We are in a very strange period right now in the housing market in Marin County. It happens every year at this time in a normal market, and I think that it is happening right now means the market may be returning to some semblance of normal.

We are hearing about multiple offers on properties, and then the properties go way over asking price. We represented two clients recently in offers to buy properties in Mill Valley. One was priced at $888,000, and got seven offers. Reportedly, it went for $1.1 Million. Another was priced at $1.35 Million, and got 10 offers.

Here is what happens. Buyers are out there right now, looking hard and anxious to find something. They’ve been waiting a long time, and they want to get the right home. There is not much on the market in the mid range right now that is available and desirable, so when something new comes up, everyone jumps on it.

I believe it is temporary. There will be a huge supply of inventory coming on the market in the next 60 days, as Sellers who have not been able to sell for two years start bringing properties back on the market.

Stay tuned, there are 1,038 homes available in Marin right now, and 34% of them are in contract. The market is shifting to a neutral market from a buyers market.  Our open houses have been very busy, much more so than last year at this time.

Lots of buyers, plus lots of inventory means more transactions, but probably not much change in pricing for patient buyers.

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We are hosting a seminar for first time home buyers in Marin County on February 4  at our Greenbrae office. If you are thinking of buying your first home in Marin County, this may be the best 90 minutes you spend all year.

Our team hosted four of these seminars last year, and we are proud to report that we put NINE buyers into their first home in Marin County last year!

The presentation is geared specifically to first time home buyers, and will cover topics such as:

- An overview of the home buying process, timelines, and a review of current market conditions

- The tax benefits of home ownership, how to qualify for the first time home buyers’ tax credit, including deadlines and income limits.

- How to get the best interest rate and get pre-approved for a loan now

- FHA loans that will allow you to buy a home with as little as 3% down

- Strategies for and advantages and pitfalls of buying foreclosures and short sales

Back by popular demand will be Bill Shine, owner of William Shine Company an accounting firm in San Francisco. Bill advises hundreds of clients on investment in real estate, and owns 23 properties himself. We’ve done numerous workshops with Bill and learn something every time, and we’re sure you will too!

Gina Kemsley of Terra Mortgage will discuss financing options, loan packages, and FHA loans, and how to get the best rates and terms.

Pat and I will discuss search and negotiation strategies.  These filled up quickly last year, and we received lots of great feedback, so we’ve made them even better. If you’re a first time home buyer, this will be a very valuable 90 minutes. And of course, there will be wine, cheese, snacks, and some fun as well.

There are 94 days left to get in to escrow to take advantage of the first time home buyers tax credit.  Get started now and you’ll be ready to pull the trigger when the right home comes along.  Just email to bravasio@fhallen.com for a reservation.

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Year end data is in, and we wanted to quickly review the ups and downs of the year. Because while it was challenging, and in some ways the worst of times, it was also rewarding, bodes well for the future, and was in many ways the best of times!

Here’s the news you’ll be seeing on the front page of the newspaper: average sale price for the year fell to $853,390, a 20% decrease from 2008. That is the largest decline in average sales price in the 43 years of data we have available. And days on market increased, from 85 days in 2008 to 101 in 2009.

So here’s what you won’t read in the newspaper…the seeds of the housing recovery have already been planted, and many people are enjoying the benefits.

1.More people were able to buy their first home last year, and get a foothold in one of the toughest housing markets in the country. The combination of falling prices, low interest rates, and the first time homebuyers tax credit brought first time buyers out in droves.

We are proud to say that our team put NINE first time Marin County home buyers into houses in 2009!

2. The buyers of today are more qualified than the ones doing it five years ago. They’re buying homes the old fashioned way - with healthy down payments, and qualifying for loans at very high standards, with good credit scores and solid income. These are not people who are going to fold at the first signs of a downturn.

3.Despite where we were in January of 2009, when many were questioning the ability of the American financial system to survive, the number of transactions in Marin County in 2009 actually rose vs. 2008. We are still very low by historical standards, at 2,156, but that’s up 4% from last year.

And current market conditions continue to bode well. Right now 36% of available homes are in contract. That is the highest percentage in several years, at a time when the numbers are typically low.

4.If you find a good house under $750,000, move quickly, because over 50% of the ones available have a contract on them! We expect this trend to stay very strong because anyone qualifying for the first time homebuyers tax credit must be in escrow by May 1. If interest rates stay low, than anyone who can buy will be looking very, very hard at this price point.

