Hello Everyone,
Better minds than ours are struggling to understand what is going on with U.S. and global economic conditions and predict the future . Sometimes feels a bit like financial fortune-telling!
On June 27, Princeton Professor of economics, Nobel prize-winner, and New York Times columnist Paul Krugman penned an article titled "The Third Depression" in which he speculated that we are currently entering an extended economic trough. This, he says, is due in part to misguided attempts by legislators and officials to begin to balance budgets to avoid accumulating more debt. According to Krugman, they should instead be pursuing a much more expansive economic policy to avoid further economic contraction he says is an inevitable destination on their current course.
http://www.nytimes.com/2010/06/28/opinion/28krugman.html
On July 10, Nelson Schwartz, another New York Times Columnist, wrote a column for the paper titled "Wall St. Hiring in Anticipation of an Economic Recovery". According to the article, major Wall Street brokerages have added about 2,000 jobs since February in anticipation of a coming economic recovery. Schwartz postulates that the recent financial successes of banks will lead the U.S. out of recession/depression and into recovery.
http://www.nytimes.com/2010/07/11/business/11rebound.html?th&emc=th
Reality is probably that the economy is at a tipping point and can go either way depending on events and policies in the next few months. It would seem that taking money out of the system to reduce deficits may not necessarily be beneficial at this particular point in time. We will see.
Meanwhile, Wall Street had a pretty good week. The Dow Jones Industrial Average had its best week since July of 2009, climbing about 5%. Still a long way from its former peak, but slowly heading in the right direction though still volatile and changing directions regularly. Mortgage rates still at historical lows but buyers must be well-qualified with good income, assets, and credit scores.
"But what actually happened here in Marin County?" you may be asking, drumming your fingers on the counter. So, Ok, the local facts as we see them---------
City-by-City report out this week shows percentage-in-contract of 5 of 13 Marin County cities and towns it follows was up, and 6 down as of July 1. Greenbrae showed no change at slightly over 31% in contract. Corte Madera, at 35.29%, still the leader even though down substantially from last month's stellar performance of 47.73% in contract. Belvedere holding the low spot on the totem pole at only 5% in contract. Remember, many of these markets are relatively small, and a swing of a few units can have a dramatic impact on the percentage in contract number.
Single Family Homes (SFR) inventory down from 1308 to 1269 since last report. Percentage in contract down just slightly from 25.08% to 24.35% overall. Homes under $1million at 33.58% in contract, down less than half a point from last report. Homes in the $1million and up segments all showing reductions as follows:
$1million-$1.999 million down from 16.02% to 15.18%
$2million-$2.999 million down from 19,83% to 17.36%
$3million and up down from 8.40% to 7.76%
This in spite of anecdotes about high-end properties starting to move. Guess we will have to wait and see what happens next!
Average sold price of SFR's YTD at $1,054,594 vs $972,521 last year at this time. Average Days on Market (DOM) at 93 vs. last year's 108 at the same time. 935 SFR's had sold as of July 6, 34% more than the 697 sold as of the same date in 2009. This percentage increase has been decelerating for a number of weeks now, since the Federal mortgage tax credits ended.
Good new is that according to CB MarketQuest, SFR accepted offers in June were 30.1% of inventory, the highest level in the 24 months covered by the report. The June ratio of accepted offers to new listings was 91.8%, exceeded only (in 24 months) by December's figure of 116.3%.
Marin County Condominium inventory down slightly to 352 from 368 at last report. Overall percentage in contract also down from 33.42% to 32.10%, while condo's under $1million (all but 19 of the listings) also down from 35.16% to 33.63%. Average sold price YTD at $400,476 vs $365,807 this time last year, and DOM up slightly from 114 to 117 since June of '09. YTD condo units sold as of July 6 at 252 vs. '09 figure of 231, or up 9.1%. This also shows continued deceleration from the rushing-to-get-the-tax-break peak. Condo accepted offers as a percentage of inventory at 29.5% at the end of June, the highest in the 24 month period covered by the CB MarketQuest report. Accepted offers as a percentage of new listings, at 89% were 3rd highest in the 24 month period, behind November and December of '09. Important to remember that increasing sales prices may be an indication of the specific units sold as much as of overall price levels---- a phenomenon called "market mix".
Local offices still busy, with good numbers of open escrows, even though many buyers and sellers are taking their a summer vacation break. Traditionally, the local real estate business cools off a bit this time of year, then gets another bounce after Labor Day. Anyone's guess what will happen this year-----
More next time.
Until then, best wishes to all,
Fred
p.s. for access to spreadsheets please see http://www.fredanlyan.com
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