Neighborhood Home Values Holding Up Nicely

A month ago, in The Other Bubble, I mentioned that I live in Marin County, just north of San Francisco and commented on the surprising strength of the local real estate market. Well, things appear to be better than I thought.

Amidst all the talk of the subprime meltdown and impending financial calamities, I found it interesting that not too far from where I live, a house has apparently just gone into contract for $65 million – the full asking price. The Wall Street Journal broke the story this morning, but an old Forbes profile of The Most Expensive House in California is a better stop to read more about Locksley Hall, currently owned by Robert “Toxic Bob” Friedland, a global mining tycoon who earned his nickname by helping to turn Summitville Mine into one of the most notorious Superfund sites.

While I mentioned on Wednesday that I have had a good run with my trading lately, I hasten to add that I am not the buyer. So far, the buyer's name has not been disclosed. One locally famous name worth noting, however, is Olivia Hsu Decker, who handled the listing and whose web site makes for interesting browsing if you are into house envy.

Friedland has renovated the original house extensively and various sources list the current square footage at 10,000 or 12,000. I must say, however, that $6,000 per square foot is not outrageous for the area, especially considering that the views from the site are generally considered to be in the top five in the world.

If nothing else, this transaction will make for some interesting average home sale price statistics in the area. Perhaps some day I can try to sneak it in as a comp...

The Other Bubble

I have visited 47 states (all except North Dakota, Arkansas and Oklahoma) and seen a lot more of this country than most will ever see, so when I look at the various foreclosure and subprime maps that have been making the rounds lately, it is easy for me to picture many of these places and the residents I have met there along the way.

On the other hand, I live just north of San Francisco in Marin County, which in many ways, is like living in a completely different kind of bubble in terms of real estate values, disposable income, attitudes, politics, etc. When it comes to real estate in the area, starter homes in the $3 million range are not uncommon. For some additional context, a couple of years ago my wife and I looked at a local $8.5 million house that lacked a private master bedroom and was in need of a fair amount in the way of repairs.

In spite of the projections by the Marin Real Estate Bubble blog, local real estate has been surprisingly resilient. The Marin Real Estate Report tracks a variety of real estate data and is the source of the graphic below, which shows that for the past seven years, real estate has climbed fairly steadily, at least when adjusted for seasonal trends. The story is different in other parts of California, as comparable San Diego data show, but for now at least, the full extent of the Marin bubble seems to be intact.