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Pacific Union Q4 2013 Newsletter

January 22, 2014

Marin County: Q4 ResultsThe supply of available homes tightened noticeably in the fourth quarter, but sales activity in our Marin County region remained strong until the last weeks of December, when holiday plans typically crowd out homebuying considerations. Sales were particularly strong in Corte Madera, followed by San Rafael, Novato, Mill Valley, and Kentfield. Activity was slower in Sausalito, Belvedere, and Tiburon. Most sales were for homes priced less than $500,000, while most listings were for homes in the $500,000-to-$1 million range. Homes in the $2 million-to-$5 million bracket sold well but gave buyers more of an advantage in negotiations. Sales prices cooled somewhat from the heated rise seen earlier in the year, in part because of a dip in the number of multiple offers. Looking Forward: We expect that the coming of spring will bring an influx of homes back on the market, driving sales activity even higher. The market will be influenced by outside factors such as the Federal Reserve's monetary policy and possible changes to loan regulations, but Marin County will remain a popular destination. Bright prospects for the Bay Area economy, meanwhile, will keep buyers and sellers busy throughout the first quarter and beyond. Defining Marin County: Our real estate markets in Marin County include the cities of Belvedere, Corte Madera, Fairfax, Greenbrae, Kentfield, Larkspur, Mill Valley, Novato, Ross, San Anselmo, San Rafael, Sausalito, and Tiburon. Sales data in the charts below includes single-family homes in these communities.Median Sales PriceThe median sales price represents the midpoint in the range of all prices paid. It indicates that half the prices paid were higher than this number, and half were lower. It is not the same measure as “average” sales price.Q4_marin_chart1_mediansalespriceMonths’ Supply of InventoryThe months’ supply of inventory is a measure of how quickly the current supply of homes would be sold at the current sales rate, assuming no more homes came on the market. In general, an MSI below 4 is considered a seller’s market; between 4 and 6 is a balanced market; and above 6 is a buyer’s market.Q4_marin_chart2_msiAverage Days on the MarketAverage days on the market is a measure that indicates the pace of sales activity. It tracks, on average, the number of days a listing is active until it reaches “pending” status, meaning all contingencies have been removed and both parties are just waiting to close.Q4_marin_chart3_avgdomPercentage of Properties Under ContractPercentage of properties under contract is a forward-looking indicator of sales activity. It tracks expected home sales before the paperwork is completed and the sale actually closes.Q4_marin_chart4_percentundercontractSales Price as a Percentage of Original PriceMeasuring the sales price as a percentage of the final list price, which may include price reductions from the original list price, determines the success of a seller in receiving the hoped-for sales amount. It also indicates the level of sales activity in a region.Q4_marin_chart5_salesprice_originalpriceA Closer Look at Marin CountyQ4_marin_chart6_sect2_citiesBay Area Real Estate Markets to EnjoyContinued Vibrancy and Velocity in 2014 Fasten your seat belts, because 2014 will outpace 2013 in the San Francisco Bay Area residential housing market. The calm of the past 60 days, when we saw multiple-offer situations dissipate, will ramp up toward the end of the first quarter to robustly outperform Q1 2013 in units sold. In 2013, units sold experienced double-digit-percent increases in all Bay Area markets. References to “lack of inventory” need to be shaped in the context of exceptionally high buyer demand. While inventory seems scarce, vibrant demand and limited days on the market are creating these intense conditions. Our regionally unique housing demand is driven by a robust job market: California generated over 300,000 new jobs in 2013 and saw unemployment rates settle in at 8.5 percent by the end of November. The strength of the Northern California job market has consistently been driven by technology, social-media, and professional-service firms and is now joined by the retail sector. This job growth was fueled in 2012 and 2013 by three western Bay Area counties (San Mateo, San Francisco, and Marin),all of which currently enjoy unemployment rates of about 5 percent. Job growth is now taking hold in the northern and eastern counties of Sonoma, Napa, Alameda, and Contra Costa, where unemployment rates range from 6.0 to 6.8 percent, also well below the state average. Interest rates remain near historical lows, and multiple new lenders are returning to the jumbo-mortgage market. One dynamic we anticipated in 2013 that did not materialize in force was the mobilization of the “move-up buyer.” If this segment of buyers engages the market this spring, we expect to see additional inventory in the form of their sales and significant movement in the high-end and second-home markets. As we noted back in October, we have a robust outlook for 2014 and 2015. We expect to see records set for units sold and near double-digit-percent price appreciation throughout the Bay Area. Municipal building departments are seeing enormous activity in new-housing and major remodeling permits, an exceptional leading indicator of consumer confidence, buyer demand, and a vibrant real estate market. Please remember that real estate is hyperlocal. While information is widely available and opinions on real estate markets are plentiful, there is generally only one set of facts. In a market that is experiencing record-setting velocity, it is particularly important to find the best real estate professional to provide you with the keenest insight, knowledge, advice, and decision support. Thanks for your confidence in Pacific Union. Sincerely, Mark A. McLaughlin, CEO, Pacific Union Bay Area 10-Year Overview Here’s a look at home sales in the Bay Area’s real estate markets in the fourth quarter of 2013, with a glance back at the 10 preceding fourth quarters.Q4_10year_monsterchart