February in Marin: “There’s Not Even Any Bad Homes For Sale”

Winter is here in Marin and the rains have been relentless. Cold too, so the snow pack in the Sierras is 125% of normal, yay. You can see now how they wisely opted to use “Climate Change” instead of Global Warming.

Speaking of change, the talk around the real estate offices and with home buyers has been, “Will this be the year more inventory hits the market?” While nobody knows for sure, suffice to say that most signs point towards higher mortgage rates by year end, with The Fed raising 2-3 times. But interest rates are expected to increase from 4% now to roughly 4.5% by Q4. The question is, what will that do to the supply side with inventory and what will it do to prices. Okay, that’s two questions, but the answers are simple if we use recent history and a bit of common sense.

First, nothing is going to make Marin home prices shoot up, or down. Recent global economic news, wild stock market swings, mortgage meltdowns–none of it impacted home values here. Not instantly, anyway. The mortgage implosion brought home prices down 25% – 40%, depending on the town. But that was a nationwide drag-down and was roughly 8%-9% a year on average over a 3 year span. Nothing changed here with the quality of life in our bucolic county of 255,000. Home prices just dropped like they did across the country, though much less than in most areas. So a tiny 1/4% increase in rates every few months isn’t going to do any damage to home values, we are told by the big brains, anyway. In fact, if history is any guide, it may actually work in the opposite direction.

Because the increase in rates was signaled well in advance and is well-documented, we suspect more buyers will rush to lock in over the first six months of the year, than those few who will wait. On the average home price here of $1.4 mil and a loan of $1 mil, the difference in monthly payment is approx $400. Nothing to break the bank, but over ten years, that’s $50,000 in savings, which may be a reason to get off the fence and get the checkbook out.

Now anybody who DOES want to wait it out, by choice, may be hoping that the average home price declines by at least $50,000, due to the fact that, technically, fewer buyers can afford that $1.4 mil. This could happen, but there is a very high risk factor. We haven’t seen this occur before and the only way that would happen is if a LOT more homes flooded the market suddenly, which is also unlikely.

Right now, there are only 152 total single family homes for sale in Marin. That’s the entire county. If you wanted to jump in my car and go tour homes for sale in your price range and target area, we might look at one or two. Or even none. There are so few houses for sale, a client this week said, “There aren’t any good homes for sale right now.” I said, “There aren’t even any BAD homes for sale.”

Will that change, who knows, but if you’re looking to buy, I wouldn’t wait. If you have to wait, you’ll be okay over the next 12 months, but after that, it’s anybody’s guess. Any questions, let me know. Otherwise, please stay warm and dry. Enjoy February wherever you are.

TS

Text or call 415.377.5222 or ted@gomarin.com

Filed under: Marin Real Estate Blog by Ted Strodder