We’re one week past Labor Day and Marin is back into full swing. Kids are back in school, most vacations are over, and traffic is jamming again. Just this week 107 new homes have been put on the market, increasing inventory to just over 1600. That dropped our homes in escrow by 2% from a month ago to 23%. The good news is that in the last 3 months, 705 homes have sold at an average price of $925k. If you deduct the 200 condos that sold, the average price of a single family was $1,040,000.
So where do we go from here? The lowest interest rates we have ever seen and the tax breaks are a huge factor in buying activity, but yet there is something else. The New York Times just featured an article “A Dream House After All” in which they say that despite the gloom and doom in the housing market, the American dream is far from dead. Yes, it is going to take years to recover what has happened in the nation by home prices dropping 29 percent nationally. That of course is an average with a differential in Las Vegas at 57% and Marin at 27% from last July and even in Marin, there is a variation of price drops where some of the high-end areas haven’t suffered as much.
The article points out that for people with a realistic version of the American dream, buying a house now makes a lot of sense. More and more people are looking at a home as an investment. You live in the house that provides “a real flow of valuable services”. They calculated that investment being approximately a 6 percent return after maintenance and repair. Assuming you are in it for a long haul, there is also appreciation and gains that are excluded from taxation in a primary residence up to 250k. Then there are a few other bonuses of home ownership. Along with the tax credits of $6,500-$8,000, you can deduct also the interest on your mortgage. If you do the math,you can se the financial advantage.
Yes, we all know the unfortunate circumstances that befall the unemployed who are losing their homes and the steady drip of bad economic news that “has sapped the confidence of buyers, sellers and lenders,” but the prediction is that, with the sagging of new construction, we will see inventory of available homes decrease and a tightening market. So much of attitude and emotions drives the economy and those can change overnight, and yet more and more consumers are seeing a house as never having been such a bargain, and unlike a stock, bottom line is, you have a place you can call home. The article said in fact, “The American dream is not dead – it’s just taking a well deserved rest.”
This is indeed a refreshing viewpoint and one that is so appropriate to Marin where the people see the beauty and safety of the environment adding so much to what they call home and why the American dream is so real.