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Selling your house
Bay Area Real Estate Sales.com Newsletter
February 2005
In this Issue:
Marin & San Francisco Home Sales Statistics
NAR Housing Update - homes sales set record
again in 2004
Fast Facts
I thought this
article on Home Prices and the Bay Area Real Estate Bubble was fantastic. So
rather than write something myself this month, I'm reprinting it here. It was
written by Ray Brown, the President of our San Francisco Marina Pacific Union
Office and author of the 2 bestselling books: "Home Buying for Dummies" and
"Home Selling for Dummies":
Just as you are
what you eat, so you are what you read. Rapidly rising home prices triggered a
spate of articles that attempted to predict precisely when the Bay Area's
residential real estate bubble would burst. Now, surprise, surprise, some
folks wonder if homes are still a good investment. You decide.
I've been a San
Francisco Realtor since 1974. In the past 30 years, I've seen several giddy sellers'
markets and exactly as many somber buyers' markets. I've seen 30-year mortgage
rates hit a 45-year low of 5.25 percent last June and skyrocket over 18 percent
in the early 80's. I've seen lots of stock market bubble bursts. It's a
misnomer to characterize the residential real estate market as a bubble. It's
more like a balloon that occasionally develops a slow leak. Once that leak is
patched, the balloon resumes its ascent.
Homes have never
suddenly lost favor with homeowners the way stocks do with stockholders.
Remember when Enron's stock plunged from $49 a share in September 2001 to 25
cents by the end of November 2001, after word got out about corporate
malfeasance? How about the double whammy of Black Friday and Meltdown Monday
in October 1987, when the Dow Jones average lost about 25 percent of its
value? That tested the efficacy of everyone's deodorant.
Even in the worst
of times, however, the Bay Area residential real estate market never burst.
Sure, home prices sagged now and then, but they never burst like a delicate
soap bubble.
This isn't a hit
piece on the stock market. Stocks and bonds are an essential component of
everyone's diversified investment portfolio. I just don't want people to
confuse the way the stock market operates with how the residential real estate
market behaves.
Homeowners don't
have the herd mentality of stockholders. Suppose, for example, that mortgage
rates suddenly zoomed to 18 percent. Would all homeowners simultaneously put
their houses on the market? Of course not. Higher rates on new loans wouldn't
affect tens of millions of existing mortgages. Life would go on. Sure, home
prices would head south. And sooner or later, as they always do, interest
rates would return to normal. Ditto property values.
If you don't sell
when prices are down, you don't lose money. If you must sell in a depressed
market, due to divorce, retirement or another major life change, you'll find
the real estate gods are scrupulously fair. Whatever you lose when you sell,
you'll immediately recapture when you purchase your next home. Home prices are
like corks floating on a pond. They all go up and down together.
Homeownership
isn't just an investment. It offers a rainbow of benefits: physical shelter,
an inflation hedge, and tax write-offs. Under current tax laws, house sellers
get an awesome tax break. A hefty portion of capital gains on home sales are
excluded from tax: up to $250,000 for single taxpayers and $500,000 for
married couples filing jointly.
