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Managing Sellers' Expectations
Reflecting on the past twelve months, Marin County real estate markets experienced the most difficult and unpredictable dynamics we have seen in decades. The financial markets imploded, unemployment trends accelerated and consumer confidence was shattered. We have benefited from historically low interest rates and ample access to mortgage capital; however, credit requirements, approval guidelines and loan to value ratios are as stringent as in recent memory.
The good news is over 1,100 single family homes have sold in Marin County in the first nine months of 2009. Successful sellers have rationalized the market dynamics, followed their real estate advisors recommendations and successfully made housing decisions to support their lifestyle. Buyers continue to seek opportunity and will write offers only on the homes (sellers) that have balanced the best pricing in relation to the relevant and recent neighborhood comparables.
Over 70% of the 1,100 single family homes sold in 2009 closed for under $1 million. Approximately 50% of these 1,100 homes closed in San Rafael or Novato. The velocity of the market under $1 million and in San Rafael and Novato may be the only growth sector in Marin County real estate. We feel this is reflective of the aggressive sell-off distressed properties, short sales and bank owned properties. The chart below illustrates summary market trends by price point.
 The average number of days on market has trended over 100 days for 2009. This trend is indicative of sellers' "hoping" to get a specific price for their home that may be based on what they paid for it or what they "need" to sell it for to maintain lifestyle choices. Unfortunately "days on the market" are not a seller's friend. Homes that sell within the first 90 days of a listing enjoy pricing within 7% of the list price. Homes that sell between 90 - 120 days on the market close at a 15% discount and those over 120 days on average are discounted 22% at closing. We pride ourselves by providing our clients with balanced advice and recommendations.
For home prices over $1 million in Marin County, sellers need to be exceptionally realistic and sensitive to our market conditions. Volume (units and dollars) is off approximately 50% YTD v 2008 and over 60% from 2007. Buyers enjoy a fabulous selection of listings in all neighborhoods and therefore are very discerning. Our experience is buyers only act with a sense of urgency if the home is "one of a kind" where the market sees one such home every few years, or if the price is perceived to be precisely at or slightly below market. In light of the above, days on the market analysis, why would a buyer act with urgency if time on the market generally translates into a 7% to 22% discount?
We are experiencing a modest increase in activity in the high-end of the market (over $3 million). In Q1 & Q2 '09 we closed eight and nine homes over $3 million respectively. This activity increased to 15 closings over $3 million in Q3 '09. There are nearly 110 listings in Marin over $3 million and only two are in contract. Once again, a seller must be most realistic in pricing to attract the limited demand.
The most important aspect of our role as real estate advisors is to provide our clients with honest, balanced and objective advice. We strive to be clear, analytical and proactive in our approach. If our experience may assist you in your real estate analysis or decision making, please do not hesitate to call.
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Matthew Pouliot
Active & Recent Sales
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