Dave DuPont

Year to date 2009 has been terrible year for condo sales in Southern Marin. As compared to 2005-2008, the pace of unit sale is off 70% the average of those years, and the average selling price per square foot is down close to almost 20% from its peak of 626$/sqft in 2007.

Tiburon condo sales are being hit the hardest with the price per square foot off 25% from its peak, and prices are off 41%.

Now is a good time to buy a condo anywhere in Marin as the prices are discounted to such an extent that the normal premium for the Marin location & school system is virtually gone. Call me for more details on this. Dave DuPont 415-867-6611

Marin is Separated into four primary areas:

1. Southern Marin: Sausalito, Mill Valley, Tiburon, Belvedere
2. Central Marin: Corte Madera, Larkspur, Kentfield, Greenbrae, Ross, San Anselmo, Fairfax and southern parts of San Rafael
3. Northern Marin: the northern parts of San Rafael, Ignacio and Novato
4. West Marin: Stinson Beach & Bolinas, the towns west of Fairfax from Woodacre, San Geronimo, and Lagunitas to Nicasio and Point Reyes Station, to Inverness, the Dillon Beach area.

West Marin is an incredibly beautiful, rural area pressed up against both the inland and coastal side of the Marin Headlands. There are three primary ways to access these areas:

• First, you can take highway 1 from Mill Valley up and over Mt. Tamalpais' shoulder, weave your way down and drive Highway 1 through Stinson Beach, Bolinas, on to Inverness and beyond.
• Second, you can also take Sir Francis Drake Blvd. all the way-- through Fairfax, through many of the West Marin Towns of San Geronimo, Lagunitas, Woodacre to Olema-- and then turn south to Bolinas and Stinson Beach or North to Point Reyes Station, Inverness and beyond.
• Last, you can take Lucas Valley Road west through Nicasio, to Point Reyes Station, Inverness and beyond to Dillon Beach and Bodega Bay.

All three are charming ways to spend an afternoon (or longer). There are restaurants, B&Bs and hotels that border all routes and you can easily make a weekend out of any one of them.

Point Reyes National Seashore is a stunning 65,000 acre wilderness that includes Drakes Bay Estero and offers a vast selection of beaches, hiking and nature watching including over 1000 species of plants and animals. Places of interest are Bear Valley Visitor Center, Point Reyes Lighthouse and the Point Reyes Bird Observatory.

The weather in West Marin varies significantly the farther west one drives. The towns closer to Fairfax have weather similar to Fairfax which is warmer than most of Marin-beautifully warm, long summer days, and much less fog than both Southern and coastal Marin. As you continue west along Sir Francis Drake Blvd. (or Lucas Valley Road) you reach a point where the weather becomes more maritime affected. Once you reach the coast, the towns north of Point Reyes Station have weather very similar to San Francisco proper, with the exception Stinson Beach which is south of Point Reyes and is sheltered by several points (the largest of which is Point Reyes). Summertime in Coastal Marin is dominated by the Marine Layer and, when it isn't foggy, it can be breezy to downright windy. Most importantly, however, all year around there are absolutely delightful beach days mixed in!!!

Commuting from West Marin is possible but not recommended. Most professionals that make the commute for work either work East Coast hours or are Doctors that work non-traditional hours (e.g. 24 hour shifts twice a week).

Posted by David DuPont 415-867-6611

The Four Areas of Marin County-- South, Central, North and West Marin

• "Southern Marin" includes Sausalito, Mill Valley, Tiburon and Belvedere
  • Homes in Southern Marin are highly sought after due to its proximity to San Francisco and the home bidding process ranges from competitive to frenzied for homes properly priced
  • Southern Marin is more subject to the maritime influence (the fog and wind) which serves to keep it cooler in the summer and warmer in the winter. As you drive north past Mill Valley, you drive over a ridge that separates "Southern Marin" from "Central Marin"
• "Central Marin" includes Corte Madera, Larkspur, Greenbrae, Kentfield, Ross, San Anselmo, Fairfax and parts of southern San Rafael
  • "Central Marin" is slightly more removed from the maritime air and is warmer to much warmer in summer and slightly cooler in the winter-as you move north and west through these towns this effect increases until you approach the coast again and the warming effect reverses
  • Homes in Kentfield and Ross are highly sought after and command some of the highest prices in Marin County due to its warmer climate, larger lots and fantastic schools systems
• "Northern Marin" the area includes northern parts of San Rafael and areas north, exemplified by the town of Novato
  • Northern Marin is much more removed from the maritime influence and is much warmer in the Summer (it gets quite hot) and a bit colder in the winter.
  • Home prices are much more reasonable in northern Marin County and the Northernmost part of Novato (link) is still only 30 miles from San Francisco-but the commute during normal business hours is slow going
• "West Marin" West Marin includes the Coastal Towns of Marin and is very sparsely populated. The weather in West Marin varies significantly the farther west one drives. The towns closer to Fairfax have weather similar to Fairfax which is warmer than most of Marin-beautifully warm, long summer days, and much less fog than both Southern and Coastal Marin. As you continue west (along Sir Francis Drake Blvd. or Lucas Valley Road) you reach a point where warming effect reverses amd becomes quite cool again. Once you reach the coast, the towns north of Point Reyes Station have weather very similar to San Francisco proper-- foggy and chilly in the summer, with the exception Stinson Beach which is south of Point Reyes and is sheltered by several points (the largest of which is Point Reyes). Traditional commuting from West Marin for work in San Francisco is possible from the Stinson Beach area as well as from several towns just west of Fairfax. Most professionals that make the commute from more distant Coastal West Marin either work East Coast hours or are Doctors that work non-traditional hours (e.g. 24 hour shifts twice a week).

