S&P/Case-Shiller Index: June 2007 (www.SocketSite.com)
According to the May 2007 S&P/Case-Shiller index (pdf), single-family home prices in the San Francisco MSA slipped 4.0% year-over-year and fell 0.7% from May ’07 to June ’07. For the broader 10-City composite (CSXR), year-over-year price growth is down 4.1% (down 0.5% from May).
S&P Case-Shiller Index Change: June 2007 (www.SocketSite.com)
The standard SocketSite footnote: The S&P/Case-Shiller index only tracks single-family homes (not condominiums which represent half the transactions in San Francisco), is imperfect in factoring out changes in property values due to improvements versus actual market appreciation (although they try their best), and includes San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., the greater MSA).
U.S. National Home Price Index Posts a Record Annual Decline (pdf) [Standard & Poor’s]
May S&P/Case-Shiller Index: San Francisco MSA Continues Decline [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by j94109

    None of this applies to the nice areas of SF. Last month, a condo sold in my building in Russian Hill for $840k — which is $80k higher than any condo that sold in that building the year before (all the units are 1100 sq. ft. 2/2s). It looks to me like, even in a “down market,” prices are up 9.5% in Russian Hill once again!
    [Removed by Editor]

  2. Posted by badlydrawnbear

    Unfortunately that condo has nothing to do with the CSI.

    The S&P/Case-Shiller index only tracks single-family homes (not condominiums which represent half the transactions in San Francisco)

    and really that should read the CSI only tracks resale of existing single family homes. The CSI does not track new construction, to the best of my knowledge.
    [Editor’s Note: That’s correct with regard to new construction (no baseline arms-length sale price from which to measure any change).]

  3. Posted by Michael

    “None of this applies to the nice areas of SF.”
    I can only hope you are being sarcastic.
    “a condo sold in my building in Russian Hill for $840k — which is $80k higher than any condo that sold in that building the year before”
    You seem to be missing the whole ‘apples to apples’ point of the CS index. Lets see some hard data on that condo and the building. Address?

  4. Posted by j94109

    Ok, 1545 Broadway St.
    Prices are up 10% this year at that address. Prove me wrong.

  5. Posted by anon

    J94109: From a single sale of a single condo at a single address, you conclude: “It looks to me like, even in a ‘down market,’ prices are up 9.5% in Russian Hill once again!” That sweeping conclusion is what is being criticized as baseless.

  6. Posted by fred

    J94109 is being facetious.

  7. Posted by anon

    While J94103 is clearly being facetious, there is a staggering degree of gleeful schadenfreude on this this site. It’s pathetic.
    [Editor’s Note: With regard to schadenfreude: Eyes Wide Open: Looking For Lessons In Other’s Unfortunate Mistakes.]

  8. Posted by anon

    Guess j94109′s wit was too subtle for my thick brain to pick up on.
    But I certainly don’t see a staggering degree of gleeful schadenfreude on this site. Until very, very recently, the voices in the local press and the RE industry were nearly in unison that the SF real estate market is hot and prices are only going up, up, up. A few on this board pointed out that neither history, economics common sense, nor the data really support that view. That minority view is now the overwhelming consensus.
    If there is any glee, it is in a return to sanity and the potential to buy a reasonable place in SF in the near future that is not absurdly overpriced.

  9. Posted by tipster

    It seems harder and harder to imagine in the face of this data and the mortgage meltdown that the builders of those big towers claiming they intend to “raise” prices next year is anything other than a ploy to convince the deposit holders to close, in an attempt at appealing to the greed of the option holders who imagine “instant equity” in what is, in reality, a declining market.

  10. Posted by anon

    “If there is any glee, it is in a return to sanity and the potential to buy a reasonable place in SF in the near future that is not absurdly overpriced”
    Doubtful, unfortunately.
    The non-conforming mortgage requirements will keep all a precious few out for a while. Only the truly desperate will sell during that time and the super-qualified will be the buyers.
    Then will be a stasis for a while. Prices won’t drop as much as people think.

  11. Posted by badlydrawnbear

    Anon 11:43 … ‘Prices won’t drop as much as people think.’
    Well that depends on who(m)? you mean by ‘people’.
    Considering that this data represents the steepest decline for the CSI in its 20 year history and that the data is the for the 2nd quarter of 2007 (before the August credit squeeze and tighter lending standards kicked in) we can, at very least, expect several more quarters of declines in the CSI.

