April 2010

The $2m+ Market Finally Awakens: The Tale of 35 Bigelow in Mill Valley

For the last 6 months I have been chronicling the slow improvement in the Marin real estate market.  If you may recall at the beginning of the cycle we saw the sub-$1m market in the northern part of the county show some initial life with a slow creep of similar improvement south at larger price points.  In my last newsletter that trend was showing signs of becoming a reality as homes in southern Marin in the $1m-$3m price range were showing signs of increasing at a rapid rate and edging towards becoming a seller’s market.  In this edition we’ll recap on the data today and I’ll talk about a property that I was listing last year in 35 Bigelow in Mill Valley that initially came on the market in 2008 at $2.85m and just recently sold after the listing price had worked its way down to $2.15m.  I think the sale of this property is fairly emblematic of what is happening in the market and I’ll provide a case study on the history of the property’s 2 year journey from initial listing to eventual sale.

Today’s Market
First, the hot-of-the-press data. I have often called out in recent newsletters the way that we measure buyer or seller markets as being the percentage of homes actively being  listed on the market vs those in contract.  My last newsletter pointed out that the $1m + market was gaining momentum and recent data is only reinforcing that trend as shown in the chart below.  Across the county single family homes in the $1m - $2.5m market space especially are trending up.

Another key metric that can measure how ‘hot’ the market is becoming is shown below.  For 13 higher end communities in Marin we’re seeing a trend towards a higher volume of active listing, while in parallel seeing a trend towards properties moving off the market faster.  While the volume of “Active Listings” is now increasing towards 900, the “Days on Market” (or DMO) metric, which measures how long properties are actually on the market from the time that they are put on the market, is declining rapidly from almost 100 days to just over 90 in a span of only a month.  This means that despite the increasing rate at which inventory is being added, demand is strong and outstripping the supply.  This phenomenon is exactly the opposite situation from what was going on a year ago as properties languished on the market.

So what to make of all of this?  First, as with any data, you have to read between the lines to get the full picture.  While it is great to see the DOM, it is very likely that a good percentage of those “new” listings are actually listings that came off the market earlier and have come back on.  That said I think the buying public is really beginning to see that the continued decline of prices in better communities in Marin are probably over as prices have stabilized and in some quarters actually beginning to rise again (a good topic for a future Marin Insight newsletter).  Furthermore we are seeing a trend towards higher interest rates for 30 year mortgages in conjunction with a more fluid market for actually getting loans.  Combine these factors with a cautiously optimistic economy and its prodding buyers into action which is why the market is seeing a rapid acceleration.  The scenario that I alluded to in the earlier sentence something that I experience myself   I had a co-listing with Marguerite Burbank in Mill Valley that recently went into escrow and in the second part of my newsletter I’ll detail its listing history.  Read on…

The Triumphant Tale of 35 Bigelow in Mill Valley
This is a wonderful remodeled 4 bedroom/4 bathroom Craftsman style home that has been extensively remodeled and in typical markets would have only been on the market for a couple of weeks at most, even at prices approaching $3m.  It is located on a street to street block in the highly sought after Blithedale Canyon area just 3 blocks from downtown Mill Valley. It is easily accessed from both West Blithedale and Bigelow Streets and overlooks a charming and private garden on one side and majestic redwoods on the other. You can easily walk to school, to many of Mill Valley’s restaurants & to hiking trails. It’s an easy commute to San Francisco and close to Mill Valley's award winning schools.  Like I said, this is a great home in a great location and should be highly valued..

Marguerite had the listing and initially put it on market May of 2008 at $2,85m and at 2,500 sq ft this equaled $1140 per square foot.  That was certainly expensive, but given the recent run up in value over the prior 3 years, I can see how the price could have been rationalized.  In May I seem to recall not having that much anxiety about the future of the economy, but like many others I was concerned about where the lending market was heading and horde of speculators operating in the real estate market.  The property came on late in the spring season and no concrete buyer stepped up so the owners took it off the market and made some improvements to property.  These included a 2nd main entrance added to access the home from the West Blithedale side, which increased its overall value and appeal.  It came back on the market again in the spring of 2009 with Marguerite and I co-listing the property at a reduced price of $2.4m and that price reduction spurred a lot of traffic at the Sunday open houses.  As I hosted those events myself I regularly saw many repeat visitors, but if you mat vividly recall that was a very tough time for many people to step up to purchase a new home.  Of course for those who did have cash in hand, it was the single most opportune time to negotiate a deal.  That said, it was almost impossible to get a laon and for many people who had the cash were too jittery to spend it.  After all, perhaps the prices would continue to decline?

And yes prices did continue to decline as they did at 35 Bigelow and in the market overall.  The property came off the market again in late 2009 and came back on this spring, when in March it was finally sold at a new listing price was $2,149,000 ($859 per square foot).  That is nearly $700k off of the original 2008 listing price and a great deal for the new buyer.  I mentioned above, it was not uncommon to see repeat visitors at my open houses and indeed, in the end, the new owners were in fact one of those repeat visitors that obviously were waiting for the best time to go ahead and make their move.  Good for them and it the above experience is being repeated at a number of other listings in Marin.  For those very special properties, even at higher price points, we’re seeing more sales and the market data supports that.

My Parting Thoughts
So has the market turned the corner?  My personal opinion is yes, but that means only that the market is climbing its way back from a long hard slide.  I don’t expect to see prices sliding at the rate they did before and I only expect to see prices moving upwards in any meaningful way for those well-priced, move-in quality homes in very desirable neighborhoods.  That said, if you have been sitting on the sidelines like the buyers of 35 Bigelow and have had your eye on a high quality property in a great location, now may indeed be a great time to make the deal of a life time.

As always, feel free to contact me about your real estate needs and I am always grateful for referrals.

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