Kyle Frazier, J.D., Broker Associate Ι Pacific Union International | Christies International Real Estate | (415) 350-9440

Marin County, California, Luxury Homes Report (August 2009–Sales and Inventory Analysis)

Marin County, CA’s luxury real estate market segment continues to take shape in the aftermath of the equities meltdown of Fall 2008. In our New Economy, buyers are placing emphasis on prestige locations, sweeping views, grand appointments, compelling “estate history,” and impressive scale. The luxury market in Marin remains weighted towards homes priced under $4 million, although we did have 3 sales of homes priced over $4 million in July 2009. The number of sales in July 2009 is off by 74% from July 2008. The news is not all negative, however, as we had several significant properties trade last month and another 30 luxury homes are currently in escrow. For a detailed snapshot of current national trends from the Institute for Luxury Home Marketing dated August 2, 2009, click here. Note, if you would like a local report relating to any town or zip code in Marin or San Francisco, call me at (415) 350-9440.

Buyers remain dubious of price stability for good reason (see chart below reflecting year over year median asking prices in Tiburon, Mill Valley, and Kentfield). But, increased conforming loan limits and a pronounced level of increased affordability across the board should help sales moving forward into the Fall as buyers with 25% down will obtain top-shelf financing for purchases of $1.6 million. While not necessarily “Luxury” territory here in Marin (although declining prices are putting some very nice homes into the sub-$2 million price bands), a sizable segment of buyers of luxury homes must sell their current homes first (80% of buyers are sellers). The chart below indicates that across the trend in Marin’s luxury segment is for lower prices — 10-25% lower than last year in Mill Valley, Belvedere, and Kentfield. 

The year over year inventory levels in Mill Valley have hovered at around 20% since May 2009 (much improved from a nearly 60% inventory increase in February 2009). Meanwhile, inventory in Kentfield has rocketed nearly 90% higher this year compared with last year. In combination, Tiburon and Belvedere inventory levels are about 70% higher than last year. Prediction: Kentfield and Tiburon / Belvedere prices will continue to recede through Q4 2009. Indeed, we can see that trend has set in dramatically in the above chart which tracks asking prices of homes currently for sale.  

Among the sales last month, was a $9.8 million trade in Kentfield after just 3 days on the market. Our agents are noting a more focused approach by buyers. In addition, Carlos Santana’s San Rafael estate sold last month after just a couple of weeks on the market. Indeed, we are also starting to see buyers lose out on properties they loved because they assumed there was no urgency in writing an offer.
 
The graph below reflects a 90-day rolling average of asking prices for homes in the topmost quartile (e.g. prices of the most expensive homes) in 3 touchstone Marin County cities: Tiburon, Mill Valley, and Kentfield. As you can see, over the past year, prices have declined, although asking prices appear to have leveled in all 3 towns.

 Below is a new chart focusing on the percentages of homes in Tiburon and Mill Valley that have experienced price reductions, as well as a look at how deep those reductions have been, on average.

Real Estate Market Chart by Altos Research www.altosresearch.com

The definition of this market stat is: “Percentage of homes on the market that have decreased their asking price at least once over the past 90-day period.” In any market, even in strong seller’s markets, there will always be some number of properties that will decrease their listing price. These may include sellers that drastically overpriced their homes just “to see what they could get” or homes that simply entered the market at a price level above what the market will bear.

Even in strong seller’s markets, the Percent Price Decreased will be 10-12%, so some repricing of individual properties is common in any market. In weaker markets, this value begins rise into the teens, 20%, 30%, and higher. Percent Price Decreased is an incredibly insightful gauge of demand levels in the residential housing market. This statistic illustrates how many listed properties may be behind the “price curve” – listed at a price above what the market is willing to pay for similar properties. However, “Percent Price Decreased” alone does not indicate the overall health of a particular market. This statistic should be combined with other market stats to determine the overall direction of a market.
 
$2 Million to $4 Million Luxury Homes
Summertime is a traditional slow season for Marin real estate because many families focus more on vacations than on home buying. While buyer activity has picked up over the past week, home sales in July 2009 were limited to six. It seems that there is a lot of home shopping going on, but few sales. Inventory has dipped to 126 homes on the market between $2 million and $4 million (down from 135 last month, but up from 110 in March).
 
Quick recap of 2009: Since the emergence of the “new economy” (post-October 2008), sales numbers in this price band are down. For example, there were 18 sales in October 2008 (a relatively strong time of year for sales and, of course, these buyers were well into their escrow periods at the time of the meltdown). Then, by February 2009, sales dipped to just 2. As things began to improve in April & May 2009, sales bumped up to 8. And June 2009 was relatively strong with 16 sales. Although that number fell to just 6 in July 2009, I believe we will pleased in coming months with sales numbers. Today, there are 25 homes in escrow in this price band. That portends stronger sales months to come.  
Cities recording sales in this price band included: Belvedere (2), Kentfield (1), Ross (2), and San Rafael (1). These homes averaged 61 days on market. Their average sales price was $2.993 million (roughly $747 per square foot), with an average of 4,177 square feet. As noted above we also have a stockpile of homes in the escrow pipeline, including homes in Belvedere (5), Tiburon (4), Sausalito (2), Mill Valley (4), Corte Madera (1), Larkspur (1), Ross (3), and Kentfield (3), and San Rafael (1). The absorption rate for Marin homes in this price band is up to 21 months. Most sellers seem to understand that they must position their home at the head of the line when it comes to pricing if they want to sell. 
$4 Million & Up Ultra-Luxury Homes
The inventory level of Marin County’s ultra-luxury market (homes priced in the $4 million and up range) remained static with 54 homes for sale. The highest concentrations of homes in this price band are Tiburon, Belvedere, and Ross. Recent activity in this price band is improved. Marin County saw three homes sell last month, including a $9.8 million sale Kentfield, Carlos Santana’s San Rafael estate, and a spectacular Belvedere home. Moreover, there are an additional 5 homes currently in escrow in this price range (including 2 in both Belvedere and Ross). Marin cities and towns with homes priced over $4 million include Tiburon, Belvedere, Sausalito, Kentfield, Ross, Mill Valley, San Rafael, and Novato. The absorption rate for these homes is 18 months.  

Marin Cities & Towns

$2 Million — $4 Million

$4 Million & Up

Active

Pending

Active

Pending

Sausalito

12

2

7

0

Belvedere

26

5

10

2

Tiburon

20

4

21

1

Mill Valley

30

4

4

0

Larkspur

2

1

0

0

Corte Madera

0

1

0

0

Kentfield

11

3

2

0

Greenbrae

2

0

0

0

Ross

6

3

8

2

San Anselmo

6

0

0

0

San Rafael

6

1

1

0

Novato

5

0

1

0

The above graph identifies the numbers of active listings and homes in contract in the Marin County luxury ($2 million to $4 million) and ultra-luxury ($4 million and up) home market segments. Note that all homes in contract are included in the category “Pending” even though some are technically “Contingent” properties (e.g., the buyers have not removed all contingencies). This information is limited to Marin County’s Highway 101 corridor towns and cities that consistently maintain a monthly inventory of luxury and ultra-luxury homes (Western Marin coastal homes are not included)

Call Kyle Frazier, Marin Realtor & CRS, Member of Institute of Luxury Home Marketing, Broker Associate, Morgan Lane Marin Real Estate, Pacific Union International, Christie’s Great Estates of Marin, 415/350-9440 for more luxury home market information. You can also e-mail Kyle at mailto:Kyle@ImagineMarin.com.

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