Marin County Market Conditions
Mortgage Market, Foreclosure Rates & Real Estate Listings of Homes For Sale
What's Happening With Foreclosures in Marin, December 2008?
Foreclosures in Marin County increased significantly in 2008, with the majority of affected homes in Novato and San Rafael (about 83%). Foreclosures increased for the entire county about 650% compared to 2005. Foreclosure.com reported 244 foreclosures on December 29, 2008, with this distribution:
| City | No.* | % |
| Novato | 125 | 51% |
| San Rafael | 78 | 32% |
| San Anselmo | 11 | 5% |
| Mill Valley | 8 | 3% |
| Sausalito | 6 | 2% |
| Tiburon-Belvedere | 3 | |
| Fairfax | 2 | |
| Greenbrae | 2 | |
| Larkspur | 2 | |
| Kentfield | 0 | |
| Ross | 0 | |
| Rest of Marin | 5 | |
* Foreclosure as defined below; not including pre-foreclosures. |
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A closer look would reveal that most of these houses have an estimated market value of less than $900,000. And, many homeowners facing foreclosure were significantly overextended by the lax lending policies of the last three or four years.
Most of Marin has been and remains free of foreclosures.
The foreclosure figures that you read can be confusing because there are three stages of foreclosure:
| Pre-Foreclosure | Lender files Notice of Default. | Owner has 90 days to resolve the debt. |
| Foreclosure | Lender files Notice of Sale. | Owner has 21 days to resolve the debt before the house is sold at an auction or the lender becomes the owner. |
| New Ownership | Either a private buyer or the lender takes possession. | If the lender owns the property, it eventually goes on the market for sale. This is known as an REO (Real Estate Owned) sale. |
Recent History of Foreclosures in Marin
Here is the history of foreclosures in Marin for 2005 through 2008. Figures include the whole range of foreclosures states: pre-foreclosure through new ownership. In summary, foreclosures in Novato and San Rafael increased by 10 to 11 times. The increase in the rest of the country was 2 to 4 times.
| City | 2005 | 2006 | 2007 | 2008 | Increase over 2005 |
| Novato | 92 | 173 | 441 | 1,045 | 11x |
| San Rafael | 66 | 77 | 278 | 644 | 10x |
| San Anselmo | 31 | 25 | 58 | 77 | 2.5x |
| Mill Valley | 36 | 61 | 79 | 109 | 3x |
| Sausalito | 25 | 38 | 55 | 68 | 3x |
| Tiburon-Belvedere | 17 | 44 | 59 | 35 | 2x |
| Fairfax | 8 | 11 | 22 | 31 | 4x |
| Greenbrae | 3 | 5 | 13 | 18 | 6x |
| Larkspur | 13 | 11 | 19 | 20 | 1.5x |
| Kentfield | 1 | 12 | 7 | 9 | 9x |
| Ross | 0 | 3 | 7 | 7 | 7x |
| Rest of Marin | 48 | 86 | 90 | 135 | 3x |
| TOTAL | 345 | 554 | 1,151 | 2,223 | 6.5x |
Progress on Preventing Foreclosures
Until now, homeowners unable to meet their mortgage payments had to default on their loans—stop paying for two or three months—to gain the cooperation of their lender. The lender might then consider a short sale in which they agreed to sell the house for less than its market value just to recoup most of their investment.
The Marin Independent Journal reported on December 27, 2008 (Jim Staats, Struggle to fight foreclosure, save homes) reported that the government has addressed this issue:
“This month, mortgage giant Fannie Mae began to allow borrowers facing imminent financial difficulties to request loan alterations, rather than having to wait until two or three months of payments were missed.
An ambitious mass-market loan modification program recently outlined by the Federal Housing Finance Agency - overseer of Fannie Mae and another major lender, Freddie Mac - along with other banks and mortgage servicers provides help for subprime and other borrowers slipping closer to foreclosure. To be eligible, owners must prove they can make mortgage payments with up to 38 percent of their monthly gross income and show proof of their hardship. If successful, borrowers can get sizable interest-rate reductions, deferral of principal payments or loan extensions.”
Marin Housing Housing Prices in October and November
Prices of houses sold in Marin dropped in October and November if we look at either median or average prices. Condos in northern Marin sustained the greatest losses, often decreasing in value 30-40%. Many of these were foreclosures unfortunately hit by poor lending practices. Condos in southern Marin decreased in value only 8-10%. If we look at the value of single family houses or condos, Marin values have held up MUCH better than in the rest of the Bay Area.
The statistics in this changing market do not often tell the whole story. Decreasing median values in Marin result primarily from bargain hunters buying up discounted condos. Since median values point to the most frequent sales price, these condo sales strongly influence the statistics. The activity of bargain hunters reflects an underlying confidence in the Marin housing market. If you can, this is a great time to buy.
Here are reports from the Marin Independent Journal that illustrate these points:
Marin home prices fall 30 percent
by Jim Staats, Marin IJ, 11/20/08
Marin's median price for all homes was $599,750, a whopping 31.5 percent drop from the $857,000 median a year ago, MDA DataQuick of San Diego reported Thursday.
The median price of a single-family home in Marin last month was $850,000, down 13 percent from $978,000 last year, and 141 single-family homes were sold - down from 169 in October 2007. In September, the median single-family home price in Marin was $825,000, and 159 single-family homes were sold.
The price drag resulted from the 74 condo sales last month with a median price of $315,000, a 42 percent drop from $543,000 one year ago.
The number of condominiums sold last month was a jump from the 43 sales the year before as bargain hunters and investors clamored for foreclosures and other discounted properties.
