Tuesday, April 10, 2007

Marin County: Looking good

Economist sees Marin holding its own in housing slump
Gary Klien
Marin IJ Newspaper 04/10/2007 06:24:04 PM PDT

A prominent real-estate economist predicts that troubles will persist in the California housing sector throughout the year, but she said Marin's unique market is weathering the downturn better than other areas.
"It's God's country, what can I say," Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday in Terra Linda. "When is the 30 percent decline in Marin County's market going to happen? Not in my lifetime."

Appleton-Young, appearing before a regular meeting of the Marin Association of Realtors at the Four Points Sheraton, delivered a mixed message of optimism and wariness about the housing sector. The Marin Association of Realtors recently launched a public relations blitz, promoting their message of a healthy market to Rotary Clubs, chambers of commerce, public officials and community groups.

Appleton-Young, while expecting a continuing contraction through 2007, said the brunt will be borne by the inland markets of Southern California, the Central Valley and areas north of Sacramento. In those areas, she said, agents are coping with a growing inventory of unsold homes because of new construction in the suburbs and rising foreclosures on strapped lenders with riskier subprime mortgages, she said.
The Bay Area is facing many of the same challenges, but to lesser degrees, she said. According to the California Association of Realtors:

- Some 138 detached homes were sold in Marin in February, up 47 percent from February 2006. Statewide, sales were down 9.6 percent over the same period.

- The median price of a detached home in Marin was $963,414 in February, up 1.9 percent from the previous February. Statewide, the median increased 5.7 percent over the same period, but the price, $564,700, was considerably lower than Marin's.

- Marin had an unsold inventory index - the number of months needed to deplete the supply of detached homes on the market at the current sales rate - of 1.1 months in February. That compares with 2.8 months in the Bay Area and 8.8 months statewide.

"You have, like, no inventory compared to Southern California," Appleton-Young said. "And Southern California's inventory is moderate compared to the Central Valley.

"It's important to keep it in perspective. Do you really know anyone who thinks, 'Gee, I'm so sorry I bought in the Marin market?'"

According to the most recent report from DataQuick Information Systems, a La Jolla-based research firm, sales of detached homes in Marin rose 25 percent - from 134 to 167 - between February 2006 and February 2007. The median price for a detached home rose in Marin half a percent, to $925,000, over that period.

Appleton-Young said California's housing sector will continue to suffer for some time from a wave of foreclosures on homeowners with subprime loans. But she said the areas most affected will be inland areas, where many residents bought new homes with zero down payment loans during the price peak of 2005-06, only to see values plummet.

According to the Mortgage Bankers Association, the percentage of subprime loans in the California market has risen from 5 percent to 15 percent since 2003.

"People are paying a much larger share of their income to pay their mortgage," Appleton-Young said. "It made sense when your return was 15 percent."

College of Marin real estate instructor Corina Rollins, who was not at the event Tuesday, said she agrees that Marin is somewhat more insulated than other areas because the housing sector is taking its biggest hit at the lower end of the market - where first-time investors and speculative investors roam. Rollins said she has seen an uptick in foreclosures in Marin, but they tend not to be for homes in the upper range.

"When you look at it, it's a very limited section of the market," said Rollins, a Greenbrae appraiser. "It's all the bottom of the market, which, goofily, is $400,000 to $600,000."

Marin's foreclosure activity, while not increasing as dramatically as in other counties, nearly doubled in the fourth quarter of last year. According to DataQuick, 101 notices of mortgage default - the first step in the foreclosure process - were issued in Marin County in the fourth quarter of 2006, up 98 percent from the last quarter of 2005.

By comparison, notices of default were up 134 percent in the nine-county Bay Area over the same period, DataQuick reported. Statewide, default notices increased 145 percent year-over-year. In Merced, Placer and Santa Barbara counties, the increase exceeded 250 percent.

But recent foreclosure activity has apparently been brisk in Marin. According to the new Foreclosure Center at Yahoo.com, dozens of foreclosures have been listed in Marin in the past two weeks alone, including six in Novato; four in San Rafael; three in San Anselmo; two each in Marin City, Mill Valley, Corte Madera and Kentfield/Greenbrae; and one each in Sausalito and Fairfax.

Despite the problems in the housing sector, Appleton-Young noted that the economy is growing at a moderate pace, interest rates are relatively low and job creation has been steady in California. Also, the commercial real estate market has been "on fire," suggesting brisk job growth and investment, she said.

"It doesn't look like there's a recession coming any time soon," she said.

Local real estate agents said they were encouraged by Appleton-Young's talk.

"I think there's a lack of inventory and a lot of qualified buyers," said Marilee Brand of Coldwell Banker in Greenbrae. "But they have to feel like they're getting value for the dollar."

Vicki Buckle-Clark, an agent with Pacific Union in Greenbrae, described the market as "extremely unique."

"We can't be lumped together with all the California statistics and the nationwide statistics," she said.


Anonymous Anonymous said...

