“Fiscal Cliff” Bill Contains Important Relief for Many Homeowners

As I mentioned a few weeks ago, the Mortgage Debt Relief Act was set to expire yesterday, but was renewed in the bill congress passed late last night…big news for sellers considering a short sale. It also included a revival of the tax deduction for mortgage insurance, which had lapsed after 2011, which is good news for FHA borrowers. The Wall Street Journal summarizes the changes here. They didn’t go after the mortgage interest deduction yet, but it sounds like that could still happen so we’ll keep tabs as things develop.

The Unfortunately Titled “Fiscal Cliff” has Implications for the Marin Real Estate Market

I’m sure you’re as tired of hearing about the “fiscal cliff” as I am, but there are some important issues in the mix for home buyers and sellers. One option being considered is a change to the mortgage interest deduction, which could be a big deal, depending on what exactly the change turned out to be. Our local IJ real estate reporter summarizes here.

And so far there is no word about an extension of the Mortgage Forgiveness Debt Relief Act, which expires at the end of the month, and would have major implications for homeowners who are underwater and considering a short sale. There’s a good explanation of the issue and the potential impact of congress failing to act here. It’s not as big of an issue in Marin as it is in many other parts of the country since the number of short sales has fallen so drastically here this year, but it’s still important and would likely have an effect on our market to some degree.


House Flippers vs. First-Time Buyers

Since the beginning of the year the market in Marin has been on fire and it has continually sustained that pace throughout the year. We usually see seasonal ups and downs throughout the year but that hasn’t really happened in 2012. The big questions are what is causing this and will it continue into next year?

One major factor is that interest rates are at historic lows. These low rates have made it possible for buyers to push their limits and be able to afford more home. Inventory is low because homes are being snatched up with multiple offers and we think sellers are seeing this and waiting to put their homes on the market, hoping to make more money if they wait. Another factor is the dramatic drop in short sales and foreclosures coming on the market. Also, some say the latest dot.com boom happening in San Francisco is pushing people out of the city and up to Marin because it is more affordable. All of these factors have contributed to making it very competitive in the Marin housing market but there is one other factor that has frustrated buyers and agents–the house flippers who have become so prevalent in Marin and Sonoma counties.

We often say to our buyers that the best investment is trying to find “grandma’s” house because it has often been well maintained and the list price usually reflects the updating that it needs. Most buyers want to pick their own finishes and are okay with pulling out old green carpet, refinishing the hardwood floors underneath, painting and picking out kitchen and bath counter tops. In Marin this usually means instant equity once a buyer transforms the house. The problem is that most of these nuggets are being snatched up by flippers who slap on some cheap updates and re-list for a hefty profit, thus pricing out many young families who would otherwise be able to benefit from such a situation. Of course some flippers are buying foreclosed properties on the courtyard steps for all cash, which in my opinion is fair game since they’re taking that risk, and most buyers don’t have all cash and aren’t willing to take the home subject to all outstanding liens.

But when a sweet home with upside potential hits the MLS buyers need to realize they are probably going to have to go up against flippers, who end up putting in cash offers with no contingencies. This is frustrating because these buyers, who would otherwise be able to compete for a good home with upside, instead end up with the option of buying the flipped house, often with updates done with poor craftsmanship, sometimes with concealed problems, and at an inflated price.

We know it’s “just business” and there is no law against flipping homes. But this trend is making buyers do things they wouldn’t have otherwise done in order to compete. One major concern we have is that now buyers are feeling like they have to rush to do pre-inspections and are basically being forced to write offers without a buyer inspection contingency, which can be very risky. A lot of buyers don’t want to spend up to $2,000 inspecting a home that they aren’t even sure they are going to own, which totally makes sense. We don’t want buyers to feel rushed doing their inspections yet we also want them to be competitive when they are going up against an all-cash flipper in a multiple offer situation. Each home and buyer is different and we of course council each situation differently, but overall we want buyers to have time to do their inspections and have time to reflect on a home’s condition, or to get further inspections if needed.

There’s no easy answer to all of this, but unfortunately it’s something buyers need to be aware of in this market. Obviously there are some good contractor/investor types who do a nice job when flipping a home and take pride in the outcome, but we’ve also seen a rise in the number of flip outfits that have turned the practice into a big business. And that trend is making it tough for regular buyers to compete for those homes, and it’s making them feel like they have to take risks if they want to try.

