April Results for Marin

Well, the Marin IJ really out-did itself today with their making a big hoopla about the Marin median house price crossing the million dollar mark. I hope they didn't break anything or soil themselves. As if rising prices are a good thing. Are rising medicare expenses a good thing? Is the rising cost of education a good thing? Is the rising cost of gas a good thing? Is the rising cost of food a good thing? Is abysmal affordability, the flip side of rising house prices, a good thing; is it something that a community should be proud of? Is having to be forced to build affordable housing a good thing? Is forcing people to drive an ungodly number of miles to commute in to SFO and Marin because of the out-of-control cost of living closer-in a good thing (and don't insult me with that classic Marin denial BS about them making that commute by choice; they have no choice)? And are all those miles driving, many of them through Marin, a good thing for the environment which Marinites claim to care so much about? No, we'd rather complain about whether someone builds a rock labyrinth in open space.

As far as I'm concerned the Marin IJ has lost all respect and any dignity it might have had. They have whored themselves out to the highest bidder, which is our local real estate industry. Yes, whored. As much as that word offends me, I don't know how else to describe them. Any newspaper worth its salt would have at least stopped and asked some basic questions, dug down at least a little below the surface, instead of taking things at face value. But I guess doing their job is too much to ask of the IJ. Short of starting a rival newspaper, I ask anyone who feels like me to cancel your subscriptions and never pay for that lame excuse of a newspaper ever again; I myself have not paid them a subscription in years.

Anyway, the following is a graph showing the percentage of houses for sale in each April since 2005 by price category. The data I used came from Vision RE:

What the above graph shows is what we (you and me) have been saying for a while now. In 2005 and 2006 the percentage of houses that sold in the below $1 million category, in the $1 million to $2 million category, and in the above $2 million category was essentially constant within each category. But in 2007 the bottom began to drop out of the "low end" of Marin's housing market. This is shown by the shorter yellow bar in the below $1 million category. Clearly, tightening lending standards, which have only just begun and have not yet had much of a bite, and the subprime "meltdown" have had an effect contrary to what Marin RE shills would have you believe. Furthermore, the number of houses in the $1 million to $2 million range increased in 2007 relative to 2005-6.

Hence, the reason why the Marin median price crossed the $1 million dollar mark in April, 2007 was not because houses suddenly became more expensive (err, more special). It was because the mix of houses that sold changed due to the deteriorating market conditions...only the higher end still has buyers that can still buy and their numbers are sure to dwindle as time goes by. Marin real estate agents with at least some shred of courage have admitted that this is in fact what is going on at the moment.

And if you are the proud owner of a "lower end" Marin POS you can be fairly confident that your crack-box has lost value and for good reason. Just look at that Mill Valley house that I've been tracking in my previous post; it has been on the market for 1.5 years (despite the fact that it has a DOM reading of five days) and the only reason why it didn't sell after the first few weeks is because the seller refuses to lower the price down to market rate. As it is, they are bleeding cash and will continue to do so until they finally throw in the towel either by choice or by default. And yet they are just one of many making up the "low end" in Marin.

Moving right along... the following data comes from Vision RE again. Look at all those negative "appreciations"! Not exactly indicative of a strong market.


The IJ and Vision RE as well made a big deal about the fact that SFR sales in April did not go negative like many of the previous months. The reason why is that April, 2007 is being compared to April, 2006 which itself was a strongly down sales market at -26%. The fact that April, 2007's sales were only slightly better than that of April, 2006 only means that our market this spring is as pathetic as it was last year.

The following graph is from Vision RE's (and West Bay RE before it became Vision RE) own dataset. Clearly, April's sales activity was nothing to be too excited about and, with the exception of the April, 2006 data point, April, 2007's sales activity was the lowest it has been since April, 2001.

The next graph is from data I've been collecting from ZipRealty.com. It shows the number of SFRs on the market in Marin since September, 2005 that were asking between $100,000 and $10 million. The point of the red lines is to demonstrate to you that Marin's inventory is currently about 16% greater than it was this time last year. Also note that the peak inventory in 2006 was about 45% greater than the peak inventory in 2005 (green line) and which current 2007 inventory has already surpassed... and it's still very early.

The next graph is also from data found on ZipRealty.com. It shows the number of SFRs (asking between $100,000 and $10 million) that are advertising "price reduced". What I find interesting about this graph is that this spring's selling season started out with about 12% more "price reduced" offerings than the same time in the spring of 2006. Again, it is hard to explain this based on your typical Marin RE industry shill's "everything is great, Marin is special" blather.

And finally, below, is the historical view of the Marin Market HEAT Index. The fat orange line is the Index for this year. The blue line is the Index for last year. Clearly, 2007 is turning out to be a lot like 2006; in fact, it's a little worse. (Incidentally, the Index is currently reading 0.63...well into a so-called "buyer's market".)

Now, don't get me wrong. I wouldn't be maintaining this blog if I didn't enjoy it. Heck, I've even survived desperate death threats. But mostly I do it because I have to...because the Marin IJ, as the local RE industry's propaganda outlet, cannot, no, has not been able to act in accordance with it's name... independent. I think it is utterly disgraceful that a nobody blogger, with a budget of exactly $0, can (at the risk of sounding self-congratulatory) perform a better job of portraying the Marin RE scene than a multi-million dollar (at least) industry which is so anxious that it must spend millions of dollars on a "propaganda blitz" to convince people to buy. Again, I ask any of you who are like-minded to cancel your subscriptions to the Marin IJ; they don't deserve your hard-earned money.