San Rafael's market kicked off '22 with incredible demand. The condominium & median home markets were as competitive as any market in the Bay Area, while the luxury market took a few months to ramp up to what we saw in ‘21.

Condominiums in San Rafael averaged above $700k for the first time ever (year-average) in 2021, and after a brief correction over the turn of the new year slightly below 600k, Q1 overall posted a $658k average price per unit.

The median market is still dramatically undervalued in the eyes of the buyer pool, creating massive bidding wars and houses selling hundreds of thousands of dollars above asking, and in some cases 500k above 2019 purchase prices.

The luxury market ramped up slowly, averaging $3.2M, down from $3.7M in 2021. But 3x big sales are currently pending which will pull the average up through early '22.

The Condominium Market

The San Rafael condominium market has bounced right back after a less-than-desirable end to 2021, where we saw average values drop below $600k toward the holiday season.

With the continual strength of the single family market challenging buyers' ability to secure property, I think we're seeing a trend of buyers priced out of the single family markets turning to the condominium markets and buying the best-available.

San Rafael has a challenging value-horizon, being one of the furthest removed (distance-wise) markets from the major city-hub of San Francisco, coupled with being pigeon holed as the majority bearer of Marin’s expected ~ 14,000 additional housing units needing to be built within the next decade, ordered by the State of California. Locals are not thrilled by the anticipated housing increase, and have taken measures to contest the mandates imposed on Marin County.

The Median Market

For the purposes of defining the line between the median market & the luxury market, $1,000,000 above or below the median at the time of this report is considered the market for a median home, whereas anything $1M above or greater tends to correlate better to the luxury market.

The median market in San Rafael was as competitive as any in the county in Q1. Homes are selling at a record price per foot ($873/foot average), averaging just 17 days on market. With a median of $1,664,000, the market is considered somewhat undervalued by buyers being priced out in Mill Valley, Larkspur + Corte Madera, which should factor into continued growth. I wouldn't be surprised if we saw a $2M average sooner than later, even in conjunction with rising rates. Spring/Summer ‘22 is poised to be the peak (or a peak) before the Fed’s interjected rate hikes really hit home and suck buying power out of the market.

The Luxury Market

The luxury market tailed off in Q1. The average of the 6 luxury sales hit $3.2M, down from $3.7M in 2021. Although, there are some exceptional properties (1x @ $5M) currently pending & on-market at the turn of the quarter, which should average out the data after Q2. With buyers valuing high-quality, finished square footage almost as much as acute location, I would expect to see San Rafael continue to catch up to surrounding markets.

Projecting Ahead To Next Month/Quarter

I still anticipate the next quarter to be just as explosive as the Q1. San Rafael has the luxury of being close-enough in proximity to SF to still appeal to all the exodus buyers and checking the box of 'commutable,' whereas that sentiment seems to stop once you pass Terra Linda toward Novato.

With that in mind, it's hard to see the $1.6M - $2.6M market to tail off any time soon. You can get significantly more house in San Rafael for under $2M compared to being unable to secure a house under $2M in markets in Southern Marin. This alone should ensure the market continues to trend upward in the face of 6 projected rate hikes coming before the end of 2023.

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