On August 17, 2018

Marin County Real Estate Market Report

While we wait for the autumn selling season to begin in September, this report will take a look at Marin and Bay Area market trends from a variety of angles, starting with home prices.

Paragon & Compass Merge

We are pleased to announce that Paragon Real Estate has joined forces with Compass in order to deliver a new level of support and service for our clients. Founded in 2012, Compass is a real estate technology company now operating in 30 regions with over 90 offices across the United States, including New York City, San Francisco, Los Angeles, Chicago, Boston, Seattle, Washington D.C., Dallas and Miami. With the merger, the Compass Bay Area team consists of more than 500 agents closing more than $4.5 billion in annual sales volume.

Bay Area Housing Affordability

The California Association of Realtors (CAR) just released its Q2 report on housing affordability, which we have illustrated in the 3 charts below. (For some reason, CAR calculates the Q2 Marin median house sales price at a little less than our MLS analysis, but the difference is not material.)

The Luxury Home Market

Spring 2018 was a strong market for high-end homes in Marin, though as is typically the case, it was not as hot as the market for more affordable homes. These dynamics were consistent across the Bay Area.

Bay Area Sales by County

In total sales volume, Marin has the fourth largest luxury home market in the Bay Area, but if population is taken into account, it has the largest proportionally: Both SF and San Mateo have about 3 times the Marin population, while Santa Clara has 7 times more residents.

Luxury Market Seasonality

As illustrated by the next 3 charts, the Marin luxury market is fiercely seasonal. Typically, there is a large burst of new listings in September, which fuels the relatively short autumn selling season. In mid-November, market activity plunges, and the expensive home market does not pick up again until early spring.

Trends in Market Dynamics
Time on Market to Acceptance of Offer

As the market get hotter, listings sell faster.

Sales Price to List Price Percentage

As the market get more competitive, overbidding increases.

General Market Seasonality

Market activity climbs steeply from the beginning of the year to peak in spring, slows in midsummer, spikes back up in autumn, and then plunges for the mid-winter holidays.

Months Supply of Inventory (MSI)

The stronger the buyer demand as compared to the supply of listings available to purchase, the lower the MSI. Generally speaking, MSI figures around the Bay Area have been flirting with historic lows in 2018.

Percentage of Listings Accepting Offers

As the buyer demand increases, higher percentages
of listings go into contract within the quarter.

Price Reductions

Sellers reduce prices most often at two times of the year: At the end of spring and early summer as they try to sell unsold listings before the summer slowdown, and then at the end of autumn before the market dives into its winter doldrums. It is an effort to grab the attention of buyers anew before or during periods of reduced demand.

Mortgage Interest Rates
Short-Term and Long-Term Trends

Two of the factors that have worried market analysts have been the big changes in federal tax law limiting the deductibility of state and local taxes, and interest rate expenses – changes that affect more affluent, higher home cost areas like ours most dramatically – and increasing interest rates. So far in 2018, buyers appear to have shrugged off any such concerns, and dollar-appreciation rates have generally accelerated since the beginning of the year.

Interest rates play a big role in housing affordability, and their drop after the 2008 crash played a vital part in the market recovery of the past 6 years. It has typically been very difficult to predict interest rate changes with any accuracy, though most economists believe they are headed higher. The questions being: If so, how high? And how will buyers react?

It is impossible to know how median and average value statistics apply to any particular home without a specific, tailored, comparative market analysis.

These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value. Longer term trends are much more meaningful than short-term.

Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given with respect to the accuracy or completeness of the information. Compass disclaims any and all liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the report. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes or regulations of any state are those of the author(s). Past performance is no guarantee of future results.

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