"Spotless"

Update 9-16-06: I added an inventory graph.

If you have a spotless house in a spotless location, then you will probably get your asking price. Everyone else must cut the price to sell which most sellers are still loath to do. That's why the recent median/average sales prices have at times deceptively inched up in an overall environment of price reductions; these days the median/mean reflects the mixture of houses that sell and not a measure of the average price of the market as a whole. This article in SF Gate supports that conclusion.

[Regarding the RE market in SFO] "It's cratering underneath my feet," muttered one agent after his pristinely marketed, cautiously priced listing engendered only a single, below-asking offer. Another agent, whose characteristic optimism had evaporated like the sheen on a new floor after an open house, bluntly described the market as "flat-lined" in his newsletter.

What exactly constitutes a "spot"? Every agent I spoke to gave me lists of fatal flaws, and many of these lists overlapped. Unfortunately, most of the flaws are out of a seller's control: bad location (across the street from a housing project, bus stop or other "undesirable" vista), no parking, massive foundation problems, no outdoor space.

Other, less-permanent flaws may scare buyers off because they seem too daunting to fix. Having only one bathroom, for instance, is often enough to besmirch the loveliest of properties. Likewise, many a buyer can't envision fixing an awkward floor plan or popping windows into an irredeemably dark house.

Indeed, the concept of move-in condition has gained increasing traction, especially among more affluent buyers searching for $1 million-plus homes. "I'm seeing a real resistance to renovating," says Sotheby's Gloria Smith. "They've done it and seen their friends do it. They know what kind of stress it puts on a marriage and the fact that the contractor's costs often double."

According to the majority of agents, it's not worth scrimping when it comes to improving surfaces. The new standard has gone far beyond vacuuming the rug and doing the dishes before prospective buyers arrive.

During the boom, buyers just wanted a roof over their heads. Now it seems they want every little thing on their "under heaven" wish list. But short of that, agents say, they'll settle for that lovin' feelin' that only a buyers' market can bring.

"Buyers want a good deal," says Shagley. "They want to feel as if they've gotten something for their money."

Who can blame them?

The Marin HEAT Index is at yet another new all time low of 0.45. Any bets on what it will be by Thanksgiving?

Here's the discussion for the above picture by the author of the HEAT Index:

My September 1 prediction that the market and the Market HEAT Index would continue to cool through early and mid-September was accurate. More listings, lower rates for closed sales and for pending sales combine into a pretty frosty Marin market. Larkspur is the only town showing a "Balanced Market" index reading, and the price range of $2 Million - $4 Million is the only range performing at or above the previous year's levels. Look at these statistics:

1. The Market Heat Index for Marin declined from 0.53 to 0.45 (a new record cool point);
2. Pending sales declined from 291 to 265;
3. Number of properties sold in prior 30 days was essentially unchanged (250 to 249); and
4. Active, available for purchase properties increased from 1,019 to 1,143.

My prediction that the Index would experience a rise by early and mid-October is unlikely to pan out, however, because of the decrease in pending sales to the very low level registered on the 15th. (It was 265, down 9% from the reading on September 1.) This presages a further reduction in the Marin Market HEAT Index well into October and early November.

Buyers: I truly believe that buyers in Marin who act in a down market such as this are both bold and smart. They have lots of choices, and they have a lot of bargaining power. They almost always do well if they buy to hold.

Sellers: Sellers, though, need to work harder be more pragmatic about pricing their property then at any time here in the past ten years. Properties do sell, even in these quite cool conditions. But only occasionally do they sell over their asking price or with multiple offers. Good condition, fair-to-low asking price, good on-line marketing: these are the watch words for sellers in this market.

And according to ZipRealty Marin's SFR inventory is currently about 45% higher (refer to green line in the following figure) than it was this time last year (my search parameters were any SFR within the asking price range of $100,000 and $10,000,000, any number of bathrooms, bedrooms, etc., in any Marin town):


Here's the August, 2006 results according to Vision RE. It looks like everyone in their sample of the overall market rushed in at the last minute to complete those sales in time for the start of school. Or maybe it was an effect of lowered interest rates (oh, but wait a minute, people in Marin are supposed to be so wealthy that interest rates don't really matter). It will be interesting to see what DataQuick comes in with: