Heading into the 2019 Market

 

As of early February, the government shutdown is over - at least for a couple more weeks - the stock market has recovered dramatically from its late 2018 plunge, and interest rates are well down from November highs. A good number of large, local, high-tech "unicorns" continue to plan IPOs in 2019. All these are positive economic indicators for the Bay Area real estate market. However, indicators have proven to be volatile over the past 5 months, and their future direction should not be taken for granted.

 

As detailed in recent reports, there was some cooling in the market in the second half of 2018, after a very hot spring. The month of January typically has the fewest sales of the year, sales which mostly reflect activity during the December market doldrums: We don't consider its data to be a reliable indicator of conditions or trends. But activity is picking up, and the beginning of the spring sales season - typically the strongest market of the year - will soon provide more direction as to where the market is heading.

 

Market Overviews

Median sales prices often fluctuate by month or season, and such short-term changes often have little to do with changes in fair market value: There can be other supply and demand factors at play. But these charts illustrate the longer-term trends in appreciation in the Marin market.

 

Median sales prices often fluctuate by month or season, and such short-term changes often have little to do with changes in fair market value: There can be other supply and demand factors at play. But these charts illustrate the longer-term trends in appreciation in the Marin market

 

Since San Rafael and Novato are by far the largest markets in Marin by sales volume, they have an outsized impact on county median sales prices. Further down in this report, median prices are broken out by city and town. The dominant home sale in the county is the 3-bedroom house, with 4-bedroom houses not far behind.

 

Since 2012, home sales under $1 million have dropped by half as prices have steadily appreciated. This chart shows the migration of sales to higher price segments.

 

Home sales at prices of $3 million and above in 2018 were about the same as the number sold in 2017. The big jump was in the first couple years of the recovery, 2012 to 2014.



Marin Home Sales by Size

 

One of the many differences between Marin and San Francisco is that Marin has much higher percentages of larger homes: 60% of SF sales in 2018 were of homes smaller than 1500 sq.ft., while in Marin the percentage was only 32%. Factors behind this are age of construction, the quantity of condo construction in recent decades, household affluence and median household size. (Generally speaking, Marin has newer houses, fewer condos, more affluence and larger households.)

 

 

This next chart illustrates how the extremely hot spring 2018 market in Q2 cooled off in the second half of the year. This cooling is a relatively common dynamic each year, and Q3 and Q4 2018 readings are very similar to those in Q3 and Q4 2017. Some other Bay Area counties have seen more market softening than Marin since last summer.