Marin County real estate prices have ballooned since 1998 and now Marin is truly an exclusive enclave for wealthy families and motivated professionals. Historically, Southern Marin, especially Mill Valley and Sausalito, was more of a laid-back community of artists, hipsters and intellectuals, and those elements of Marin still exists today giving the county some character and depth paradoxical to its recent professional makeover.

Longer Term Outlook for Home Prices Marin County CA :

The economic maelstrom we are navigating is more than just a recession. Recessions occur regularly, and in fact are important part of the economic health of any economy. Our economy is going through is a shift of greater proportion & meaning: the greater post-war, high-growth ‘secular' boom cycle that culminated in the Great Bull Markets in stocks and housing is over.

Moving forward, GDP growth will slow to below trend for an extended period, and unemployment rates will average higher. There won't be as much compensation trickling down through the system to the lower income components of our economy-leading to an increase in crime and drug use around urban centers. Successful families will cluster to safer neighborhoods close to key job markets-- the ultimate "flight to quality", and demand for Marin County homes will benefit from this trend.

Prices in Marin will stabilize and remain at these inflation-adjusted levels for the 3-5 years. Real Estate prices in other parts of the country with sub-par job markets may continue to slowly erode thru this period.

Valuations:

Residential Real Estate relies on flawed valuation models. The mantra is that homes "are only worth what someone will pay for them"; and the best way to value a home is in comparison to other similar homes that have sold recently nearby; articulated mainly by $/sqft. The problem with this antiquated valuation model is comps closely track the business cycle so towards the peak the comps will guide people to overpay (and banks to over lend) and at the bottom buyers won't fully understand the value inherent in the marketplace. I have developed a revolutionary software valuation model that estimates "fair value" for homes in Marin (http://www.thedupontgroup.net/home-value-estimator). In hot markets, homes will trade at a premium to fair value, and in cold markets, homes will trade at discount to fair value.

The premise of the model is: houses, like any other asset, have an implied value given the characteristics of the asset and availability of substitutes-- or choices. This value has as much to do with the location value as the structure; the actual house is a depreciating asset that requires constant maintenance-and across a large sample size homes are differentiated almost solely by location (i.e. Mill Valley or Modesto).

Our group is leading our firm again this year in home sales, and it is due mainly to: 1) how we articulate value to buyers; and 2) implementing proven marketing principles from other industries for promoting homes in an atypical real estate market.

Now is not the time to select a realtor based on tenure-the habits most realtors have developed over the last 15 years are not translating well to selling homes in the real estate environment in Southern Marin County. Please call David DuPont @ 415-867-6611.

Short Term Outlook :

In the last 44 years, there have been only two years (excluding 2008 & 2009) when average home prices in Marin County have decreased from one year to the next: -1.2% in 1991 and -1.4% in 1992-- after the S&L crisis.

In 2008, Marin County average home prices fell -12.7%. Southern Marin prices dropped only -3.3%. This correction in home prices gained speed in 2009 . Marin County average home prices are currently down -21.4%; Southern Marin prices are down -14.2%. This has more to do with the dearth of high end home sales than anything else.

Homes are trading significantly below what they are worth ("Fair Value") when analyzing the fundamentals such as future supply vs. demand, public schools, proximity to jobs, etc.

How far are prices likely to fall? Prices are currently at, or very close, to a bottom. The rebound will be predicated on several key stats-the Bay Area labor market, and the capital markets stability. On a national level, the Case-Shiller home-price index just registered its second straight monthly increase after 30 straight down months.

Employment: Hiring and firing in the Bay area lags the broader US economy. The latest stats show that the SF-San Mateo unemployment rate hit a new low of 9.3%, and CA 11.9%. This helps explain the painfully slow pace of home sales and the buyer reluctance we are seeing in the marketplace. The longer-term prospects for our job markets remain very good with the caveat that Sacramento doesn't drive business out of the state by taxation.

Capital Markets: High end Marin home sales are led by moves of the stock market. The US stock market has rebounded sharply, but to date this rebound has had little effect on either the price or pace of high-end home sales in Marin. This should change soon if we maintain these approximate levels in the S&P. Bond yields and mortgage rates are still quite low considering the amount of Govt. stimulus and the coming inflation, and that has helped create a bottom for the bottom half of the housing market in parts of Southern Marin as buyers lock great rates on 30 year conforming high-balance loans.

Economy & Stagflation: The two greatest longer-term issues facing our national economy are little changed: 1) consumer debt levels are still at levels inconsistent with robust GDP growth. This may serve to keep our jobless rate higher (6-8%) range moving forward. 2) The amount of stimulus in the system indicates future inflation and a secular rise in mortgage rates.

Short Term action plan: If you plan on selling a home to buy another, this should be done sooner rather than later in order to lock in a decent mortgage rate on your new home.

Posted by David DuPont 415-867-6611