Mill Valley Real Estate Update Q1 2011

April 13, 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.

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.

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.

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.

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.

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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