Marin & San Francisco Home Sales Statistics**
|
Marin & San Francisco Home Sales Statistics - by city as of 2/01/05
|
|
City
|
Total
|
Active
|
Number in Contract***
|
Percent in Contract*
|
|
Marin County
|
|
Belvedere
|
10
|
8
|
2
|
20%
|
|
Corte Madera
|
12
|
9
|
3
|
25%
|
|
Fairfax
|
8
|
5
|
3
|
38%
|
|
Greenbrae
|
5
|
3
|
2
|
40%
|
|
Kentfield
|
23
|
11
|
12
|
52%
|
|
Larkspur
|
8
|
3
|
5
|
63%
|
|
Mill Valley
|
66
|
39
|
27
|
41%
|
|
Novato
|
110
|
47
|
63
|
57%
|
|
Ross
|
9
|
6
|
3
|
33%
|
|
San
Anselmo
|
21
|
13
|
8
|
38%
|
|
San Rafael
|
111
|
62
|
49
|
44%
|
|
Sausalito
|
34
|
23
|
11
|
32%
|
|
Tiburon
|
43
|
36
|
7
|
16%
|
|
Others-Marin
|
|
|
|
|
|
Total Marin 2/1/05
|
460
|
265
|
195
|
42%
|
|
Total Marin 1/10/05
|
458
|
246
|
212
|
46%
|
|
Total Marin 12/6/04
|
756
|
367
|
389
|
51%
|
|
Total Marin 11/4/04
|
927
|
489
|
438
|
47%
|
|
Total Marin 10/5/04
|
968
|
564
|
404
|
42%
|
|
San Francisco City & County
|
|
Total
SF 1/10/05
|
|
|
|
|
|
Total SF 1/10/05
|
984
|
360
|
624
|
63%
|
|
Total SF 12/6/04
|
1402
|
556
|
846
|
60%
|
|
Total SF 11/5/04
|
1656
|
740
|
916
|
55%
|
|
Marin Home Sales Statistics
- by price range as of 2/01/05
|
|
Price
|
Total
|
Active
|
Number in Contract***
|
Percent in Contract*
|
|
$100,000-$499,999
|
38
|
18
|
20
|
53%
|
|
$500,000-$749,999
|
103
|
39
|
64
|
62%
|
|
$750,000-$999,999
|
104
|
62
|
42
|
40%
|
|
$1,000,000-$1,499,999
|
92
|
55
|
37
|
40%
|
|
$1,500,000-$1,999,999
|
66
|
40
|
26
|
39%
|
|
$2,000,000-$,2499,999
|
25
|
22
|
3
|
12%
|
|
$2,500,000-$2,999,999
|
15
|
7
|
6
|
40%
|
|
Over
$3,000,000
|
55
|
48
|
7
|
13%
|
|
Total Marin 1/10/05
|
498
|
293
|
205
|
41%
|
|
Total Marin 1/10/05
|
458
|
246
|
212
|
46%
|
|
Total Marin 12/4/04
|
756
|
367
|
389
|
51%
|
|
Total Marin 11/4/04
|
927
|
489
|
438
|
47%
|
|
Total Marin 10/5/04
|
968
|
564
|
404
|
42%
|
|
San Francisco Home Sales
Statistics - by price range as of 2/16/05
|
|
Price
|
Total
|
Active
|
Number in Contract***
|
Percent in Contract*
|
|
$100,000-$499,000
|
193
|
68
|
125
|
65%
|
|
$500,000-$749,000
|
489
|
193
|
296
|
60%
|
|
$750,000-$999,000
|
193
|
88
|
105
|
54%
|
|
$1,000,000-$1,499,000
|
114
|
65
|
49
|
43%
|
|
$1,500,000-$1,999,000
|
50
|
35
|
15
|
30%
|
|
$2,000,000-$2,499,000
|
18
|
13
|
5
|
28%
|
|
$2,500,000-$2,999,000
|
17
|
12
|
5
|
29%
|
|
Over
$3,000,000
|
34
|
26
|
8
|
24%
|
|
Total SF 1/10/05
|
1113
|
501
|
612
|
55%
|
|
Total SF 1/10/05
|
984
|
360
|
624
|
63%
|
|
Total SF 12/4/04
|
1402
|
556
|
846
|
60%
|
|
Total SF 11/4/04
|
1530
|
746
|
924
|
60%
|
*Key:
0% - 10% of Homes in Escrow: Extreme Buyer's Market 36%
- 45% of Homes in Escrow: Seller's market
11% - 20% of Homes in Escrow: Strong Buyer's Market 46%
- 55% of Homes in Escrow: Strong Seller's market
21% - 30% of Homes in Escrow: Buyer's Market 56%
- 100% of Homes in Escrow: Extreme Seller's market
31% - 35% of Homes in Escrow: Balanced Market
**Charts
represent information gathered from BAREIS and SFMLS at a specific point in
time.
***Includes
all: Sale Pending & Contingent properties
Prices, sales rise; Realtor calls it 'madness'
Reported in the Marin Independent
Journal, 2/16/05 By Jim Welte, IJ reporter
Marin home sales and the median price
paid for them continued to soar in January, jumping nearly 24 percent in
year-over-year sales and reaching all-time highs for median prices, according
to a report from a real estate information firm.
La Jolla-based DataQuick Information
Systems reported that the median price for a single-family home in Marin last
month was $850,000, a nearly 26 percent jump over January 2004 and a 5 percent
jump over the previous month.