Marin Short Sale Update

We posted back in May about the declining short sale inventory in Marin County, and how that trend has been contributing to the low overall inventory this year. Thought we should update how things have gone since then. A few more came on in May and June but the trend has generally continued, with only twelve new short sale listings in Marin in October, which looks to be the lowest number in any month since the short sale explosion began back in 2007. Here’s a three year look at short sale inventory in Marin through October:

That’s good news in that it looks like fewer homeowners are feeling the need to sell their houses while underwater, but not as great news for buyers who are feeling frustrated by the lack of homes available to purchase. It feels like we’re at a crossroads of sorts, where a lot of the homeowners who needed to sell (even in a bad market) have largely done so, while those who might like to sell, but don’t have to, are seeing the market improve and are thinking they’ll get more for their homes if they wait a bit.

At some point we should see more inventory as more sellers will jump in as prices increase, but that may not happen until spring. And even then it’s hard to say if we’ll then see enough of an increase in listings to satisfy the strong demand for homes in Marin and get us back to a more balanced market. Below is a look at the same period for all residential listings.





A New Name and New Principals for San Anselmo Elementary Schools

The new school year is just underway, with some big changes.  San Anselmo’s Brookside Elementary School was previously divided into two campuses. Lower Brookside was kindergarten through second grade, and third through fifth grades were at the Upper Brookside campus.  With the big increase in enrollment of younger students, and after much thought about how to accommodate everyone, the district decided to split the two campuses into separate schools altogether.  With last year as the transitional year, for this 2012-2013 school year Upper Brookside has been renamed Hidden Valley, and will be K-5. Lower Brookside will keep the Brookside name and is still in transition, with K-4 classes for now, and plans to become a complete K-5 next year.

Brookside Elementary has a new principal, Billy Cameron, who was previously assistant principal at Bacich Elementary School in Kentfield.  Hidden Valley Elementary also has a new principal, Kristi Fish, who was previously a dean of students, assistant and interim principal at Ross Elementary in Ross.  To read more about her and the new school check out the PTO website.

The Kindergarten Readiness act of 2010 will start to be implemented this year, which gradually will move up the eligibility cutoff so that in 2014 kids will need to be 5 years old by September 1st, where they previously had to be 5 by December 2nd to be eligible for Kindergarten admission. There is a Transitional Kindergarten program at Brookside that will allow children affected by the change to have a pre-kindergarten class on campus before their year in actual kindergarten.  Further information on the requirements can be found here.


Under $1.5 Million, Marin Inventory Stays Low

The real estate market in Marin (and most places for that matter) normally has a seasonal cycle of peaks and valleys of activity and inventory. Even if the totals are higher or lower in a given year, the basic pattern generally holds: inventory bottoms out in winter, and peaks in spring/summer. That’s not the case so far in 2012, at least when you look at homes under $1,500,000. The chart below shows all Marin residential properties under 1.5 million over the last five years, and you can see how the number of homes for sale has stayed low since winter.

Basically, this means it’s the best time to be a seller in that price range in years. As has been the case in general this year, multiple offers have become common for good homes that are priced right. What will happen this winter? Hard to say, but if you’ve been considering selling we should talk. Email me at gcrowe@sfnorth.com if you’d like to explore that possibility, or if you’d just like market stats tailored to your price range and area.



Should You Buy or Rent?

We are well aware of the unreliability of Zillow.com’s “zestimates” of home values in Marin, but this post on their blog is pretty cool. They’ve crunched the data to show how many years it would take to break even on the cost of buying versus renting the same home in metro areas around the country, including the Bay Area. The numbers are pretty low in areas where home prices are relatively low compared to rents, and much higher in expensive markets. For example, they say that in Novato just 4.5 years after buying a house you would start to save money versus renting, while in a market like Tiburon they calculate it would take more than 15 years to reach the break even point. Here’s a direct link to the SF and Marin numbers.

New Listing: 31 Santa Barbara Ave, San Anselmo

Stephen brought on a great new listing this week in the San Francisco Blvd area of San Anselmo, one of our favorite neighborhoods. It’s a really cool, sunny 3/2, with lots of updates, a family room and office, and a big yard. Asking price is $879,000. It’ll be open Sunday July 29th from 1-4. More info here.

Marin Pending Rates for June

Here are the pending rates for Marin towns for June, 2012.  They are calculating them a little differently now, so are actually more accurate that they have been for previous months and the rates will now appear to be lower across the board (no more 135% pending rates for example). I won’t get into the changes in methodology here, as even the old ones are useful as relative activity between the various areas. If you’re curious let me know and I can send you more info. Greenbrae led the charge with a 70% pending rate, with Mill Valley, San Rafael, and Novato coming in as “slight seller” markets. As has been the case for some time, the rates are much stronger in the lower price ranges, as shown in the second chart.