Friday, December 16, 2005

November Market Update

Well, according to this Marin IJ article (written by this blog's now favorite IJ reporter...wink, wink, nudge, nudge) the median priced SFH in Marin in November, 2005 was $920,000. (Yay for us, we are now even more unaffordable!) According to the IJ this is a 9.9% increase from a year earlier and is up a pathetic 0.6% from this October, 2005 (the IJ actually used the words "climbed" and "jumped" to describe this 0.6% increase if you can believe that). Sales volume is down 13% as compared to November, 2004.

However, using the more reliable data from the Marin Assessor's office, we learn that in fact November, 2005's $920,000 price tag is really up only 7% from a year earlier (still respectable) and is down (not up as according to the IJ) a meager 0.3% from this October, 2005's $923,000 median price. But according to the data at West Bay Realty, the $920,000 median price tag for November is down 3% from this past October, 2005.

It's still too preliminary for this blogger to make much of all this (but of course the IJ is all over it as they can still write a positive article) as it usually takes a couple months for the data to settle. More graphs to come.

26 Comments:

Anonymous silver said...

Did the real estate inventory increase or decrease last month in Marin? Did the sales volume expand or shrink at the same period of time?

Sources indicate that adjacent counties such as San Mateo, and San Francisco registered a decrease in sales volume and increase in inventory.

Dec 16, 2005, 1:45:00 PM  
Blogger Marinite said...

According to the article sales volume is down about 13% as compared to November, 2004.

I'll update the post to reflect that bit of info.

Dec 16, 2005, 1:53:00 PM  
Anonymous silver said...

I re-post below of my data search result for rental properties sales activities in Marin.

There have been 55 rental properties for sale in Marin and 11 have been sold between April, 05 and now. This represents a 20% of rental properties sold and the rest of 80% inventory is still available for sale. Although I do not have previous years' data for comparison, I would interpret this search result as a lackluster interest in rental properties investment here in Marin this year. This might also imply that rental market is soft in Marin. Can one draw a conclusion that it is a renter's market?

Dec 16, 2005, 1:56:00 PM  
Blogger Marinite said...

I think it means that buyer's of rental properties in Marin realize that rents do not come close to cover carrying costs which of course is a prime indication of how overpriced property is in Marin.

Dec 16, 2005, 2:07:00 PM  
Anonymous holland said...

One commentator on CNBC mentioned that recently in Southern California, high-end real estate market attracted more business than the low-end one.

Maybe the same type of activities happened here as well. This would explain why the average sales price went up while the sales volume went down and inventory grew.

This could be the start of a new trend. Housing prices might have reached a point that most middle and lower income people are being priced out. Only the top income earners could afford buying houses in expensive areas of California.

Dec 16, 2005, 3:05:00 PM  
Blogger Marinite said...

"This could be the start of a new trend."

I wouldn't use the word "trend" as no market could survive a situation like that; markets just don't work that way unless artificially maintained.

Dec 16, 2005, 3:11:00 PM  
Blogger marin_explorer said...

Only the top income earners could afford buying houses in expensive areas of California.

And here's the irony--most of these home are sad POS that are hardly a reward for a professional's hard work. A $1M home in much of Marin is actually a "working class" home, once affordable to below-median incomes. Just one reason I see a different "trend" on the horizon.

Dec 16, 2005, 3:32:00 PM  
Blogger Marinite said...

It's only possible because of increadibly easy lending. If money were not free, then far, far fewer people would be able to buy and bid up prices.

Dec 16, 2005, 3:38:00 PM  
Anonymous rejunkie said...

And also possible due to two other factors:

Taxes. As I have posted elsewhere, the change in 1997 from a once-in-a-lifetime 125k exclusion of capital gains on your primary residence to 250k/500k AND the drop in the federal capital gains tax (assuming your gain is > 500k) makes the real cost of trading up much lower.

Crappy returns elsewhere: People pour money into RE because it has been the top performing investment over the past several years. The Dow is creaking its way back to 11000 after a nearly 4-1/2 year hiatus.

Dec 16, 2005, 3:53:00 PM  
Anonymous silver said...

Fixed assets investment such as real estate and precious metals do well in a weakening dollar and inflationary environment.

However, real estate will peak when interest rates start to rise to a certain level. Owning real estate then becomes risky for people who use ARMs or other exotic loan arrangements.

Dec 16, 2005, 4:10:00 PM  
Anonymous Curious George said...

