December 13th, 2011

Today the Urban Land Institute released their report on the real estate industry. Below are some highlights from the report. Marin County real estate will continue to benefit from its close proximity to San Francisco.

Housing Buys._ The battered housing sector offers the best generational buying opportunities for oceanfront condos or dream suburban homes. Prices edge up off nadirs in better markets after unprecedented declines and mortgage rates remain highly attractive, if purchasers can muster enough equity and adequate credit scores.

“Cool Towns.”_ Employers wanting to lure the best generation-Y brainpower are paying careful attention to where this bulging group of young adults wants to settle. “That’s where companies
want to be.” “High-quality-of-life places do better”: echo boomers want plenty of stimulation from entertainment and nightlife attractions convenient to work and residences. Many wouldn’t be caught dead living at the end of a suburban cul-de-sac, dependent on cars to get around. Besides the usual brightlights, big-city 24-hour markets, “cool places like Austin, Seattle, and Portland attract more than their share” of overachieving young people. Denver’s revived downtown, full of restaurants and sports attractions, fits the bill, too. More apartments, catering to this demographic, go up in and around infill neighborhoods in these cities, broadening their urban envelopes. In a continuing trend, aging baby boomers also gravitate to city lifestyles, appreciating greater convenience and proximity to stores, doctors, and cultural institutions, not to mention their now-adult children.

Perennial Choices._ Since emerging from the depths of the early-1990s market cataclysm, five of the top six markets on the 2012 leader board—Washington, San Francisco, New York City,
Boston, and Seattle—not coincidentally also entrench themselves as investor favorites over the past nearly 20-year marketcycle (exhibit 3-1). Their established 24-hour characteristics,
diversified economies, and prominent locations with geographic barriers along global pathways combine to offer relative stability: values tend to appreciate more in up markets and rebound
more quickly after downturns. It is no coincidence that these top markets also tend to score the highest in walkability among the nation’s cities: increasingly convenience counts as more people
shy away from car-dependent places (exhibit 3-4). By attracting businesses, talent, and upper-income residents in outsized proportions, they exist as veritable wealth-island magnets for
investors, including offshore capital.

San Francisco (3)._ “It’s back”—near the top—and rates as the survey’s best buy for office and apartments. “Bullish market timers bet on room for big future office rent increases, pushing purchase pricing way ahead of fundamentals.” Empty buildings counterintuitively look most attractive to some buyers: “They see so much upside in rents.” In fact, the South of Market district “catches fire”—reminiscent of pre-tech-bubble-burst days in 2000. Computing and internet firms expand to satisfy young tech-savvy hires who want to work and live in the midst of 24-hour city amenities and action. Unlike tentative tenants in most other markets, Bay Area tech companies readily lease large blocks of space for future expansion. But overall market vacancies still register in the mid- to low teens, and demand in this Pacific gateway can fall suddenly. Cap
rates on “bulletproof” apartments cannot drop much lower, and house prices show the biggest nationwide gains after some precipitous declines. Hotel occupancies recover smartly; several high-profile lodging properties list for sale to take advantage of the upswing. Institutional investor ardor never wanes for the expensive warehouse market serving one of the country’s largest ports

Best Bets
Now is a great time to purchase that dream home or retirement condo in a prime location, but that’s out of the question for most cash-strapped folks. In good neighborhoods, well-heeled
private investors buy houses to rent and eventually will convert them back to for-sale homes when the market finally allows. In the meantime, they can secure rents to more than cover taxes
and other expenses. 

Outlook
Broken homeowners’ psyches will take a long time to fix, and more Americans come up empty: they just cannot afford to buy in the Era of Less. Expect three to four more years of bottom
slogging until the employment outlook improves enough to buttress buyer self-assurance and pocketbooks. Wealth-island neighborhoods (Marin County) will begin to strengthen and many infill markets have overcorrected, but any pricing rebounds will be measured, damped by anemic demand. The boom/bust’s legacy may be generational tepid growth.

 

November 30th 2011

We had our best day on the stock market today in a couple of years, I hope that means buyers are feeling more flush!

Overall we had 15 more single family homes sell in the month of November (153) in Marin than sold in October (138) or a 10% increase in sales volume.

Update on the Tiburon Market.

The month of November saw 12 homes sell in Tiburon, ranging in price from a high $3,000,000 to a low of $750,000. Today I saw a property which is an off market listing at 35 Rolling Hills Road with a great layout, San Francisco views and nicely updated  for $4,690,000.

Also viewed a property on Gilmartin which is on the market for $17million...it had been on the market at about $19million for  a long time, now listed with a new agent......we shall see if the new price motivates a buyer.

Update on the Belvedere market

Only one home sold in Belvedere in November, the selling price was $3,550,000, another home which has an accepted offer will most like sell by the end of the year. With a fifteen month supply of inventory Belvedere's real estate activity should be slow for the next month.