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.

Article source: http://novato.patch.com/articles/looking-at-housing-climate-year-by-year-glass-is-half-full

And they think they have problems?

When the Marin County Assessor’s Office released its records for April, at first there seemed to be reason for celebration in Novato. Overall sales of single-family homes were up 33 percent month-over-month, to 36. Industry veterans who remember the nuclear winter of 2008-2009 will recall months like February 2009, when only 10 homes changed hands in Novato. The market was frozen and looking at a long thaw.

It’s good that homes are again selling in Novato. And if we only look back a few months, we’ll see that prices are rising as well. The average property in Novato has gained back more than 20 percent of its value since January.  As long as we remain focused on 2011, the outlook is good; gotta keep those pesky memories of 2006 and 2007 at bay.

In April 2007, the average single-family home sold in Novato fetched a shade above $900,000. In April 2006, the average price was $952,000. Novato real estate has shed 38 percent of its value in five years. There’s no way to sugar-coat that. In fact, as of January local homes had lost 48 percent of their value in less than five years.

These numbers add up to Novato having a serious negative equity issue, in line with that of California as a whole (33 percent). Still, with cities like Miami experiencing a 25 percent rate not of underwater mortgages but of homes in severe mortgage distress, heading for short sale or foreclosure, the local impact is nowhere near being the worst in the country — or even the state. Novato has suffered more than many other Bay Area cities, but our region as a whole has fared pretty well, comparatively.

For plenty of local homeowners, upside-down mortgages are a reality. Enough of them are suffering that the question now should not be “How many underwater mortgages are there in Novato?” but rather “What should you do if your mortgage slips into negative equity territory?”

As an indicator of a struggling market, negative equity ranks with foreclosures and short sales, but it is not necessarily a precursor to them. One reason foreclosures are up, however, is that a significant number of underwater mortgage holders are choosing to walk away from their properties rather than continue making payments.

A Feb. 2, 2010 article in the New York Times suggests that there is a value-to-loan threshold that owners will not cross before walking away from their home. Once their home’s market value falls below 75 percent of the money owed on their loan, they give up and bug out. While these people are arguably acting with sound financial judgment, they’re also ignoring the many legitimate reasons not to walk away — not all of which are based on emotional attachment to a pile of wood, glass and stucco.

Assuming you are not a speculator, landlord or home-flipper, you purchased your home as a place to live. You did so for a variety of reasons — location, convenience, quality of public schools, square footage, yard — plus the unspoken but understood perk of return on investment. Even if you take away that ROI, you still have all of the other components, plus stability, making a good argument for staying in place. Walk away and what’s the first item on your post-home-ownership agenda? Finding a place to rent, hopefully with a comparable amount of room, convenience and access to good schools. And woe to you if you own pets.

The decision to walk away from an underwater mortgage should not be taken lightly – and should not be made for financial considerations only. Staying in a home burdened with a bad loan requires a paradigm shift. If you can afford your payments and can live with the psychic weight of feeling like an economic patsy, why not stick around and make your house a home, even if it doesn’t make short-term financial sense?

Article source: http://novato.patch.com/articles/negative-equity-doesnt-always-have-to-mean-goodbye