Latest data show a 55% drop of new homes sales in Sacramento.

"Sales of new homes fell again in November to their lowest level since September 2001 as builders continued to be hammered by canceled deals. A separate analysis of sales during the six weeks ending Nov. 15 shows a particularly sharp decline in new homes sold in West Sacramento and Lincoln." quoted by the Housing Bubble 2 blog.

This probably means either speculation fever has slowed down or first time home buyers are priced out in that area since Sacramento usually serves as a magnet for these two types of buyers.

Dec 16, 2005, 4:51:00 PM  
Anonymous Anonymous said...

"The Dow is creaking its way back to 11000 after a nearly 4-1/2 year hiatus." - commented by previous post

Just be patient, once real estate cools down, money will come out from that industry and go to the stock market. Let’s see Dow 12,000 soon?

Dec 16, 2005, 6:02:00 PM  
Anonymous holland said...

Did anyone catch the commentator's words on the Nightly Business News tonight? He said that he would stay away from investing in real estate companies, banks or any other interest senstitive industries.

He also said that the Fed proabaly would have further pressure to raise more interest rates than the Wall Street would like it to.

Dec 16, 2005, 6:28:00 PM  
Anonymous silver said...

Tim, themessthatgreenspanmade blogger made the following observation in his reply to my question regarding Marin's sales volume last month:

Tha Bay Area figures are here:

Slower Bay Area home sales, steady price increase

It looks like year-over-year sales volume is way down, but prices are still up considerably, except for San Francisco and Marin which are both single digit gains year over year for what appears to be the first time in a long time.

Dec 16, 2005, 6:46:00 PM  
Anonymous silver said...

holland,

Kudos go out to that commentator. I happened to watch the same show. That commentator is a very savvy investor. He warned about the tech bubble in late 1990s and recommended people to buy technology stocks when NASDAQ was 1100. If he is talking about staying away from real estate investment, he probably sees some dark clouds hanging now.

BTW, if interest rates are rising, maybe it is time to become a landlord. When the rental properties sale is this slow and soft in Marin, one probably could strike a good deal out of these rental properties.

Dec 16, 2005, 7:31:00 PM  
Anonymous silver said...

A correction needs to be made to my previous post. I meant hard (not fixed) assets investment such as real estate and precious metals do well in a weakening dollar and an inflationary environment.

Dec 16, 2005, 11:54:00 PM  
Anonymous Anonymous said...

"except for San Francisco and Marin which are both single digit gains year over year for what appears to be the first time in a long time."

That is odd. Marin is the god's county. How could Marin only have single digit gain last month?

Dec 17, 2005, 12:37:00 AM  
Anonymous Anonymous said...

At least you guys in Marin have a job market!

You want a bubble market and salary home price imbalance? Come to the city of Big Tomatoes.

My take on Sacramento (aka Arnie Land) and it’s housing bubble:

There is no reason in h*!! why my house should have increased from $375K (base without options) to $600 K in 2 ½ years. My house is worth about $400 K(base without options) and that is it.

Take it from me I was pretty accurate when it came to forecasting the crash of 1989 – 90.

There really isn’t much of a labor market here once you take out the State jobs and construction, real estate and finance related jobs.

· The state is in financial trouble and it will be getting worse (tech companies continue to shed jobs in the Silicon Valley – over 300,000 jobs disappeared since 1999).

Fewer jobs = less state tax revenue. Higher prison population and welfare utilization = big time drag on state spending.

· Construction of new units is already starting to decline. With that go real estate, insurance and finance related jobs. There are so many new real estate salespersons here.

· Seems like “stay at home moms AKA housewives” and real estate are the biggest job categories among Bay Area people that recently moved to Elk Grove.

No more two income households with good pay in a lot of the new lower end subdivsions.

o The men in the lower end subdivisions primarily work in construction, real estate and mortgage brokerage.

o The men and women in the higher end areas like mine work in health care, government or commute at $2.50 a gallon to the Bay Area.

o Never thought having a State job would be considered prestigious.

The rest of the market consists of people making $20 to $30,000 per year without benefits.

They can’t afford these $500,000 cookie cutter 4 BR, 3 BA homes being slapped up in Lincoln, East Elk Grove and the Sunrise / Rancho Cordova areas.


Prices in Yuba County (AKA Flood Zone Central) are already in the mid to high 300,000 range (1,200 to 1,800 square foot
crackerboxes).