5. Interest rates are still great. Conventional loans are still available at 4.75%. Even multi-unit loans are still available through FHA at the 5.5% range. It’s almost like Eisenhower was still President and everyone was still driving a Plymouth!

We’ve gone through a difficult correction. But we’re still a huge fan of Marin County real estate. It is still one of the best places to live in the world, with great communities, wonderful schools, unparalleled opportunities for recreation and a benevolent climate. Housing supply is pretty much fixed, so long term, this is still a great place to buy a home!

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Unlike so many agents out there, we have embraced short sales as a way to buy and sell real estate.  Yes, they take too long, the outcome is uncertain, and they drive everyone involved nuts. Nonetheless, short sales offer some real positives:

1. Buyers usually get a great deal.

2. Sellers get out from under a crushing load of debt.

3. Old inventory gets absorbed, at a realistic price, which helps the overall market.

Most fulfilling for us has been that in a short sale, the “win-win” that we all search for in a successful transaction takes place at an even deeper level. We’ve successfully negotiated short sales for several clients in the last year that resulted in no definciency agreements to the seller at all. Believe me, when someone is staring down a possible foreclosure and the resulting hit on their credit, and then they end up free and clear of the whole thing with minimal damage, well, it makes all the pain and suffering worth it.

Logically, banks should want a short sale to go through also. This is primarily because by the time the home goes through foreclosure, the home will be worth less from neglect and declining values than if they completed the transaction now.

And it’s not like people aren’t trying. There are currently  257 homes for sale in Marin County listed as short sales as of today, and an astonishing 72% of them are in contract! The price range is from $112,000 to $2,900,000, so in Marin County, short sales are happening everywhere now, even Kentfield!

This home in Kentfield, new construction, originally priced well over $4,000,000, is now a short sale at $2,900,000.

So why aren’t banks moving faster? A conversation with a family member over the holidays finally made the light bulb go on for me. He works in a prominent position for a large bank, and said, “So you want to know why the banks won’t approve these things, even though you and every other knucklehead involved are calling all day, making us add staff just to handle all the calls and tell you we’re working on it? It’s all because of the change the government made to the mark-to-market rules.”

Here it is in a nutshell. When a bank carries a loan for $1,000,000, it does not matter anymore from a bookkeeping standpoint if it is only worth $600,000. In the past, the bank had to change the value to reflect market value, i.e., “mark to market.” Last year that changed.

So even if the loan is in default, and there hasn’t been a payment in a year, the asset is valued at $1,000,000. The day the bank approves the short sale at $600,000, the bank’s assets decrease by $400,000. That’s $400,000 they don’t have anymore to loan to other people, or at a five to one ratio, $2,000,000.

Even though the bank will eventually need to take the loss, they are, in effect, rationing them out gradually, so the effect on capital isn’t too severe. Approve too many too quickly and the bank could suddenly be in violation of federal guidelines for capital reserves.

Short sales are still a great way to get a good deal for those with patience and guts, even in Marin County. But unless government laws change, don’t expect there to be any change in how quickly the process moves. The banks just don’t have an incentive to do it.

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The government really, really wants people to buy houses. They’re keeping rates low, and they’ve  extended the first time homebuyer’s tax credit, again!

To be eligible, the contract needs to be signed by May 1, 2010. The deal needs to close by July 1, 2010, so if you’re thinking of taking the credit via a short sale, you should be in contract in the next 30 days!

If you have not owned a home or a primary residence in the prior three years, you qualify. If you own a vacation home and have not lived in it for 36 months, you may still qualify.

The credit amount is up to $8000, or 10% of the home’s value, whichever is less, so that includes nearly every purchase in Marin.

There is also an existing homebuyer tax credit, which is new. This is for current homeowners that have lived in their current home for at least 5 years.

Both credits phase out based on income. For single taxpayers, it begins at $125,000, and for couples, $225,000. Talk to your CPA for exact information on your particular situation, and whether or not you qualify.

This is a great opportunity for first time buyers, and we expect it to continue to spur demand in the entry level through the first half of 2010.

We put three first time homebuyers into new homes in November, and will put at least one more in in December. Between Pat, Bob, and Rick, we know the entry level inventory extremely well in Marin. Let us know if you have a friend or family member who is hoping to buy for the first time - with interest rates at historic lows, this is an amazing time to do it!

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