2013 Return of Real Estate Appreciation

In the spring of 2012 everything changed in the Marin real estate market.  At the time I had a listing in San Rafael’s Gerstle Park that had been pulled from the market in late 2011.  It seemed like nothing had been selling, but when we reintroduced the property to the market in late February of 2012 we suddenly found ourselves with three offers!

If I was to hazard a guess I would have to say the bottom of the downward market cycle was reached back in February and March of 2012.  After that buyers rushed to the market like the 49ers rushing to the hills in search of gold and suddenly there were more buyers than available properties: way more buyers.  For years we had been participating in a market where there were more sellers than buyers and houses were selling under their asking prices.  There had been talk of ‘bottom feeders’, people paying very little for homes.  By mid 2012 ‘bottom feeders’ were getting beaten out regularly in multiple offer situations and their breed was fast becoming extinct.

2013 feels a lot like 2004 when I first started selling real estate for a living.  Buyers were plentiful and properties few.  In some condo complexes, which are great indicators of market momentum, it seemed like every new property coming on the market was $10,000 more than the next regardless of condition.  Then as it is now the momentum was clearly going upward and the properties appreciating measurably in value each month.

All this makes me wonder if the Marin County real estate market is ever in equilibrium.  I’ve now sold real estate for nearly a decade and through a full market cycle.  There have certainly been tipping points, like the mortgage  meltdown in August of 2008 when suddenly loans became exceedingly difficult to obtain, interest rates were on the rise and there was an audible hiss from the bubble deflating.  The real estate bubble never seemed to burst, prices just dropped noticeably by the season as properties languished on the market and their values were reduced.

In the condo markets sellers were ‘chasing the market down’ as they priced properties at and below perceived market values.  The best strategy seemed to be to price a property under the market in order to attract that one buyer who was still out there buying in your complex.  Buyers and sellers wondered when the market would bottom out, but in 2013 they aren’t wondering that anymore.

Last year at this time when I was pontificating about the market I thought that it would need to stabilize before it turned upward.  Now I wonder if it ever really has stability at all because I’ve seen it ignore plateaus and make such immediate and dramatic swings in both directions. Perhaps after a period of appreciation in 2013 and into 2014 we’ll see things level off?

I doubt it though.  In Marin County it seems like either the demand is going to be greater than the amount of properties available as it is now, or there will be too much supply and not enough buyers as it was before the spring of 2012.  Real estate equilibrium may exist in other areas and in text books, but not where we live.