Economist sees Marin holding its own in housing slump
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.