"Anonymous said...
yeah, contra costa is really bad right now, but the worst is still Marin county, especially for apartments and condos.. whoever owns apartments in Marin is really screwed."

The preceding comment was posted in the 04/02 thread concerning the East Bay. If the author is reading this, I'd be interested in some specifics on what he/she was referring to. Personally, I think Ms. Appleton-Young is a bit optimistic.

Does anyone have any idea as to the prevalence of Sub-prime and Alt-A financing in Marin over the past 3 years, particularly in the sub=$1MM range? I haven't been able to get a straight answer from Realtors and mortgage brokers I know.

11:01 AM  
Anonymous Anonymous said...

Well her stats just don't jive with stats published on real estate sites that show inventory in Marin in EXCESS of 12 months supply.

So what gives? Now NAR has resorted to just stating incorrect stats?

6:19 PM  
Anonymous marinite said...

It's the CAR (not NAR) and yeah, they are redifining their stats to fit the message they want people to hear.

I recently read that the NAR is "adjusting" their calculation of the national median price so as to fit better with "what is really going on". Right. This being akin to the CAR's redefining the way they calculate "affordability" to make things look more affordable than they really are (something like 7% affordability in Marin before the redefinition and now something around 24% affordable with the new calculation). The bastards.

This is now a war. We bloggers are the only defense against the lying and misinformation being dumped on Boobus Americanus. I'll be blogging on this point tonight.

11:31 AM  
Anonymous Anonymous said...

"It's different here"

Buy now before it's too late.

1:11 AM  
Anonymous Anonymous said...

hi, anonymous here. I don't have any references to specific market data showing that Marin real estate market is any different from the rest of the state.

I was just trying to see if Doug's the negative sentiment towards the Bay Area real estate market also applies to his own back yard.

11:20 AM  
Anonymous tom stone said...

I know corina rollins,she is one smart woman,and dead honest.as far as marin,there were almost no subprime loanss made there,however there were a large percentage of Alt-a loans made in marin the last few years.and since Alt-a loans usually have a longer period before they reset,the problems will take longer to surface.subprimes were mostly 2/28 hybrids.Alt-a are a mix of 3/1,5/1,and 7/1 hybrid loans,where they aren't I/O balloons or hybrids.the 10 year hybrid where it was I/O for 10 years,then a 20 year amortizing ARM was popular for high end properties.

6:48 PM  
Anonymous Anonymous said...

What a joke, this is all just a game of words. "Marin will fair better then other areas during the downturn", well duh!

of course Marin will 'fair better' but that doesn't mean Marin homeowners wont' feel the pain, won't see a drop in their equity, won't face rising mortgage payments as ARM and HELOCs reset.

The way the article is written is like Marin will be some little idilic island that will be untouched by the outside world.

You know many places 'faired better' during the Tsunami in the south pacific but that doesn't mean their wasn't wide spread pain and suffering and loss of life.

Face it, if you got an 'exotic' mortgage in the last few years that relied on quick price apperciation and/or loose lending standards to refi into something safer, you are in for some difficult times in during the next few years, even in Marin

5:45 AM  
Anonymous James Klobasa said...

Wow, it's really interesting to read of all the housing downturn going on. In my neck of the woods it's a lot different...

6:57 PM  
Anonymous Anonymous said...

so the point is 'its different up here' (in Marin, that is)

but couldn't you make this case for large parts or the entire Bay Area?

Sounds like somebody is trying to say 'hey there is a huge real estate bubble and you better watch out for the desaster I have been predicting for years now, it's happening right now, just not where I live because it's so different here'.

Now thats pfunny!

11:45 AM  
Anonymous Anonymous said...

Marin is special!

Don't believe these naysayers!

It is time to buy!

Perfect time.

I agree with Leslie

2:51 AM  
Anonymous Anonymous said...

Perfect time to buy? That's exactly what the realtor guy told me last fall, and I ended up buying a house in San Jose.

Guess what- since that time my house went up 5% in value. In parallel, during the exact same timeframe, there was of course a lot of talk about 'Bay Area Housing Bubble', how much more sense it makes to rent, sky falling etc etc.

If you look closely, you will find that some people have been predicting the Bay Area real estate bubble to 'burst' since 2002. Ironically, during that time, some of the houses have actually doubled in value.

It reminds me of Nostradamus. Make a prediction and leave some 'details' open-- such as for example when exactly it will happen. If it doesn't happen, just say 'it will'. Then if it really does happen, you can say 'I said so'. Hehe!

Long live the Bay Area Housing Bubble-- let 'em rent!

Doug, by the way, I just read through the 'rent vs buy' screed on your web page: http://www.rntl.net/rent-buy.htm

I guess you should include a comment 'does apply everywhere but not Marin!'

9:22 AM  
Anonymous Anonymous said...

Yes, because Marin is (Church Lady voice) "So SPECIAL!"

You DO know that these days "Special" just means "Retarded", don't you?

1:41 PM  

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