MARIN ‘MARKET HEAT’ INDEX (for July 18, 2005): 

1.12

(-0.38 in past month/-0.30 in past year/+0.04 in past 2 years/-0.09 in past 3 years)

[Readings:   Above 1.25=Sellers’ Market,

Between 1.25 & 0.80=Balanced Market,

Below 0.80=Buyers’ Market]

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“Good Bye” Sellers’ Market, “Hello” Balanced Market Conditions

(At Least for the Summer of ’05!)

For the first time in 19 months, Marin real estate conditions have settled, firmly, into the “Balanced Market” range on the Marin Market HEAT Index. The drop is the sharpest seen in the three and a half history of the Index.  Clearly more is going on than the normal mild market relaxation caused by buyers and their agents taking breaks for summer vacations. 

We think that, in addition, a “self-fulfilling prophesy” effect is at work, as the public worries over the current press drumbeat about the possible breaking of “real estate bubbles.”   No new economic facts account for this shift in press attitude (the press simply does a collective about-face on subjects from time to time, as if it had been victim to a viral attack), but coverage of real estate markets has taken a cautionary--even alarmist--turn in approach during the last number of weeks. Say something disturbing often enough, and gosh, it can make folks nervous! 

A stock market-type bubble will not (in fact, cannot) happen to real estate.  But slowdowns can happen; and according to our Index readings, a slowdown is now happening in the Marin real estate market.  What does this mean for a buyer or a seller?  Is this a good or not-so-good time to buy or sell?   

For Sellers:  This is still, by historical comparison, a reasonable time to sell. Even though the inventory of homes on the market has risen rapidly in the past few weeks, it still stands at only 103% of the same date one year ago and 78% of two years ago. Declining buyer interest and activity, however, presents as a greater factor; buyers are going into contract on homes (homes “pending”) at significantly lower rates than one year and two years ago on this date (only 74% & 72%, respectively).  These “pending” numbers combined with the inventory rise suggest that sellers with the option to wait out the summer may wish to do so.  Post-Labor Day conditions may be more favorable to sellers.   

For Buyers:  The combination of summertime’s increasing inventory of available homes and the news media “bubble” fixation coverage has resulted in the best buying opportunity in two years.  The intensity of competition for homes will be lower this summer.  Asking prices will not go down, but the number of multiple offer situations will definitely be lower.  The great news for buyers:  there are more properties to see and choose from, and there are fewer other buyers competing with you.  Take advantage of the summer market!

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I)

 Marin Market HEAT Index, By City—June 15, 2005

Area	# Listed	% Pending	# Sales	HEAT INDEX	Heat Index: One Month Change
Marin County	1,007	39	313	1.14	-0.34
Belvedere	24	4	3	.17	-0.22
Corte Madera	23	35	15	1.53	-1.47
Fairfax	19	37	11	1.5	-0.14
Greenbrae	20	30	6	0.86	-0.52
Kentfield	33	30	5	0.65	+0.09
Larkspur	18	61	8	2.71	-0.29
Mill Valley	120	43	42	1.38	-0.60
Novato	223	48	84	1.67	-1.04
Ross	22	14	3	0.32	-0.08
San Anselmo	56	30	23	1.03	-0.84
San Rafael	220	45	72	1.43	-.035
Sausalito	63	32	13	0.77	+0.27
Tiburon	85	29	19	0.73	-0.07
“Other” Marin	81	26	9	0.50	-0.15

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  II)