  12. Posted by AC

    Well, if Infinity is actually able to sell the second tower at higher prices then I guess they are right, wouldn’t you say? If the marketing team can convince buyers that high prices are justified, and people believe it and buy the units….then it doesn’t matter whatsoever what socketsite readers think about pricing trends. At the same time some socketsite readers think that prices are high, many other people may think prices are just dandy.
    As an example, BMW San Francisco can sell tons of cars at full retail price or even at a $10-$20k markup for hot cars (not negotiable) because so many people are willing to pay a high price. It’s not good or fair for people who want bargains, but that’s the way it is…a group of people willing to pay elevated prices can mess it up for everyone else.
    I am wondering what everyone is going to be saying next summer if this magical real estate price drop never appears?

  13. Posted by anon

    “Only the truly desperate will sell during that time.” There is no basis for that prediction. There will always be plenty who have to or want to sell because of a new job elsewhere, moving for better schools, etc. And anyone who bought before 2005 still could make a tidy profit by selling now. In fact, they would be smart to sell now in my book. Lastly, given the big numbers who bought in 2006 and 2006 (or refinanced) with funny mortgages that are now re-setting, we are seeing and will see more “truly desperate.” Add all that to the greatly diminished pool of potential buyers who could even get a mortgage now, and the odds are that price declines will be fairly steep.

  14. Posted by anon

    “There will always be plenty who have to or want to sell because of a new job elsewhere, moving for better schools, etc.”
    These fall into the category of “truly desperate” if they’re willing to take a bath to sell. That’s just true.
    “Lastly, given the big numbers who bought in 2006 and 2006 (or refinanced) with funny mortgages that are now re-setting, we are seeing and will see more “truly desperate.””
    No matter how funny those mortgages, very few of them reset in one year. Maybe three or five, but very few do in one. Again, that’s just true.

  15. Posted by anon

    Anon 12:30, I agree that if you define “truly desperate” as anyone willing to sell, than only the “truly desperate” will sell.
    You caught my typo: mortgages will be resetting for those who bought in 2005 or 2006. The popular 2/28s are starting to reset now, and those resetting in 3 or 5 years are soon to follow.

  16. Posted by badlydrawnbear

    anon 12:30 … actually, thanks to Credit Suisse we know exactly when these mortgages are resetting. Here is a link to the reset chart that has made the rounds on the net.
    http://www.bubbleinfo.com/statistics-2007/2007/3/15/arm-reset-schedule.html
    You can clearly see the Oct ’07 peak of $50 billion in resets (data point 11) and while the wave subsides after Sept ’08 you can see that there is second wave of resets out there waiting as well in ’10, but hopefully things will have picked up before then, hopefully.

  17. Posted by Craig

    Would the SF-specific Credit Suisse chart look the same as that? Maybe, maybe not…

  18. Posted by Amen Corner

    “Then will be a stasis for a while. Prices won’t drop as much as people think.”
    My prediction is that sales will drop significantly, the median will rise, and the Case-Shiller index will continue to decline gradually.

  19. Posted by howard

    We are all data driven here – and the data will be coming in: the August DQ and CSI results, pricing at Infinity 2, etc. I am projecting (and yes hoping) that significant price declines will start to become evident. But, we will all see.
    Regarding BMW San Francisco, I tried to buy a Mini there a couple years ago. They had a non-negotiable dealer markup. They said it was supply & demand and that people were paying it. So I went to Mini of Concord and got the exact Mini I wanted for slightly less than sticker with no dealer markup. And I get the car serviced in San Francisco. I know that supply and demand create the market and set prices – but it would be great sometimes if San Franciscans just refused to pay ridiculous prices.

  20. Posted by John

    You cannot buy a house in Concord and move it to SF.

  21. Posted by Dude

    AC – No offense, but sounds like you’ve gone from drinking the Kool-Aid to swimming in it. People’s willingness to pay inflated prices may not have diminished, but their ability to finance them certainly has. This “meltdown” has taken the proverbial gun away from many monkeys, so to speak.
    I have a friend who works at BMW SF – I can assure you they do not have $10-20K markup in cars – try $1-5K max. If they did, people would drive to Sacramento and buy there for $10K less. Or fly to LA for $200 and save $9,800. Cars being a commodity (and transportable), it’s not really a good analogy. Fine art would have been a better one, but anyway…
    Back to your point, what will you be saying next summer if we’re right?

  22. Posted by Michael

    “Would the SF-specific Credit Suisse chart look the same as that?”
    I doubt there’s a significant difference in timing between resets in SF and the rest of the country – likely driven by macro trends of the mortgage market/rates rather than anything local.
    The chart that would look different is the percentage of mortgages that will reset as SF has been running well above the national average in terms of ARM use. Any impact of rate resets will be amplified in SF.
    The BMW analogy is fine. The dealer markup becomes a discount as soon as a new model arrives or supply catches up to demand. Millennium arrives soon, more buildings are on the way and sales are down.

