Home Affordability Analysis:

Our past overriding recommended buying strategy to all clients was: “Take your time to find the right house, at the right time, at the right price.”

The results of my recent study are as follows:
• Home ownership in Marin County is more affordable than any time since the 1960s.
• Real Estate performs well in inflationary environments
• 30 Year Fixed mortgages are very near ALL TIME LOWS

During the 12 years of 1974-1985:
Inflation averaged 7.7%. The average home in Marin costs $136,805 which adjusted for inflation is about $490,000 in today’s dollars. The average mortgage rate during that same period was 11.45%. If you financed the entire purchase price, the average monthly housing payment was $4,675.

During the next 12 years 1986-1997:
Inflation averaged 3.4%. The average Marin County home during this period cost $340,188 which adjusted for inflation is approximately $567,875 in today’s dollars. The average mortgage rate was 8.7%. If you financed the entire purchase price, your average monthly housing cost would have been $4,110.

During the next 11 years 1998-2008:
During this high growth “new economy” dot com era, inflation averaged 2.71%. The average cost of a Marin County home was $1,006,000. Mortgage rates averaged 6.75%, and the average monthly cost of housing was $5,600.

Year to Date 2009:
The average home cost in Marin County has plunged from $1,221,000 in 2007, to $770,233 so far in 2009. 30 year mortgage rates via Wells Fargo with 1 3/8 points are ~4.5%. Your average monthly housing cost is now $3,200— as cheap or cheaper than any time in last 35 years.

Marin County housing prices are now 37% below the peak in 2007. As we move through this year, the statistics are getting better—which means if you had bought a house 5 weeks ago you may have gotten a better deal than if you buy one today.

For example: During the first quarter 2006 (Q1 ‘06) the average selling price per square foot in Mill Valley was $661/sqft; during the first quarter 2007 (Q1 ’07), the average selling price per square foot was $662/sqft; during Q1 2008, it was $682/sqft. 6 weeks ago in Mill Valley the average selling price per square foot was $490/sqft, 4 weeks ago it was $520/sqft, and today it is $528/sqft.

There are great opportunities out there.

The next crisis our country will face will be an inflationary one. Home values have historically performed well during inflationary times. The sooner you lock in a mortgage rate the better. So getting back to recommended buying strategy—it is the right time, and prices are very attractive—now we just need to find you the right house.

Last and perhaps most importantly—all the factors that have historically driven real estate prices higher in this area are still intact:
• proximity to a great city & economy and high paying jobs
• Great public schools
• Safe Neighborhoods
• Clean air and water
• Wonderful lifestyle and community
• Open space all around us
If you are seriously considering moving to Marin, now IS the time. Prices may drop more, but if mortgage rates rise it will be a substantial net loss to you over the term of your mortgage. As always, call me, Dave, with any questions 415 867 6611.