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Dispelling myths about Marin’s real estate


By Chris Rooney
Twin Cities Times - June 14, 2008

It's taken about 20 presentations over the past year or so, but the truth about Marin County's real estate status is finally being spread. Valerie Castellana, the 2007 president of the Marin Association of Realtors, last week held court in front of yet another group of industry leaders - this time the Sausalito Rotary - in order to answer some questions and dispel some myths about the doom-and-gloom headlines that have been frightening local homeowners.

"It is confusing," Castellana said of the real estate industry and the many facets of Marin's marketplace. "So we're trying to offer some clarity about what's occurring."

One of the things Castellana has to explain is that it's a mistake to compare Marin County to the rest of the state or the nation. Beyond that, it's a mistake to compare all parts of Marin County to one another.

"The truth is that there are many small or micro markets throughout Marin, ranging from Sausalito to Novato in the north," she told the Rotarians. "Each market has its own characteristics, trends and pricing history. And then within a community there are often anywhere between 10 to 20 submarkets comprising neighborhoods."

Castellana used Terra Linda as an example. She said the Upper Lucas Valley region experienced home-price increases of almost $200,000 in the first half of 2008 as compared to last year. Other adjacent neighborhoods are flat, while parts of Terra Linda have declined in value, she explained. "Generally speaking, prices continued to rise in most of central and southern Marin in many neighborhoods - but it is critical to complete the analysis neighborhood by neighborhood."

The bottom line, she said, is that both buyers and sellers in the market have to do a little research and determine the differences between Marin's many mini-markets.

Getting the straight scoop, though, isn't always easy, Castellana said. She pointed to alarmist headlines in newspapers and reports that offer general comparisons between Marin County and nearby regions.

One topic causing a media feeding frenzy is the alarming number of foreclosures. But Castellana said the foreclosure problem has been found primarily in a handful of states, such as Michigan, which has undergone the loss of about 300,000 jobs since 2001. The same holds true for Indiana and Ohio. Unemployed people have a harder time paying their mortgages than those with a steady income.

The other states feeling the foreclosure crunch, Castellana said, are the ones that have been "overbuilding." She pointed to Nevada and Florida as examples and said pockets of California are also victims of rampant growth. Looking at Marin County, she said the only region that experiences anything beyond negligible growth is Novato, and that city, in turn, is the one place in Marin facing more serious real estate woes.

A positive spin even comes from lenders being more conservative: those who qualify for loans are more solid than the people who were given loans over the past few years.

Castellana said it's also very important to grasp the facts and figures that get tossed around.

"There is a big difference in headlines which indicate that sales are down [meaning fewer homes have sold] versus prices are down. Often, we see headlines that say, ‘Housing down 40 percent' - in that instance the newspaper editor is talking about a decline in the number of homes sold," she explained during last week's presentation. "A good example is Sausalito. So far this year, 16 homes have sold, a decrease of 42 percent from 2007. But the sale prices of those homes are up - the average price sold in Sausalito this year is $1,872,000, compared to $1,519,000 in 2007. Higher-priced homes are selling because those buyers are not affected by the ‘loan crisis.' The same holds true for Mill Valley, Corte Madera, San Rafael and many others. While the number of homes selling has decreased, many homes are selling for higher prices than a year earlier. But, again, it is important to not paint every neighborhood with this broad brush."

Castellana said that people also need to understand the meaning of the term "median price." She said people who concentrate on this one figure are missing out on the rest of the local housing market story. "It would be better if everyone - including news organizations - took monthly reports about median home prices with a large grain of salt. Why? Because the median price is hardly an accurate indicator of where the housing market has been, where it is now or where it may be going. And often the median or average covers too broad an area. It is not focused on smaller segments of the market, which are key to sales prices."

Keith Marsh, a certified residential appraiser in San Anselmo, recently dispatched a letter saying, "When the median price statistic rises, it is because more high-priced homes have sold than lower-priced homes. Comparing the median-price from one month to another month is absolutely meaningless. The statistic is completely worthless for determining price trends unless it's looked at over the long term - usually 10 years or more. To truly understand the Marin housing market, and help make more intelligent buying or selling decisions, you need to consider other parts of the housing story, such as average sales prices in a specific area, the number of properties that have recently sold in that neighborhood, the length of time properties have taken to sell and historical price appreciation in that area "

"Marin continues to be different," Castellana said. "Marin County is more insulated concerning market downturns since we have little new housing or raw, developable land, and we have a diversified economic base. Our county is not dominated by one type of industry or even one company. The downturn that occurred in Silicon Valley several years ago had a very limited effect on the Marin real estate market."

Castellana offered some advice, such as making sure the price is right for the current market before placing it for sale. "Buyers are not interested in looking at homes that appear to be listed at unreasonable prices," she said.

She said now is the time to buy. "Buyers need to jump into the market now, while the real estate market swing is in their favor. Though it appears volatile, depending on where you want to purchase, now is the time to do the analysis and make key decisions. Real estate is cyclical - right now in some areas it is a buyer's market - but it will not last forever."

Daily Real Estate News  |  June 4, 2008 More Rate Cuts Unlikely This Year

Federal Reserve Chairman Ben Bernanke says it’s unlikely the Fed will cut interest rates any further this year. Bernanke, who spoke Tuesday via satellite to an international monetary conference in Spain, said inflation is the bigger concern at the moment.

The Fed's aggressive rate-cutting campaign has contributed to a lower value of the U.S. dollar. That, in turn, has contributed to increases in the price of imported goods and in consumer prices.

"Households continue to face significant headwinds, including falling house prices, a softer job market, tighter credit, and higher energy prices," Bernanke said.

Source: The Associated Press, Jeannine Aversa (06/03/2008)

Jennifer Peck
Jennifer Peck
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