Q2 Marin Market Update: Is the market starting to cool?

Yearly Comparison

Q2 2022 V. Q2 2021

$1.997M

MEDIAN SALES PRICE UP 16% ▲

$1003

MEDIAN PRICE/SQFT UP 16% ▲

9

AVG. DAYS ON MARKET DOWN 18% ▼

744

PROPERTIES SOLD DOWN 17% ▼

Monthly Comparison

Q2 2022

After nearly two years of the hottest real estate market we’ve ever seen, the Marin market is starting to show signs of cooling down. Overall sales numbers are down 11.3% since last month, price reductions went up 88% and properties are receiving fewer offers in comparison to 2021 (though seasonality also plays a role in the monthly shift). However, yearly appreciation metrics continue to be overwhelmingly positive despite monthly indicators showing volatility since May. The median sales price and average price per square foot are both up 16% since Q2 of last year. While change in an overheated market is typically gradual, the drop in recent monthly sales are attributed to two key factors: summer travel and a rise in interest rates.

Prior to the pandemic the Bay Area market was seasonal; with a spike in sales in the spring, followed by a typical drop in sales through the summer and another fall increase before the winter/holiday slow down. With June and July behind us, it’s noticeable that our pre-pandemic seasonality has returned now that the world is starting to travel, commute and operate as usual. Moving forward, timing is going to play a significant role again in listing success.

MONTHLY COMPARISON

YEARLY COMPARISON

YEARLY REGIONAL COMPARISON

Our take on the market

Prior to the pandemic in the Fall of 2019, Marin was at the height of an 8-year appreciating market. Desirable properties were selling around 5%-10% over asking with multiple offers. The median home price was $1,310,000, the average price per sq ft was $667, interest rates hovered around 4.25% for a 30-year fixed-rate mortgage and none of us could imagine homes prices going much higher. It was an amazing time to be a home seller. Then Covid hit in the Spring of 2020 and the market paused for 2 months when everyone was ordered to shelter-in-place. Travel stopped, schooling stopped, in-office attendance came to a halt and everyone’s lives quickly transitioned to a stay-at-home lifestyle.

When we realized this could be our reality for the next few years, coupled with interest rates dropping to a historic low of around 2.5%, we saw a rapid spike in buyer demand from San Francisco to Marin. The problem was that there weren’t enough homes to sell and we entered a housing crisis. When a home hit the market (regardless of its condition, location, or floor plan) it received multiple offers within 1-5 days, and the competition pushed sale prices as high as 20%-50%+ over asking. Buyers were forced to waive all contingencies just to win a home which, in many cases, put them at risk of losing their 3% deposit if they backed out of contract if, for example, their loan fell through or the property didn’t appraise at new heightened values. The Marin market accelerated quickly and over the last two years home prices appreciated 25% since the Spring of 2019.

Fast forward to today and suddenly the behavior of a home buyer has changed. Buyers are being more conservative, more selective, and many are putting their search on pause to see how low prices may go before jumping back into the market. While homes might not trade as high or with as many offers as a few months ago, sellers are still receiving great prices for their homes, though they may take longer to go into contract.

Answers to our clients FAQ’s:

Are we seeing the beginning of a market crash? In short, no. The housing market moves at a much slower pace than the stock market and while concerns typically follow uncertainty, a correction is not a crash. The factors that led to the 2008 crash are not applicable today. It’s hard to say at this point whether there will be a softening of appreciation or relatively small price adjustments in the short-term, but we don’t anticipate a significant drop in pricing anytime soon.

Is it a good time to buy? Yes! We’re starting to see the market stabilize with opportunities for buyers to purchase fantastic homes at a better price with less competition. While interest rates have risen slightly, it’s important to remember that rates are still historically low, even at 4%-5%. If rates drop you can always refinance.

Do you think the market will return to the height of a few months ago? It’s hard to imagine unless we are faced with another worldwide catastrophe that creates a ripple effect in the housing market. While homes might not break records as often, the market is still up significantly from 2021.

Is it a bad time to sell? Did we miss our window? Absolutely not. The real estate market in Marin is diverse and the “slow down” has affected certain areas and properties unevenly, especially for properties that hit the market in the middle of the Summer. Market timing and proper home prep play a more important role now more than ever. Our agents are always available to evaluate your home and provide strategies for getting the best price in today's market.

Own Marin is still having tremendous success selling our listings well above asking with multiple offers. Now more than ever, it’s evident that turnkey, well-prepped homes are continuing to attract more buyers during a time where they can be more selective amongst available inventory. We’re observing many other properties sitting on the market, reducing their prices and selling below asking. On the buyer side, we’ve been equally successful helping our buyers find incredible deals on and off-market around Marin and leveraging our intel and relationships with colleagues to negotiate better terms on behalf of our clients.

If you’re considering making a move in 2022, reach out to one of our team members and we’ll be happy to help you achieve your real estate goals through a changing market.