  23. Posted by tipster

    You can’t buy a home and move it to Concord, but people who are 60+ are going to think long and hard about whether they really want to stay in SF and retire with half as much $$ or move to Concord right now and sell their homes in SF.
    It isn’t just people who bought in 2005-2006. Lots of people will decide if they were planning on selling in the next 10-20 years, maybe they should do so NOW.
    So we’ll get half of 10-20 years worth of those sellers selling in the next 18 months.
    The declines are FAR greater than even I thought possible, and the post meltdown numbers are two months away.
    I’m happy that I elected to wait, but I feel badly for the legitimate businesspeople who buy and renovate homes. I assume the construction loan market will be dead in the water for at least a year. I own my own business and I do sympathize with that group.
    I think the realtors are going to make out in the next 18 months as all that inventory comes online. If you can hold on for a few months, do so. The great unwind is upon you and business will never be so good. If you are thinking about leaving because sales are slow and things aren’t looking up: wait. The next 18 months will be the best years for realtors ever.

  24. Posted by Willow

    On the car discussion, if you’re paying full MSRP for a BMW in SF then you are not doing your due diligence. You can get almost all BMWs below MSRP perhaps with the exception of some M Models. Check carsdirect.com or edmunds.com

  25. Posted by Craig

    I think that at least half of what Tipster just said is complete hot air. HALF of the next 10-20 years compressed into the next 18 mos?
    Seriously?

  26. Posted by Dude

    I think tipster is being a little melodramatic. You’ll see some increase in inventory from those displaced by ARM resets. Hopefully many of those people have refi’ed into conventional loans recently…or can afford to do so in the coming months. Not sure how busy realtors will get…I suspect workout groups at mortgage lenders will be busier.
    As for the smart money trying to time the market and sell at the peak…I think that’s already happened, for the most part. Several readers here have at least posted to that effect.
    In my humble opinion, you won’t see inventory triple overnight and prices to drop 20% in a month…real estate just doesn’t work that way. Any drops will be slow and steady, over the course of a few years. Those hoping to buy in Pac Heights for $400/sq.ft. next year are daydreaming. Those waiting to buy newer construction in SOMA for $600/sq.ft. in 2-3 years…or an SFR in Parkside for $300/sq.ft……that’s likely.

  27. Posted by tipster

    The rate of decline as of June was running 8% per year in the SF MSA. That shocked me. And that was BEFORE the mortgage meltdown.
    I can easily see something approaching a 20% decline rate starting in September, after most pre-meltdown rate locks disappear.
    If your home is worth $1+M and it’s dropping by $200K per year, I think most people who had in the back of their mind that they would sell and leave the bay area will accelerate that decision.
    It isn’t the resets that will force prices down: it is the retirees who don’t have 20 years to wait for prices to recover. When that -20% number hits, watch how fast they fly out of here. Down 8% from May to June, right around the peak buying season? And with the dot com meltdown and Japanese real estate meltdown fresh in everyone’s heads?
    The retirees will start it and then, sensing a panic, others will jump in too. Anyone who bought or has a place bigger or more expensive than they need will wonder why they don’t own something smaller.
    Watch how fast this unravels. Melodramatic? Were any of you expecting such a big drop?

  28. Posted by anon

    I’m in agreement with tipster on the predicted declines, although I would be surprised if it unraveled quite as fast as he foresees. But on the substance, for anyone who bought before 2004, and especially for the hundreds of thousands who bought before 2000, there is a huge amount of appreciation even with 20% declines. A large number are going to tap that and sell while the gittin’ is good. The notion that nobody will sell in a world of declining prices is absurd.

  29. Posted by Craig

    “San Francisco MSA slipped 4.0% year-over-year and fell 0.7% from May ’07 to June ’07. For the broader 10-City composite (CSXR), year-over-year price growth is down 4.1% (down 0.5% from May).”
    Am I reading something wrong here? I don’t see where the 8% is coming from.

  30. Posted by John

    If Tipster’s prediction is true, then why hasn’t SF’s inventory increased at all? The over-inflated RE price has been a hot topic for a while now in the news, you would think the potential sellers would have acted.
    My prediction is, the market will see lower inventory because most owners can afford and will wait it out, and we will see lower # of sales, and somewhat lower price. However, with the higher mortgage rate, it will be a tougher market for the buyers simply because there is no inventory.

