Market Trends

August 2007

Average home price appreciation for Marin County seems to be slowing after a very robust start to the year—with most Marin towns logging average home price appreciation of 10% - 15% through July, while the rest of the State and nation are showing much less resilience.

An apprehensive buyer I am working with is concerned that economic data and rising mortgage rates are harbingers of price declines in Marin County real estate—so he’s been patiently waiting trying to time his purchase with a market dip. He recently asked me "how risky is an investment in Marin Real Estate?"

Unfortunately, the answer to that question is different for everyone depending on their time horizon and personal situation, but let’s look at what has happened historically:

There has only been one period in the last 35 years when average home prices in Marin County have actually decreased from one year to another and that was during the real estate slowdown of the early 1990s—see.

Besides this barely perceptible dip in prices, the average home price in Marin County has always gone up— through good years and bad years, recessions, dot-com meltdowns and national real estate slumps such as the current one. The primary reason for our stable housing prices is the supply of Marin homes is quite small and the demand to live in Marin is quite large.

The average yearly price appreciation for Marin County homes over the last 36 years is 9.8%. The average home price at the end of June was just over $1,213,000. At the same rate of appreciation, the cost of the average home in Marin in 25 years (the year 2032) would be nearly $11,400,000. Doesn’t seem reasonable does it? Until you talk with someone who purchased a nice home on Middle Ridge in Mill Valley in 1970 for $40,000.

The greater point is the Marin Real Estate market has been incredibly immune to larger national and global real estate "bubbles" and related "shocks". Historically, unlike other capital markets, prices of homes in Marin have been very stable, and the rate of appreciation has been slow and steady. If your time horizon is 5 years or more there hasn’t been a period in the last 35 years when prices haven’t increased for Marin homes.

On the other hand, if your plan is finance your retirement in the next couple of years with the equity in your home and you want to pick a good time to sell—you may want act soon and lock in past gains. One of the greatest issues with our current real estate market in Marin is a lack of inventory and people are paying premium dollars for good homes in good neighborhoods, staged well and priced right.

Please do not hesitate to call us with any questions.