In Marin, foreclosure resales were 17.2 percent of total sales, up from 14.9 percent in September and single digits the year before.
Another month of steep drops for Marin home sales
by Jim Staats, Marin IJ, 12/18/08
Marin's median price for all homes last month was $625,000, down 28 percent from the $871,000 median a year ago, MDA DataQuick of San Diego reported Thursday. The median price was $599,750 in October. [Note: small increase from October.]
John Walsh, DataQuick president, said the free-fall in the Bay Area's overall median sale price "certainly doesn't mean every home has seen its value plummet that far."The median measures what is selling in the region, and recently the hottest sellers have been discounted, distressed homes, mainly inland," he said.
Marin Housing Market Prospers
The Marin IJ reported on June 18 that Marin home values increased significantly in May 2008 compared to the previous year:
The median value of single family homes and condos increased by 5.8%.
The median value of single family homes alone increased by 19% !
While this is going on, home values in the rest of the Bay Area decreased significantly. Here is a summary from the Marin Independent Journal:
It appears that the news is even better for home values in Central and Southern Marin since Northern Marin (Novato and parts of San Rafael) have experienced more of a slowdown.
Please notice that the claims in the media that the market here is "down big from last year" refer to the number of houses sold, not the value of the houses. Marin is apparently still a great place to live, and buyers know this.
Historically, Real Estate Prices Go Up
By Mary Southall, Marin Independent Journal, January 27, 2008
Some people who purchased homes in the past couple of years, today are wringing their hands because they think their home values have hit the skids with no hope of ever going up again.
But consider these facts from the Bay Area Real Estate Information Services (BAREIS) Web site:
Twenty years ago (1987) the average Marin home sold for $240,875. Ten years ago in 1997, the average Marin home sold for $443,135. We won't use the average 2007 price; some people argue that it was skewed upward because only the supremely wealthy were buying homes. So let's look at five years ago: In 2002 the average Marin home cost $782,829. The historical figures don't lie.
In the 10 years between 1987 and 1997, prices nearly doubled. Then in only five more years, prices nearly doubled again.
What else happened in those same years? In the three years between 1987 and 1990, prices went up a whopping 157 percent. Then between 1990 and 1992, prices leveled.
The same kind of trend is occurring now. We had a few years where prices staggered up, and now they are level. The BAREIS figures indicate the average price for a Marin home has fallen only twice since 1969.
Historically, Real Estate Prices in Marin County Go Up
A Sensible Outlook on the Current Mortgage Market
Given all the recent press regarding the "mortgage crunch", we at Madeline Schaider Real Estate would like to offer you our balanced view of what is happening to home mortgages and what you can expect in the near future. We interviewed our trusted mortgage brokers at All California Mortgage (ACM) in Larkspur, CA and would like to relay our conversations with them. Thanks to Lisa, Sheri, and Shayne at ACM.
The Reaction and Fallout
ACM believes the mortgage market has over-reacted to the decline in the sub-prime lending market. Sub-prime loans are high-risk, such as 100% financing to people with low credit scores. In all the chaos, many investors who purchase mortgage-backed securities have temporarily stopped buying several types of mortgages. In response, many lenders have either suspended certain loans or canceled some loan programs. Most have arbitrarily raised interest rates on jumbo mortgages (over $417,000 for a single family house). So far, conforming loans (under $417,000) have not been affected.
The Adjustment
ACM also believes that lenders will re-evaluate their lending guidelines over the next few months and will eventually reintroduce several of the loan products that are temporarily on hold. They will impose stricter guidelines but, in the long run, this will lead to better lending practices, protecting consumers, particularly those who were targeted for loans they really couldn't afford. This should also lead to lower interest rates for jumbo loans.
NOTE: On August 19, 2007 the Federal Reserve Bank lowered the Discount Rate (the rate at which the Fed lends money directly to commercial banks, credit unions and savings, and large lenders) by 0.50%, from 6.25% down to 5.75%. This should lead to the mortgage credit market settling back down, and hopefully will reduce interest rates for 30-year fixed jumbo loans.
How to Avoid the Chaos
It is a good time to work with a mortgage broker rather than a bank or other direct lender. Here are some compelling reasons:
- The good mortgage brokers (we can recommend some) have relationships with lenders that portfolio their loans (meaning, they do not package and sell their loans as mortgage-backed securities). They retain the loans, and their executives make the decision as to what products to offer, at what price, and to whom.
- They have exclusive relationships with other lending institutions that offer creative financing at excellent prices, including Private Banking relationships. This allows them still offer loan programs that others are claiming no longer exist.
- They have access to hundreds of loan products. As a result, they can often provide loans that are below market pricing and that you could not get elsewhere.
What To Do For Now
If you are planning on purchasing or refinancing a home, townhome or condo while interest rates are in flux, we offer you the following advice:
- Once you obtain a loan that you like, lock in your loan rate. So far, locked loans appear to be honored by lenders.
- Consider a short-term fixed loan, such as a 5-year fixed, instead of a traditional 30-year fixed loan. As of this date some 5-year fixed jumbo loans with certain portfolio lenders are almost 1.5- 2 percentage points below 30-year fixed rates. This may be possible even for stated income loans.
- Improve your credit score. This will increase your chances of having more loan programs to pick from, especially during this transitional time. A good mortgage broker can be immensely valuable in helping you with your credit score.
Please let us know if you have any further questions or would like a referral for a good mortgage broker. We are here to provide support to you with any of your real estate needs. Marin County continues to be a strong real estate market due to its geographic location, great schools, bucolic weather, and cultural amenities.