  31. Posted by Dude

    I would love to wake up on November 1st and find half the city on sale for 70% of today’s prices. Not gonna happen, for several reasons. My fellow bears will likely turn on me for this, but:
    1. Go back historically and trace prices to incomes. A 15-20% hit puts this market back at equilibrium (also meshes with ~4% annual appreciation over the long run). This is a floor – the upcoming correction won’t push prices lower excepting some temporary J-curve effect. Too many sideliners here can and will buy after a 15% drop (myself included).
    2. Those who bought pre-bubble will be fine even if prices fall 20%. If they haven’t HELOC’ed themselves to oblivion yet, they can even rent their places for a good cap rate. So life changes like moves or retirement will not force a sale unless they like the price.
    3. Real estate is a sticky market – lots of friction. Those forced to sell due to foreclosure will have at least 6 months from their first missed payment until their place is REO, so the “reset tsunami” effects won’t be seen in full until next fall.
    4. The large towers in SOMA will not go to close until 2008. Look for significant pressure once that inventory hits the market, either as rentals or “New Price!” specials.
    I agree a sizable correction is coming. And I know we all love the binge and purge scenarios. But real estate as an asset class simply doesn’t behave that way. This will take time.

  32. Posted by John

    Another point against Tipster’s arguments:
    For anyone who want to move from one property to another, it is a side way move and the current RE market condition won’t matter. If a retiree wants to move, if the market is good, he would sell at a high price but has to spend high to buy the new property. If the market is not good, he won’t get as much for his existing home but he won’t need to spend as much on the new one either.
    However, the mortgage rate matters. Unless the retiree has paid off the house here in SF (unlikely, given the US culture), he would need to get a new mortgage. Since he probably already has a extremely low rate if he refinanced over the last few years, it makes absolutely no sense to make a sideway move into a new property, dumping a low rate mortgage into a high rate one.
    So, it is LESS LIKELY that the retirees would want to sell right now.

  33. Posted by Spencer

    “If Tipster’s prediction is true, then why hasn’t SF’s inventory increased at all? The over-inflated RE price has been a hot topic for a while now in the news, you would think the potential sellers would have acted.”
    where have you been? the inventory is WAY up

  34. Posted by missionbay res

    “If Tipster’s prediction is true, then why hasn’t SF’s inventory increased at all? The over-inflated RE price has been a hot topic for a while now in the news, you would think the potential sellers would have acted.”
    where have you been? the inventory is WAY up”
    No, actually inventory in SF is still LOWER than the same time last year. It may be creeping up slowly, but it’s certainly not WAY up.
    http://www.socketsite.com/archives/2007/08/san_francisco_listed_housing_inventory_update_81307.html

  35. Posted by Chris

    I don’t think retirees would want to finance a place again, if they do, it would be a very small amount. They will rent and have that money for retirement.

  36. Posted by tipster

    If you drop 0.7% every month for 12 months, you drop 8.4% per year. Am I reading that number wrong? I expected it to rise 0.1 or 0.2% during what has been traditionally the strongest month in real estate. I’m shocked that it dropped and by that much. 4% YOY with a 0.7% drop means it is accelerating because last month was almost twice the average.
    And the wave of people selling who don’t have time to wait for real estate to recover won’t start for a few more months. People usually deny that these sorts of problems exist until it hits them in the face. The next door neighbor sells for 20% less than everyone thought. The house down the street doesn’t sell at all and old Mrs. Bradley who lives there really needs the money. That’s when it will hit those retirees that it’s over.
    With mortgages shut off for all but the most credit worthy people (e.g. people who already own), the low end stops selling. Medians go up but the number of sales goes down. People can’t move up. It works its way up the chain. The number of mortgage applications falls (though it will initially rise for a few weeks as people search for, and are turned down for, mortgages).
    As the lower end (i.e. smaller places) prices fall, the retirees realize that they are in the one current position where their house hasn’t fallen as much as the house they want to buy has. These people don’t move sideways, John. A widower rarely buys another 4/3. These are people who will buy a 1 bedroom condo, or move to Manteca and move out of their 4/3 in SF, Marin or the south bay. The pressure will build and they’ll start to drop their prices to get out.
    And don’t forget the real estate industry themselves. Mortgage brokers and the finance industry were making money hand over fist. They’ll start to downsize to reduce expenses so that they can be back in the game when it comes back in 5 years. Those people aren’t going to move sideways either.
    And the current, fewer, buyers at the high end realize that if they don’t get one house, the next one will be cheaper, and there will be more to choose from next week than there were this week, so they stop rushing and take their time. The sellers are all too focused on early August prices to drop their prices to the new reality to gain control of the market. Inventory starts to build. The buyers slow down further.
    The dominoes were all lined up. Todays news starts the fall in motion.
    There is no political way out. The republicans want a bad economy and the democrats are paralyzed to avoid getting blamed for it. The states are picking up the slack, but faced with the prospect of lower property tax revenues in the years ahead, they have no money, so they “help” by requiring additional disclosures to buyers. Which scares even more of them away.
    It will be a great time to be a realtor. The game , always the same, remains, “don’t waste my time”. “No, I won’t market your home endlessly unless you agree to keep dropping the price because I could have sold 5 other homes in the meantime if you had dropped like I told you to, so either you agree to drop or I won’t keep putting time into this place.” Those who realize that sellers are soon to be worthless and the name of the game is large numbers of homes sold as quickly as possible will do well enough when the whole thing drops off., that they’ll be around for the next boom.
    Some people will pull homes off the market and rent them. No doubt, a lot of new condos are already being “sold” to dummy corporations of the developer. The developer claims they are “sold” and quietly rents them out. The suckers think the development is selling, so it drives up interest in the few “remaining” units, the rents, now rising, start to fall again. Those last few buyers face the developer selling off those rental units in a few years at the same time the buyers want to sell.
    I see no way out of any of this. You can drop rates until you are blue in the face, and it still won’t matter, not that they won’t try.
    I’m a business owner. It wasn’t supposed to get this bad so quickly: I’m probably going to lose more money than any house I would buy will drop in value, so there is no glee in my voice. I hope I’m wrong, but I don’t think I am.
    Sorry for the long post but I wanted to address all the points, above.

