Because of the changing fronts on the economic and political horizon, and the resulting informational confusion, we're coming to the end of what has been one of the roughest and most frustrating years in Marin real estate. The overall economic outlook is one of a slow recovery from a deep recession. However, the economy faces some serious headwinds and there are several factors that will affect what that recovery might look like. Unemployment is a big one, and that will affect everyone, from the graduate who can't find a job and has to stay at home, to the breadwinner that has lost his job from downsizing. We expect the Fed to pump more money into the economy with a second round of quantitative easing (QE2), but continuing high unemployment could mitigate some of that. Another big factor is the dependency on foreign developments and what happens to the major foreign economies and the unexpected global developments that seem to be occurring.
What does all this mean for our own world of Marin real estate? Obviously, it will have an effect, not only on the wallets but in people's attitude and expectations, which are critical factors in any recovery. The last month has been fairly stagnant in real estate as people try and figure out what to do next year -sell, buy, or wait. Current inventory is down and diminishing daily in preparation for the holidays. A promising sign is that there is a high percentage of homes in escrow - 30% - as buyers try and close before the tax year is over. We expect the inventory of Marin homes to start to climb in January as sellers try to capture the "re-location buyers", and again in February. By April we are likely to have at least a 30% increase in the number of available homes. Many Marin homeowners don't have to sell and will stay put, and yet we know there will be a glut of short sales and bank owned properties that will flood the market from February to April, creating the critical need for good seller representation and getting the right advice in pricing, timing and marketing. it will also bring great opportunities for the qualified buyer.
What about interest rates? As far as home selling and buying goes, that can have a huge impact. The good news is that forecasters see only a slight increase in the first quarter, but if the nation's fiscal health worsens, we may see bond investors selling, thus pushing interest rates up. Higher rates will make it more difficult for home sellers to get their asking prices in a glutted market, and buyers will be affected in what they qualify for in a loan. Our advice has been to not wait to make a move, that time is not your friend here. if you're selling to buy then start that process sooner rather than later so you can have the buyers hat on when the inventory jumps.
2011 is going to be an interesting year for sellers and buyers in all price ranges. The high end in Marin is going to do well since those buyers realize the inherent value of Marin real estate and the long term upside it offers. That is also true for the under a million buyer that wants to have the quality of life that Marin offers and sees the incredible advantages of living here. We know that despite the condition of any market, people with strong reasons to move will do what it takes, and although they may not get what they would like for their home, they will be able to take advantage of the incredible opportunities on the buying side. It is critical for sellers to stop living in the past, but to look into the future just like the buyers are doing, and get on with their lives, and we are here to help you do that.