With 2011 entering its last quarter, now might be a good time to take a fresh look at the Novato real estate market. During the darkest days of the market downturn, Marin’s most attractive affordable option suffered more than its neighbors. Now that much of the Bay Area is claiming victory over real estate recession, is Novato following suit?
Given that real estate is seasonal, you’ll learn more by comparing year-over-year performance than month-over month. Another thing to consider: even in a town as large as Novato (contextually speaking; with a population of roughly 50,000, Novato is the second-largest city in Marin County), one month of data reveals only a Hemingway-esque iceberg tip.
When I say that single-family home prices fell 7.8 percent month-over-month in August, I’m not really telling you much. Same goes for the fact that sales activity jumped almost 25 percent last month. It could mean nothing more profound than the possibility that more people went on vacation in June than in July.
Unfortunately, it is when we compare numbers from past years that we learn some distressing truths about local real estate.
General wisdom says that 2009 and 2010 represent the nadir of the housing market. It was early in 2009, you might remember, that the after-effects of the October, 2008, stock market crash brought housing to almost a complete standstill. Well, in August, 2009, the average single-family home in Novato sold for $667,593 – 14 percent more than it fetched two years later. One caveat is that the market had begun moving again by summer, 2009.
One year later the story was that real estate had spent the past year making incremental gains, only to see them wiped out by a mid- to late-summer swoon. In 2010, Novato clocked in with a mark of $624,125, a 6.5 percent drop from 2009 but still 8.2 percent higher than last month’s figure of $572,915. Activity dropped from 39 sales (2009) to 31, a number matched this year.
Condo sales jumped to 20 in 2011 after languishing at 16 and 11 in 2009 and 2010. Condo values, however, fell to $247,920, a loss of 12.7 percent from 2010.
Circling back, maybe August was just a bad — but busy — month. Maybe there was a run on distressed properties (their share of the overall market is up 5 percent since this time last year). Or maybe we should compare August not to August 2010 or July 2011 but to the entire calendar year beginning in January.
Novato began 2011 on a low note. January and February posted average values around $500,000 — numbers no local homeowner wants to see. Activity remained brisk, however, unlike in most Bay Area cities. For all of 2011, Novato’s entry-level status has pumped up its market. Even though values are lower than we’d like, the city has posted stout monthly sales figures. So far Novato has topped 30 single-family sales in five of eight months, led by April’s 36 sales.
Home values have not followed suit. They’ve hung around the mid-$500s, topping $600,000 only in March and July, though approaching that mark also in June ($594,441) and April ($589,652). For the year, the average single-family home sold for $568,698, within 1 percent of August’s $572,915. An average of 29 homes has sold each month, two less than August’s 31.
August as Everymonth? It could be. It is the weakest of what looks to have been a strong summer but completely in line with 2011’s overall performance.
So the story in Novato isn’t booming optimism or relentless pessimism, with values down from 2010 but up from early 2011. What happens next will be determined by two factors: the city’s ability to ramp up during real estate’s hot season — autumn — and the future of its inventory of distressed and low-end properties. As long as these bargains are driving the market, activity will remain high but prices will remain suppressed.
Some good news: as of Sept. 26, active inventory was down 37 percent year-over-year and days on market (the number of days a property remains active before going into contract) was down 21 percent, to 63.
Putting it bluntly, Novato hasn’t rebounded the way San Francisco, Burlingame, Mill Valley, Palo Alto and the rest of the “above the fold” Bay Area has. Its real estate profile is different — more distressed homes, more entry-level properties and it’s difficult to imagine any of the celebrated “new tech money” making its way to northern Marin County. With this in mind, the local market’s summer 2011 performance is a glass half-full.