2018 brought a new high water mark to Marin County Real Estate pricing for the 7th straight year, rising 7.5% in 2018, and an average of 8.3% annually since 1972 (see chart on back). Home prices are now 22% above the previous peak in 2007, and 73% above the 2011 recession low. The loss of so much housing in Sonoma added to demand this year and has resulted in rising building costs, both materials and labor, and is now affecting costs and completion times in Marin.
Every residential home purchase is the combination of 2 primary emotional reactions to a property: a reaction to the Lot/Location and another to the Structure/Condition. For the last 7 years, buyers have been paying a premium for finish- so the dominant emotional reaction is to Structure/Condition. This has differed in past decades when buyers were more focused on neighborhoods and school districts. In this environment, Sellers are generously rewarded by buyers for making the key flow and finish upgrades that appeal to today’s finicky home shoppers. As a broker, I differentiate myself by guiding sellers in making cost effective upgrades that will bring them the greatest return when they sell.
Real estate cycles in Marin last ~8 years, which cautions that sometime in the next 18 months market conditions could materially change. We are already feeling it in certain neighborhoods and price ranges. Counter balances to this 8 year cycle are the tremendous loss of housing supply in Sonoma, and a tidal wave of new office space and strong job market in SF- all of which are adding to the already frothy Marin buyer pool. Barring any major sudden economic shocks or geopolitical events, any price drops in this down cycle in Marin County will likely be short-lived and minor.
But these cycles definitely impact buyer behavior- even in modest market downturns buyers historically show an intolerance to risk. The combination of 1) higher interest rates 2) buyers emotions hinging on structure/condition and finish, 3) the natural ebb of the 8 year real estate cycle, and 4) rising remodel costs– will likely manifest in rising sale price spreads between remodeled homes and fixers. If you are thinking about selling any time in the next few years, please call us soon so we can help put together a team and a plan.
Sellers would do well by selecting a listing agent with proven performance in more challenging market conditions. In the last recession, The DuPont Group far out-performed every listing agent in Marin County both in terms of price and days on market. The selling skills needed during market pullbacks are different from the tactics listing agents employed in the last few years seller’s market. Please include us when interviewing agents for your listing.
Thank you and Happy Holidays from The DuPont Group!
Please see a link to our annual newsletter below, and if you haven’t received one by Christmas and wish to, please reach out to us directly. Dave 415-867-6611