Marin RE Market in a "Depressed State" According to One Marin Agent

It seems that at least one Marin agent is willing to concede what we've been predicting here all along (despite the invective of certain bulls), at least for this still quite early stage of the bubble's unwinding (see quote section, below). Basically, very expensive houses, those occupying the upper 20% of the market (in terms of price), are still being sold with gusto as their buyer's are unaffected by the gradually tightening lending standards. The bottom 40% of the market is tanking. The middle 40% hasn't made up its mind yet.

What to expect: Statistics calculated over the entire county should show the median/average going up, even if slightly, because it is primarily the priciest houses that are driving those calculations. If your house is part of the bottom 50% or so of the market, you can be fairly certain your house has lost value.

Furthermore, expect the further tightening of lending standards to push the dividing line between that segment of the market that is selling vs. that segment which is not to continue working its way up the price scale.

On a related note: I spent much of the evening looking at listings on ZipRealty that are currently on the Marin market and that were last sold around the market's peak, mid to late 2005. What I noticed is that of those houses, the asking price (err, "wishing price") of a good three-quarters of them are only slightly above their original 2005 purchase price (too many houses to make for a reasonable post). After taking into consideration commissions and other costs associated with selling, they will be lucky to break even. More than likely they won't sell at all as sellers are loath to bring a check to the table at closing.

Marin RE bulls like to quip, at least when it is in their favor to do so, that a house is only worth what someone is willing to pay for it. In a free-market (which the housing market most certainly is not) that's true. But what I'd like to know is how much is a house worth that doesn't sell? $0?

Furthermore, many of the POSs that I've made fun of in the past, those that I am very confident didn't sell, are not on the market at present. Why? Maybe the seller gave up? Maybe the seller is trying to rent them? Who knows?

Some choice quotes:

We all have been seeing and hearing in the media about the depressed state of the housing market. Our Heat Index numbers in most categories definitely support this...

BUT--it's fascinating that the two highest-priced tiers of the Marin MHI ($4 million+ and $2 million--$4 million) are as hot or hotter than they were on the same date two and three years ago during our record setting sellers' market. In fact, the MHI reading for homes above $4 million is 25% higher now than three years ago at a most intense phase of the boom market...

On the other end of the spectrum, our Indexes of homes priced Less than $1 million make a dramatically different showing, with current intensity levels down rather shockingly--from 60% to 86% lower than their readings on the same date two and three years ago...

Put another way, current market intensity in the highest 20% of Marin's market (those listings Above $2 million) is at or above the readings during boom years of 2005 and 2004, while Condos and most of the lowest 40% of the market ($1 million and below) are experiencing a sharp drop in intensity levels making those market segments significantly cooler than during the boom years...

By the way, just to follow-up, our first-of-the-year predictions forecast a balanced market by April. While the market in Marin did indeed warm through the early spring, it only approached, but never reached the threshold for balanced market readings [it didn't even come close]. Then the market cooled slightly again...

And for what it's worth: I'd like to say that Nate Sumner (the agent who maintains the Marin Market Heat Index) has earned a "gold star turd" in my book. Any agent who can admit that their predictions for this year were way off and who can (at length) write up a market discussion that does not try to put an obviously bogus positive spin on a down market is worthy of mention if for no other reason than its rarity. Assuming I am correct in my judgment, I wish more Marin agents would follow his lead.