In the last 44 years, there have been only two years (excluding 2008 & 2009) when average home prices in Marin County have decreased from one year to the next: 1% in 1990 and 1.5% in 1991-- after the S&L crisis.

In 2008, Marin County average home prices fell -12.7%. Our Southern Marin housing price index was down only -3.3% for 2008.

This correction in home prices gained speed in 2009 . Marin County average home prices are currently down -21.4%; our Southern Marin average home price index is down -14.2% led by Sausalito, down -37% year to date.

This correction in housing prices is the worst we have experienced in recent history. The rate of price

How far are prices likely to fall? For several months now our research has indicated that the earliest that prices will bottom is Winter 2010. The rebound will be predicated on several key stats—the Bay Area labor market, and the capital markets stability.

Employment

Hiring and firing in the Bay area lags the broader US economy and we have been waiting for the labor market contraction that has affected other parts of the US and CA to be felt in Marin. The latest stats show that the SF-San Mateo unemployment rate hit a new low of 9.3%, and CA 11.9%. This helps to explain the painfully slow pace of home sales and buyer reluctance we are seeing in the marketplace for homes in Marin. The longer term prospects for our job markets are good with the caveat that Sacramento doesn’t drive business out of the state by taxation.

Capital Markets:

The US stock market as defined by the S&P 500 has rebounded sharply, but to date this rebound has had no affect on either the price or pace of high end home sales in Marin. Bond yields and mortgage rates are still quite low considering the amount of Govt. stimulus and the pending inflation, and that has helped create a bottom for the low end in pricing in parts of Southern Marin.

Economy & Stagflation:

The two greatest longer-term issues facing our national economy are little changed: 1) consumer debt levels are still at levels inconsistent with robust GDP growth—which is key for decreasing debt levels. This may serve to keep the national unemployment rate higher in the 6-8% range moving forward.  2) The amount of stimulus in the system indicates future inflation and an escalation in future mortgage rates. If you plan on selling a home to buy another, this should be done sooner rather than later in order to lock in a decent mortgage rate on your new home.