July 12, 2007
JustQuotes: Not Too Scary In San Francisco (Unless You’re The One)
“In the nine-county Bay Area, 3,383 households received default notices in June, more than double the 1,460 in June 2006. Alameda and Contra Costa had the highest number, with slightly more than 1,000 such notices each, followed by Solano with 557 default notices.”
“Contra Costa County had 1 foreclosure notice for every 198 households, while Alameda County had 1 notice for every 440 households. At the other end of the spectrum, Marin County had 1 foreclosure notice for every 2,625 households, while San Francisco had 1 such notice for every 2,179 households.”
∙ Foreclosure activity rises dramatically [SFGate]
First Published: July 12, 2007 10:25 AM
Comments from "Plugged In" Readers
Effect on SF is immaterial so far. But when a 3/2 rancher in Walnut Creek is going for under $500K, will be tough to sell a parkingless one-bedroom in the city for the same amount.
Posted by: Dude at July 12, 2007 10:57 AM
Agree with Dude except the part about the effect on SF being immaterial so far. The Chron story only discussed part of the underlying data, the formal foreclosure notices. The full numbers from RealtyTrac reveal that over 1000 homes in SF are in trouble with their loans -- 463 are in "pre-foreclosure" meaning generally that a notice of default on a payment has been sent; 167 have been "foreclosed" meaning they are being sold off; and 450 are already owned by the bank, which will sell them (typically).
These numbers are a little imprecise since they are a snapshot and do not necessarily show the trend, but the raw numbers are high -- much more than "1 in 2179" is in trouble.
Posted by: Trip at July 12, 2007 11:29 AM
And yet, prices in SF still march higher, and the stock market is at a record high today. I'll take this type of 'world is coming to an end' scenario anyday! :)
Posted by: o at July 12, 2007 12:06 PM
Please spare us all the "look at today's stock market" crap. It dropped 150 points earlier. Was that the end of the world or do you only pay attention to the up days? Besides, nobody said it's the end of the world. (Oh, wait. Someone did. It was you.)
Thanks Dude and Trip for actually adding comments with value. I agree with both of you. SF has done well and you have imaging that NODs have mostly gone out to folks in rougher parts of town. (Do a search on craigslist and you'll see short selling going on in Daly City, Bayview, etc.)
Median is up but volume is down. If you lop off the bottom of the market by squeezing credit, that's what happens. It's happening in LA too.
Posted by: anon22 at July 12, 2007 12:36 PM
Local notices of default won't have nearly the same impact as nationwide NODs, because nationwide NODs cause investors to lose their appetites for funding mortgages. And it's the ease of funding that has fueled the boom/bubble, not supply and demand. Local NODs make for slightly larger supply, but it will never be enough here to make that big a difference.
Of course, if the mortgage investors head for the exits, they may choose to put their money in the stock market, which will go up. Someone here will no doubt post how "good" that is for the local real estate market. But they'll be wrong.
Posted by: tipster at July 12, 2007 1:00 PM
housing tracker has started to follow REOs (along with inventory, asking prices, and affordability indicators), starting on 5/4/07 with 8 REOs for the Bay Area pegging the index at 100.
While the data is probably to new to be of any real use it will be interesting to follow.
FYI - the index currently stands at 200 with 16 REOs.
Posted by: badlydrawnbear at July 12, 2007 1:24 PM
Trip, 450 REO houses in San Francisco is impossible! Everyone knows San Francisco is different. The reason I think you are lying is these REO houses would have been snapped up by international investors and second home owning baby boomers just looking for that weekend get away in the city, long before they got foreclosed on.
Even if they got foreclosed on there would be legions of buyers bidding over asking at the auction. You sir, are messing with reality.
Posted by: MexiforniaUberallis at July 12, 2007 4:18 PM
"Please spare us all the "look at today's stock market" crap."
This isn't totally immaterial. If someone had $400k in stocks last year it's $500k today; while that technically only gives them $100k more buying power the wealth effect may lead to more extravagant bidding. It gets boring watching money grow in a brokerage account -- Americans have to buy *something*. And don't forget about all the Googlers and Apple employees (and many other tech companies with stock run-ups) currently renting in SF. I'm not saying that "o"'s post is on the money, but if stocks stay high that can have a non-negligible effect on high-end housing prices. (Granted, bond yields will likely rise if stocks continue to rise which decreases housing affordability.) I've met one young Googler that casually mentioned that she was thinking about buying a 1BR unit in SF in cash.
"But when a 3/2 rancher in Walnut Creek is going for under $500K, will be tough to sell a parkingless one-bedroom in the city for the same amount."
Personally, I wouldn't live outside of SF for any price. Life's too short to miss out on all the day to day things I experience living here. My friends are here. And I can walk or bike everywhere so let parking spaces go for $200k like they do in Manhattan (http://www.nytimes.com/2007/07/12/us/12parking.html).
Posted by: Gdog at July 12, 2007 5:26 PM
Hallelujah, Gdog. You said it all, and summed it up nicely!
Posted by: movingback at July 12, 2007 8:44 PM
Hilarious....How many of you really think it's boring to watch your money grow?
Posted by: anon at July 13, 2007 9:40 AM
These foreclosures in Contra Costa are mostly affecting the eastern parts from Concord and beyond, not the more desirable western part, and until it does so, SF will be safe.
Posted by: Doug at July 13, 2007 11:00 AM
The counties outside of San Francisco that have been the hardest hit are reflective of the same in other parts of the country -- areas where there has been the greatest amount of new single-family home construction, or 'tract housing'. These areas were mainly fueled by speculators and investors/'flippers' -- in some areas up to almost 50%. So these areas have been very hard hit. Sacramento area, Las Vegas, many areas in central and South Florida, Phoenix, Northern Virginia, and many parts of Southern California. This is also what drove very much of the sub-prime market. Like Gdog said, I would not want to live outside of San Francisco for any price -- or way out in the suburbs for that matter. Nor can you compare what is going on in the markets in the major or large cities such as San Francisco, New York, Washington DC, Los Angeles, etc. with their outlying suburban areas. Markets are all local, very local. Not so much about everything that you read or hear in the news. Anon -- nothing boring about watching your money grow!
Posted by: movingback at July 13, 2007 11:34 AM
My experience over the last dozen years working for Wall Street is that both a bull and bear market in stocks are good for real estate. As the stock market goes up, some people take some of their profits and buy a bigger place to live. When the stock market goes down, some people decide to dump their stocks and go into real estate. Makes no sense but that is what I have seen people doing.
Posted by: Rillion at July 17, 2007 4:26 PM