Buying and Selling Guide to Real Estate in Novato

As a top-producing local real estate team, we’re committed to giving you excellent, personalized service. This guide offers a timely analysis of the housing market in Novato, California, that will answer your questions and help you develop winning buying and selling strategies.

While the fundamentals of developing a winning buying and selling strategy remain the same, you should also consider current local housing market indicators. To give you an overview of the Novato market, this guide will cover the following topics:

 

• Housing Market Behavior in an Elevated Rate Environment and Low Inventory-----
• Supply and Demand Trends for Single-Family Homes and Condos in Novato------
• Key Housing Market Indicators for Novato
• Listing a Home at the Right Price

The single-family home market experienced --------- Similarly, median condo price ---contracted/increased--- --% from --- to ---  

 

Year over year, the median single-family home price in Novato was --% ---higher/lower--- in February 2025 than 2025, while condo prices ---rose/decreased--- --%. 

 

Supply and demand and mortgage rates have significantly driven prices over the past year.. Locally, Novato experienced a --% drop in homes sold year over year, which isn’t surprising given the --% decrease in inventory. ---------

 

The average 30-year fixed mortgage rate in the United States has more than doubled since December 2021, increasing by about -- percentage points, negatively affecting affordability. For example, increasing a homeowner’s interest rate by just 1% would cost them about $500 per month on a $1,000,000, 30-year mortgage. Even with sustained higher mortgage rates, low inventory ---boosted prices--- in 2024.

 

Sales and new listings ---increased--- in the first half of 2024 for both single-family homes and condos, but at a significantly depressed level. Single-family home inventory was ----notably low---- in 2025, but condo inventory continued to rise through ----, hitting a ----- low/high----. Inventory dropped/rose significantly in November and December, which is normal for Novato. In 2022, buyers and sellers rushed to the market in the first four months of the year to lock in their mortgage rate once it became clear that rates were going to move much higher. Demand softened, as well as supply, and inventory fell. The market has become much slower, with far fewer new listings in 2023, and the market needs new listings to have more sales. Comparing total new listings and sales, the number of sales was 19% lower than in 2022, while new listings decreased 24%.

 

Months of Supply Inventory (MSI) — the measure of how many months it would take for all current homes for sale on the market to sell at the current rate of sales — is typically low in the area. In California, the long-term average MSI is around three months, which implies a balanced market that doesn’t favor buyers or sellers. Novato is almost always in a sellers’ market for single-family homes due to the low supply relative to demand, while condo MSI tends to vary more month to month. MSI currently indicates a ----strong sellers’ market for both single-family homes and condos----.

 

In this section, we analyze the single-family home and condo markets across several key indicators to provide the necessary information for you to refine your winning buying and/or selling strategy. As market conditions change, we can look at the data in real time to make the best decisions. 

 

In February 2025, single-family home prices ----increased/decreased---- year over year in terms of median price and price per square foot. Because few condos sell in a given month, average price per square foot, which is down --% year over year, is a more accurate metric than median price. ----Single-family home sales ----increased/decreased--- despite a significant ----decline in inventory----, highlighting the high demand in Novato.

 

The current housing market favors ---sellers/buyers---- in Novato.

MSI was ---low/high--- in February for single-family homes and condos, which implies that the market favors ---sellers---. -----Because the environment favors sellers, we might see more inventory come to market. However, generally, fewer new listings come to market in the fall and winter months. We expect fewer new listings and sales than normal, and for inventory to hit a record low this winter.------

The Days on Market (DOM) implies that sellers should expect offers to be accepted in about --- days for single-family homes and -- days for condos. If it takes longer to receive offers, sellers should consider reducing their prices. Buyers should proceed with caution and consult with an experienced agent before making an offer on a home that has been on the market for longer than the average DOM because the price may be too high, or something may be wrong with the property.

Sale-to-list-price ratio — a measure of the difference between the original list price of the home and the final sale price — reflects the negotiation power of homebuyers and home sellers under current market conditions. The average single-family home sold for --% of its original list price while, on average, condos sold for --%, which means buyers and sellers should expect to ----negotiate offers below list price----. However, we will see in the next section that properly pricing a home can make a huge difference in the percentage of list price the seller receives.

 

We can split homes sold into two categories: homes sold without price reductions and homes sold with one or more price reductions. Price reductions may indicate problems that need to be fixed, poor marketing, and/or bad showings. More often, however, price reductions occur because the home was overpriced and misaligned with market data from the time it was first listed.

Overpricing a home can create a negative feedback loop. Initial offers fail to materialize because the home is overpriced, the Days on Market surpasses the average, and new potential buyers assume there’s something wrong with the property. More price reductions and low offers might follow as the home sits on the market, causing the final selling price to come in below what the property could have garnered had it been priced correctly in the first place.

For an example of such a scenario, we can look at the February 2025 single-family home data.

 

A total of ---- homes sold without price changes, recording an average of --% of their original list prices and spending -- days on the market. In contrast, the ---- homes that sold with one or more price reductions recorded only --% of their original list prices (on average) and spent over ---twice--- as long (-- days) on the market. These numbers underscore the importance of a well-informed pricing strategy. 

 

In the first quarter of 2025, we anticipate fewer new listings and sales due to normal seasonality and the current economic environment. Even though mortgage rates fell in February 2025, the cost to finance a home is still more than enough to price a fair number of buyers out of the market. Higher mortgage rates also impact sellers, since they are often buying in conjunction with selling their homes. Unless the seller in questions sells a home for more and buyer for less in cash. All that said, demand for homes in the area will likely outpace the homes on the market, creating price support. ---The data show that housing has remained consistently strong through this period---. 

As always, we remain committed to helping our clients achieve their current and future real estate goals. Whether you’re planning to buy or sell, we can guide you through the options that best fit your needs. Deirdre and I as experienced professionals are happy to discuss the information we’ve shared in this white paper. We welcome you to contact us with any questions about the current market or to request an evaluation of your home.