New houses in Dunmore’s “Provance” in Yuba City are already over $400,000. These houses (future dumps) have great views of the Sri Narayan Hindu Temple, the subsidized Mahal Plaza apartment complex and most importantly, the Roll a Home trailer park and several orchards and dairies (the lovely smell of cow)!

Most of the Sac region buyers use ARM’s, Negative Amortization / Interest Only loans. Or even worst, loans with adjustable interest rates, interest only for the first three years with payment level options (pay what you can afford).

On top of that all I see out here nowadays are new cars and I am talking about 35,000 Pickup trucks with leather seats (!), big SUV’s, BMW’s, high end Toyotas and even Mercedes (in a cow town!).

0% loans and goofy lease deals with high backends abound.

The best job you can get out here is working for the State at 40,000 a year with benefits and no prospects for a payraise.

What happens when the interest rates go up (and they are going up)? Mortgage rates increase at the time of adjustment. What is even worse is that a lot of the people buy with second and silent third loans.

Well the notion of creditworthy borrowers changed in 2003 under pressure from the Bush Administration that wanted to stoke the economy.

Greenspan in his speeches influenced a downward trend in rates, Fannie Mae and Freddie Mac lowered their lending criteria.

More importantly the Chinese Central bank bought a ton of treasury issues to keep rates down so that we can buy more of their output.

All you had to do in the last two years was "fudge" your application, be able to walk, talk and fog a mirror and you got a loan!

Dec 17, 2005, 10:48:00 AM  
Anonymous Caddis said...

You can summize the graph as to this: Once a peak has hit, the price goes in the opposite direction for a period of time. Only to return to it's previous high number at a later point in time. It does not stall, platue, zig-zag or the like. So am I to believe that it will do something completely different than the last 30+ years?

I'll buy in 5. Sell in 10.

Caddis

Dec 17, 2005, 10:54:00 AM  
Anonymous holland said...

How about China effect? With their currency strengthening, they could come to this country and buy up properties, companies, and other assets. With the amount of debt we owe them, they probably could buy up a large portion of our assets. Did someone say that they could buy up the whole DOW 30 companies if they could.

Dec 17, 2005, 11:16:00 AM  
Blogger Marinite said...

Well the notion of creditworthy borrowers changed in 2003 under pressure from the Bush Administration that wanted to stoke the economy.

Greenspan in his speeches influenced a downward trend in rates, Fannie Mae and Freddie Mac lowered their lending criteria.

More importantly the Chinese Central bank bought a ton of treasury issues to keep rates down so that we can buy more of their output.

All you had to do in the last two years was "fudge" your application, be able to walk, talk and fog a mirror and you got a loan!


That is a perfect summary of the real reasons for this rapid house price appreciation. This artificial rise can only last so long and then there is hell to pay. I feel sorry for anyone who is making their plans around increasing price appreciation but what can one do? People will do what they do and unfortunately folks are not terribly far-sighted.

Dec 17, 2005, 11:21:00 AM  
Anonymous Caddis said...

Ew...I've been reading about China...it could be bad.

Dec 17, 2005, 11:22:00 AM  
Blogger fredtobik said...

since we all know what is going to happen in this market, how can we capitalize? screw the why it happened, someone tell me what to do with the 350k i made in re in the last 5 years.

Dec 17, 2005, 10:05:00 PM  
Anonymous by_palladium said...

Fred, if you want to do something smart with your profits, get them out of the us dollar. Sell out and slowly build a position in precious metals and foriegn companies that are not exposed to the US (Australia, Brazil, etc.). It all depends on your time frame, if you are over 45 and want to retire in the US...who cares, ride it back into the ground. If you want to preserve your absolute purchasing power, use the above.

Dec 17, 2005, 11:33:00 PM  
Anonymous holland said...

"Sell out and slowly build a position in precious metals and foriegn companies that are not exposed to the US (Australia, Brazil, etc.)."

Totally agreed. I would also add energy stocks or countries that have energy resources such as Russia, Canada or Mexico.

Dec 18, 2005, 10:21:00 AM  
Anonymous holland said...

The commentator on last Friday's Nightly Business News said that we are at the late stage of this 3 and 1/2 year bull market. He recommended large vs. small cap stocks. He also recommended moving away from any interest rate sensitive stocks and putting money into consumer staple, energy, and health care stocks. These stocks tend to be immune from the impact of rising interest rates.

Do your own due diligence, of course.

Dec 18, 2005, 10:53:00 AM  

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