Dave Roberts

reomarin.com is a new site for bank owned property in Marin County. Reomarin.com has maps of REO listings and lists of foreclosed property for San Rafael, Novato, and other cities in Marin that have been hit by the real estate downturn.

Real estate is down as much as 30% from last year in parts of Marin. The explosion of foreclosures that is going on in Vallejo, Rohnert Park, Windsor, Santa Rosa and other North Bay cities is also affecting Marin County. This is still an affluent and prosperous area, but it hasn't escaped unscathed.

If you are looking for foreclosures or bank owned property in Marin County, reomarin.com will be an excellent resource.

Location, Location, Location is the old time real estate phrase for the three most important factors that determine value. Things haven't changed much since that saying was first used, probably in ancient Rome. I have focused on Windsor in my most recent posts here about bank owned homes and on my reo.sonoma.net site because there is enough data about similar homes to help analyze the fall in prices over the past few years. With this post I wanted to pull back to an overview of Sonoma County real estate as a whole to look at which cities are most impacted by the foreclosure crisis.

This is a pretty straightfoward chart. It shows the total dollar value of all residential sales in Sonoma County by city. For each city, the blue bar represents open market sales (including short sales) and the maroon bar represents sales of bank owned properties. The total length of the bars clearly marks Santa Rosa as the volume leader in sales. Given the dominant size of Santa Rosa, that's to be expected. Another observation about Santa Rosa is that the REO market there exceeds the open market volume of any other city in Sonoma County. A final note about Santa Rosa is that visually REO volume makes up about half as much residential real estate volume as open market sales. From the raw data I can add that this 1/3 share of the dollar value is obtained with 47% of the transactions.

Other observations jump out at me from this chart. Have a look at Rohnert Park. Nearly half the total value in real estate this year has come from bank owned property. From my raw data, 53% of Rohnert Park transactions have been sales of foreclosed properties, a larger proportion of the market than in Windsor. By contrast, Healdsburg, Sebastopol and Sonoma have modest volumes of REO sales that are dwarfed by their substantial volume in open market sales.

I started the post talking about location. It's clear from these REO numbers that some locations are harder hit than others. A plentiful supply of market priced homes at the peak of the real estate boom is a contributing factor to the volume of today's bank owned property market. As I pointed out in my Windsor blogs, nearly every REO home being sold this year was purchased or refinanced between 2003 and 2007. Windsor, Rohnert Park, and Santa Rosa share this chart's leader status because they were so active earlier in the decade. Cities that avoided the worst of the peak are now being spared the worst of the crash.

*I took some small volume cities off this chart to aid clarity. Bodega Bay, Glen Ellen, Kenwood, Monte Rio, etc. still exist and still had sales in 2008.

REO sales are the closest thing real estate has to a pure market. No home owner emotional involvement to skew pricing realities, and no short sale issues to confuse the negotiations. I analyzed 119 bank owned homes and condos in Windsor California that have sold this year. All of these homes had either been sold or refinanced between 2003 and 2007 so I could get a clear reading of the market price changes since the peak of the real estate bubble.

First, the good news. Although there has been a significant drop in the market since the peak in late 2005 (in our area), the sales activity for REO properties is robust and the inventory has been vanishing. For Sonoma County as a whole, there is less than a sixty day supply of REO property. As you can see in the chart below, the start of the year consisted of sales that averaged about 85% of listing price. A careful reading of the numbers shows that both buyers and sellers were unsure of pricing, so listing prices tended to start too high and buyers were completing purchases at relatively good discounts. Since then, listing agents have gotten a better feel for the market and buyers seem to agree. Most bank owned homes in Windsor are selling for at or above the listing price. Now, for the other side of the coin.

The bubble crept up on most of us. We thought it was just a hot real estate market and ignored the spread between what people could really afford and what they were paying. The next chart has a dot representing each Windsor REO sales price and the percent that sales price has declined from its own peak value.

I think everyone can draw their own conclusions from this data. I have some other charts that demonstrate the declines in value in slightly different ways, but it's clear that for this one town in Sonoma County, price declines in the 35% range are the norm. Some prices have gone down as much as 50%, but they're the exceptions. Or as I put in in the chart, the "Ouch" exceptions.

This market continues to be very active. My reo.sonoma.net blog talks more about these issues and has a map based searching tool for people looking for bank owned properties in Windsor or Sonoma County.

I love maps. For me, they make locations much easier to understand than a list of addresses. We all know a few local areas well enough that a written address instantly connects you with the house and a sense of location. Once we're out of those few known areas, however, lists of street addresses are a cumbersome way to get oriented.

That's why I'm so pleased to start offering a map-based Sonoma County REO tool. It uses the familiar Google map tools we have gotten used to, but it is pre-set to only show REO listings. The BAREIS MLS actually lets the map cover Marin REO, Napa REO, as well as Mendocino and Lake County REO listings, but my focus is on Sonoma County. Stop in and visit the site and let me know what you think of the REO map. The site is just getting started and I will be adding more content to help buyers understand the REO process.

Petaluma is the southern gateway into Sonoma County from Marin and San Francisco. The proximity to the big city makes Petaluma a great commute center. Thousands of people commute south every morning along Highway 101. Before the advent of commuting, however, Petaluma was (and still is) a real town in its own right. From the early days as an agricultural center to today's broadband and networking strengths, Petaluma has been an important contributor to the economic vitality of Sonoma County.

You can see in the chart below (live chart with continual updates) that the downturn in real estate prices is still in force near the end of May 2008. One of the factors to note is that the four quartiles don't share the same trajectory. The lower two lines representing the more affordable half of the market are still trending downward. On the other hand, the third and fourth quartiles are showing either a leveling off or slight increase in median price within their ranges. These are small moves, but are a sign that some buyers are back in the market.