“As Winter Approaches Will Jerome Powell and the Fed Rain on Marin Home Prices?”
It’s November in Marin, with cool weather in the forecast as we move into winter. Heck, it even rained the last couple of days. I know, right? Rain, one big 1/4″ of it. Now to what this blog is really about: whether or not this cloudy weather is going to impact Marin home sales and prices.
If you follow this or any other publication nationwide, you already know that real estate sales and values have both changed, often dramatically depending on the location. This continues to be a very localized market dynamic though, often with sales and prices varying greatly depending on a few factors. Prices in Milwaukee are usually far different than they are in Mill Valley, mainly due to the abundance of buildable land back there and the lack of it right here. There is an abundance of listings nationwide right now, while inventory remains low here in Marin. But why is that?
The reasons are many, but most accounts point to the trade factor. Sellers have to become buyers, which means they may reap the rewards of a nice price when they sell, but now they have to buy and the real estate shoe is now on the other foot, so to speak. They now face all those challenges their buyers faced, not the least of which is not a lot of houses to choose from. This is why I advise all sellers before they hit the market, “Become the buyer and pretend you’re out looking for a house. What price and condition do you want to see in the market that day?” It helps tremendously to look at it like this when selling anything from a car to a house, or in between.
The second reason is a perceived affordability of a new, often much higher mortgage interest rate. Many homeowners contemplating selling today are frozen in their tracks (often literally in places like Milwaukee) when they see they’re giving up their 3% mortgage for one approaching 7% or even beyond. Some of them sell, especially if they already own a home somewhere else. But those with no house to move to and no mortgage already in place are stalling and not selling. Therein lies the Low Inventory Blues, at it were.
While slowing has been prevalent here over the last six months, buyers continue to buy. People need a place to live, after all, and with rents high it often becomes a smart rental alternative to own something, even if it’s not your end all first choice of a home. I’ve had several buyers do this in the last couple of months with great results. They don’t have a landlord and they get some much needed tax advantages to owning versus renting. While home prices are certainly down here, the market is not out. Marin home buyers still value our quality of life and the long term return on that investment with years of enjoyment to follow.
That’s it for now. It’s a whole new world and I for one am very curious to see what happens. In my thirty-five years of doing this, I’ve never seen anything like what we have now with sales moving up ever so slowly, even in the face of often severe price reductions in over-built areas nationwide. Until next time, enjoy November wherever you are and please stay safe. As always, thanks for reading.