Including both single-family homes
and condominiums and townhouses, the Marin median price was $740,000, a 19
percent jump over the same period a year ago and up slightly from November
2004, the previous all-time high.
"It's just total madness out
there right now," Marin Association of Realtors President Jack McLaughlin
said.
Marin's median home price, both for
single-family homes and overall, was by far the highest in the Bay Area, with San Mateo County a distant second at $698,000 and $693,000, respectively. Marin's
median price for townhouses and condos was $493,000 in January, up more than 13
percent over last year. San
Francisco had the
highest median price in that category at $670,000.
A combination of several factors is
sending prices through the roof, several local industry experts said. The
biggest factor is lack of inventory, they said. While buyer demand
traditionally outstrips inventory at this time of year, the situation is
exacerbated by high demand. McLaughlin said the trend of multiple frenzied
buyers making offers well above the asking price - a phenomenon that peaked
early last year - has returned.
McLaughlin said he personally has
been involved in at least 12 listings that have received multiple offers above
the asking price. We have to keep checking and
making sure the fax machine has paper in it we've been so busy," he said.
"I am totally buried in real estate transactions." Lack of inventory
is the only thing preventing the housing market in Marin from exploding, said
Larry Brackett, chief executive of Frank Howard Allen Realtors. "The
buyers are out there," he said.
Even with the lack of inventory to
match buyer demand, a total of 309 homes in Marin were sold in January, a 23.6
percent leap over January 2004. The numbers reflect the closure of sales, and
sales normally plummet in the winter months.
Another major factor in the craze
continues to be appreciation, according to Barry Crotty, an agent with Pacific
Union Residential Real Estate in Greenbrae. For example, he said a typical
$600,000 home in Terra Linda has appreciated by $100,000 just in the past year.
Sellers have gotten more savvy about the presentation of their homes, which
changes the perceived value of a home even beyond the increase in its actual
value. "The perceived value is certainly a little greater than it was in
past years," he said.
Given continued low interest rates,
even with the recent increase by the Federal Reserve, homeowners are also able
to remodel and expand their homes relatively cheaply, several experts said. As
a result, the actual quality of homes being sold is improving, furthering that
appreciation.
"If you drive around Marin, all
you hear are saws and hammers," he said. "People are really upgrading
the housing stock in Marin. We're not selling the same houses that we did six
months ago or three or five years ago." The phenomenon is not limited to
Marin, Brackett said. A total of 7,509 new and resale houses and condos were
sold in the nine-county region in January, DataQuick reported. That was a
nearly 6 percent jump over the same period a year ago.
"As far as identifying trends,
January and February numbers are generally shaky because of somewhat atypical
mid-winter purchase patterns," DataQuick President Marshall Prentice said.
"Still, last month's statistics were a continuation of trends we saw
toward the end of last year. More surprising than the strong sales counts was
the strong appreciation rate."
The median price paid for a Bay Area
home was $534,000, a new record. That was up 0.2 percent from $533,000 in
December, and up 20.5 percent from $443,000 for January a year ago. The last
time annual price increases in the Bay Area were more than 20 percent was in
January 2001, when the $375,000 median was up 20.2 percent from $312,000 a year
earlier, DataQuick reported.
Local industry experts said the
market shows no signs of slowing down anytime soon, particularly if sellers
step up and match buyers' demand.
"I don't think that anybody who
works in this industry right now really believes that there is a bubble," Crotty
said.
This month Liz McCarthy interviewed Jay Zemansky, Insurance
Broker from Sadler & Company Insurance, on the subject of Earthquake
Insurance:
Q: What is the California Earthquake Authority and how does it
work
California Earthquake Authority was
created so that ALL homeowners/renters/condo unit owners would have access to a
market for earthquake insurance no matter where they live in California. It was created to be self funded
by insurance premiums with no State of Calif. Funds used to pay claims. It has been in existence for over 10
years and is now fully funded and ready to pay out on any disaster that might
occurred due to an "event".
If a person has a policy for earthquake
insurance through their insurance carrier there is a 70% plus chance that it is
a CEA policy. The individual insurers handle the paper-work for their Clients
with homeowners, renters or condo insurance and place the earthquake coverage
with the CEA. The balance of the insurance companies carry the earthquake
coverage directly. When and if an "event" occurs a claim is made to the
Client's insurance carrier | |