Marin Fall Newsletter

Paragon Real Estate Group
 
Paragon Real Estate Group

The Marin County Real Estate Market

Home-Buying in Marin vs. Gold & Apple Stock - as an Investment,
Median Home Price Appreciation & Marin Community Values

October 2015 Report, including 11 Custom Charts

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The autumn selling season started with a surge of new listings right after Labor Day, but it will be another month or so before preliminary statistical data is available on home sales negotiated since then. However, it is clear that the recent volatility in national and international financial markets has not so far caused a severe adjustment to local home prices. While we wait for early autumn sales to close in quantity, we'll review the market from a variety of angles.


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Marin County Home Price Appreciation
Short-Term & Long-Term


2012 - 2015, by Quarter



It's not unusual for median sales prices to drop in the 3rd quarter - usually a slower selling season after spring - which happened this year as well. This has less to do with changes in fair market value, than with the fact that the market for higher priced homes typically slows down more than that of the general market in summer.



1990 -2015, by Year



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Return on Cash Investment

Comparing Buying a Home in Marin
to Inflation, Gold, the S&P 500 & Apple Stock



For the purposes of this analysis, we've broken home ownership into 2 aspects, the first being ongoing housing costs - mortgage interest, home insurance, property taxes, maintenance - which after tax deductions could be compared to the cost of renting a similar home. The second aspect, illustrated in the chart above, is the cash investment side of buying a home and the compound annual return on that investment, after closing costs and loan principal repayment are deducted, if one had purchased a median Marin home in 1994.

For the Marin County Median Home calculation - a combination of house and condo sales - we used the 1994 median price ($330,000), with a 20% downpayment ($66,000) and paying 1.5% in buy-side closing costs ($4950) for a total cash investment of $70,950. Net proceeds were calculated using the 2015 YTD median sales price ($935,000), deducting 6% in sell-side closing costs ($56,100) and the original 80% mortgage balance ($264,000), which equals $614,900. This equals an annual compound return on investment of 10.8% over the 21-year period.

All of us should have put every penny we had into Apple stock in 1994, but barring that, purchasing a home in Marin would have been an excellent alternative - particularly if you'd bought in its highest-priced communities, which appreciated even faster than the county as a whole. Three factors not included in the above analysis further increase the financial benefits of home purchase over the other investments graphed: 1) the $250,000/$500,000 capital gains tax exclusion on the sale of a primary residence (potentially saving up to $75,000 in taxes), 2) the "forced savings" effect of gradually paying off one's mortgage (if one resists refinancing out growing home equity), which has a substantial wealth-building effect, and 3) over time, the ongoing cost of housing with a fixed rate loan, strategically refinanced when rates go significantly lower, will usually fall well below rental costs that continue to rise with inflation.

With financial assets subject to market cycles, changing the buy or sell dates in this analysis can dramatically affect the return. We picked 1994, because of the availability of MLS median price data going back to then.


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Median Sales & Prices
by Community & Bedroom Count


3-Bedroom Houses




4 & 5-Bedroom Houses




2-Bedroom Houses & Condos



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Median Home Price Appreciation
by Marin Community, 1994 - 2015










Since the above charts track the combined median sales price for both houses and condos, those communities with larger numbers of condo sales will have comparatively lower median prices: In Marin, condos sell for much lower prices than houses.

We performed the above analysis for 9 other Marin towns and our full report can be found here: Marin County Home Prices & Trends by City. Simply scroll down the webpage until you find the graph for your community.


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3rd Quarter Market Snapshot




If you have any questions regarding this report or if I can help
in any other way, please don't hesitate to contact me.

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These analyses were made in good faith with data from sources deemed reliable, but they may contain errors and are subject to revision. Statistics are generalities and all numbers should be considered approximate. How any median or average statistic applies to a particular home is unknown without a specific comparative market analysis. We are not qualified to render legal or tax advice of any kind. Sales statistics of one month generally reflect offers negotiated 4 - 6 weeks earlier.

© 2015 Paragon Real Estate Group
 
No one knows Bay Area real estate better than Paragon.
Paragon Real Estate Group
(415)738-7000 | (415)565-0500 | www.paragon-re.com/
Patricia Carapiet
Lic# 00895957
1400 Van Ness Avenue
San Francisco, CA 94109
Direct (415) 738-7218
Cell (415) 990-9125
pcarapiet@paragon-re.com
http://www.patcarapiet.com/
 
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