Marin’s Inventory Shortage Continues

How many buyers might there be for your Marin house? This photo may be an exaggeration, but you get the idea: There is something of a stampede coming across the Golden Gate Bridge these days.

With only 452 homes for sale right now, and with 42% of those already in contract, Marin is squarely in Sellers’ Market country. Homes under $750,000 are tough to find, and 56% of them are already in contract. The move up market, $750,000 to $2,000,000, is a little easier with 40% in contract. Over $2MM, only 22% are in contract.

The quarterly sales report from Coldwell Banker shows that Marin’s inventory shortage is actually less serious than some nearby markets.

The Peninsula is crazy, as the author notes, “One Menlo Park home priced at $1,395,000 received 28 offers.” And this: “Entry-level inventory in areas close to downtown Mountain View is almost zero.” Mountain View, by the way, is a town of 78,000 people, nearly twice the size of San Rafael.

And from San Francisco: “The number of available homes is down significantly from this time last year, which was already too low. “With the pressure to find homes there so intense, it isn’t surprising that the overflow spreads northward to Marin. Tech companies are responding to the demand and trying to make it easier for workers to live in Marin. Apple now has four buses a day from Marin to the Cupertino campus, as does Google. Both leave from the Park and Ride at the Buckeye Roadhouse in Mill Valley. According to one of our friends, it makes the commute “totally doable”, as the buses have Wi-Fi, are extremely comfortable, and totally geared for productivity.

We’re not quite sure whether sellers are just getting a slow start this year, or if something fundamental has changed, but the shortage of homes for sale in Marin is hanging on like a stubborn cold. If you are one of those sellers on the fence, this should read as some seriously good news. The law of supply and demand puts you in the driver seat. Prices have rallied to the point where some of us are wondering how long it can last. But as long as tech is booming in San Francisco, we expect the migration to Marin continue, as young families realize the difficulties and expense of raising children in the city.

If you’re a buyer, there are some strategies that can help.  Some over priced listings that have been sitting on market may be more than ready to welcome a realistic offer.  There are also some things you can do, other than increasing the price, to make your bid look more attractive. We’ll update this market report every couple of weeks now that Spring is coming. Hopefully things will loosen up a bit soon.

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Home Buying Strategies: Lease Option?

One of the hardest problems for a buyer to overcome is moving up. How do you successfully sell your current home, get the funds, and then turn around and buy something new, all when inventory is so tight?  It can be quite a daunting maneuver.

One idea to consider is a lease option. A lease option will reverse that process. Basically you find the new property, lock it in with an option, move in, then sell your current home. We are in the middle of a deal right now like that, and so far, everyone is happy.

Here is how it works in Marin County. The Buyer puts an offer in on the new home, with an option agreement. The option agreement requires funds be put down, usually 5% of the sale price, and given directly to the Seller. The funds are non-refundable, but applicable to the purchase price of the home. At the same time, the Buyer also executes a lease agreement to move into the home and pay rent to the Seller. Once in the new home, the Buyer sells their current home, then uses the proceeds to close on the new property.

For example, let’s say the Buyer finds a willing Seller at $1,000,000, with a lease price of $5000 a month. The Buyer puts down $50,000, which goes directly to Seller. They move in at $5000 a month; often a portion of the rent may also be applicable to the purchase. They then sell their home for $700,000, and use the funds to complete the purchase (which is now only $950,000, because the option payment has been deducted from the sale price.)

There are risks, of course, as the Buyer may get less for their home than anticipated. It also requires a Seller who is willing to wait a little while for their proceeds. But occasionally the stars line up and it can work for everyone involved.

Are Larkspur and Corte Madera Marin’s Sweet Spots?

Marin County home sellers have had a phenomenal year so far. Maybe it’s the new elementary school, the worsening traffic to the north, the nicer weather, and for a myriad of reasons, but the Twin Cities market is as hot as Marin gets right now. Which is pretty hot. Well priced homes in many areas have been flying off the market. But if the real test is how much people are willing to pay per square foot for a home, then the year to date the two of the strongest markets in Southern and Central Marin are Corte Madera and Larkspur.

In Corte Madera, homes year to date are selling for $672 a square foot, a 21% increase vs. a year ago. In Larkspur, homes are selling for $766 a square foot, a 25% increase vs. last year. That does not mean these are the most expensive markets in Marin- that would still be Ross, where this year buyers are paying an astonishing $1,042 a square foot for homes. Well, actually they are more similar to estates, with an average size of 3,034 sq feet.

Mill Valley also saw a big jump, with price per square foot rising 19% to $731 a square foot.

Why the big increases in these two towns? In a word, value. Relative to neighboring towns prices have historically been much lower there than in the neighboring communities of Mill Valley, Tiburon, and Kentfield. Yet commute times to the city are similar, school districts are also excellent, and many believe the weather is better on the Corte Madera-Larkspur side of the ridge, with less fog and warmer temperatures.

Our candidate for value right now is Greenbrae, where price per square foot is actually down slightly from last year at $577 a foot. But the Bacich School District is excellent, proximity to the freeway and the Larkspur ferry outstanding, and Bon Air Shopping Center provides most of the amenities anyone needs.

A close second would be San Rafael. School district scores there are lower, but there are so many young families moving in to the area we expect that trend to improve. And we love the corridor north of San Pedro Road. Country Club, Loch Lomond, Glenwood, and Peacock Gap al have great weather, commutes, and communities!