After a statistically insane few years, the tail end of Q2 saw massive change in the real estate industry. Macro-economic events played a major role in the financial stability of all markets, real estate included, but none more significantly than interest rates essentially doubling in just a handful of months.

Mill Valley, and most of Southern Marin has seen property value gains in excess of 20% year over year since 2019, an insatiable growth curve.

With inflation running rampant & rates projected to rise at least 2x more before the end of 2022, the writing is seemingly on the wall that the real estate market will follow both the stock & crypto markets with significant price corrections. Luckily, this pocket of The Bay is so highly sought after, demand should offset value reduction.

The Condominium Market

Only 8 sales in all of Q2 says it all. What we’re seeing in the condominium market toward the end of Q2 was a buyer pool that had drastically lost buying power. Buyers in this price range are massively rate conscious, and it’s likely the first time they’ve ever seen interest rates above 6% in their lifetimes. Psychologically, this is probably the biggest hurdle that all homes for sale in this price range will face.

The Median Market

The median/trade-up market hasn't statistically been affected, yet. The trade up market is typically that first jump up from the starter home market, and typically what we call the Median Market in SF & Marin. Sellers here are just starting to feel the effect of the entry-level market losing steam. With entry level homes having a harder time finding a buyer, it’s putting a strain on people's ability to trade up to an SFH.

The Luxury Market

We’ve seen a luxury boom all across SF & Marin over the past 12-18 months with some luxury markets up 50% percent in just a handful of years. Clients in these price points are less affected by macroeconomic events and tend to transact out of want rather than need. The luxury market stands to be significantly less affected than the median or condominium markets. But don't expect the same appreciation moving forward.

Projecting Ahead To Next Month/Quarter

I would anticipate a similar market to the one we're currently experiencing for the next quarter; 6-7% rates, an entry-level market reeling for stability, and a mostly flat median market.

While I wouldn't expect to see single family home values to drop at all, I wouldn't expect them to rise, either. Demand is still insatiably high for the lifestyle Mill Valley provides, and there is still plenty of cash and equity in the Bay Area for residents to buy-sell property.

I think we will find 'the bottom' once the Russia-Ukraine situation has a definitive and positive plan for moving forward, oil markets steady, and U.S. inflation is under control. Unfortunately, I don't see those 3 things all happening in Q3.

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