes and sellers of those dated homes becoming acclimated to the new pricing structure—i.e. dated homes are selling closer to lot value given the costs inherent in bringing them up to current trends in buyers tastes and wants.

For more information about Ross, please visit. www.TheDuPontGroup.net .

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Larkspur CA Real Estate Q1 2011 Update

Filed under: Central Marin,Larkspur — dwdupont @ 11:15 am

For most towns of Marin County including Kentfield, the outlook for real estate is fair—which is very good relative to most other places in the nation. The market for Commercial office space is picking up in San Francisco and this foreshadows new jobs and greater demand in 6-12 months. The current double dip we are seeing in prices in Marin is more reflective of the cost of construction, the dated nature of many homes and sellers of those dated homes becoming acclimated to the new pricing structure—i.e. dated homes are selling closer to lot value given the costs inherent in bringing them up to current trends in buyers tastes and wants.