  37. Posted by John

    Hey, Tipster, Dow Jones just dropped 2.1% today. That means the annual drop is 800%, right?

  38. Posted by Spencer

    If Tipster’s prediction is true, then why hasn’t SF’s inventory increased at all? The over-inflated RE price has been a hot topic for a while now in the news, you would think the potential sellers would have acted.”
    where have you been? the inventory is WAY up”
    No, actually inventory in SF is still LOWER than the same time last year. It may be creeping up slowly, but it’s certainly not WAY up.
    http://www.socketsite.com/archives/2007/08/san_francisco_listed_housing_inventory_update
    The inventory is WAY UP. It’s just that the SF real estate establishment is hiding the inventory so it doesn’t appear on MLS
    http://www.socketsite.com/archives/2007/07/socketsites_complete_inventory_index_cii_q3_2007_san_fr.html

  39. Posted by c-o-n spiracy

    “a lot of new condos are already being “sold” to dummy corporations of the developer.”
    Dude, I mean tipster, whats that all about?

  40. Posted by missionbay res

    “The inventory is WAY UP. It’s just that the SF real estate establishment is hiding the inventory so it doesn’t appear on MLS”
    Well, if you include pending new home sales and upcoming developments, then of course the inventory is going to be higher.
    But I think we were talking about owners rushing to sell before the crash and pushing the inventory WAY up. So far, there’s no evidence that is happening in San Francisco.
    That may happen in the months ahead, but it’s still running behind the inventory of last year.

  41. Posted by ex SF-er

    “I think the realtors are going to make out in the next 18 months as all that inventory comes online”
    -only if there are sales. realtors are starving in Phoenix, Las Vegas, Miami, San Diego, to name a few. Inventory in those places EXPLODED… but buyers disappeared.
    Thus realtors have to spend time and money listing a property that never sells.
    Plus, the boom of the last few years encouraged too many people to go into Real Estate.
    Too many agents, too many unsellable listings= difficult times.

  42. Posted by tipster

    Yes, the buyers ARE drying up. I’m shocked again as new mortgage applications FELL rather than rose in an environment in which many buyers should have applied 2 or 3 times.
    But the sellers will come out and realtors will stop kissing their asses. No more, “List with ME: *I* can get you 110% of the peak price”, as realtors understand that the guy who sold 5 houses for 80 made more money than they did when they sold one house for 110. There haven’t BEEN 5 houses to sell, but now there will be 50. And the realtors will finally get to choose.
    There will be so many houses on the market that the realtors attitudes will change: they’ll only accept a listing if the owner is willing to price it to be sold. Those who don’t will see their work go up and their incomes fall.
    The number of mortgage applications dropped. It should have risen. The second domino just fell.
    The retirees, all of whom got burned by the dot com bust, won’t wait quite so long this time. They’ll bail out at the price it takes to do so because they are out of time. They know real estate cycles are long and they don’t have that kind of time to wait.
    A few more lean months and the second great Realtor boom will start.

  43. Posted by ex SF-er

    “Would the SF-specific Credit Suisse chart look the same as that? Maybe, maybe not…”
    SF’s reset chart looks a little different than the Credit Suisse chart. But it still is one ugly chart.
    I will try to post the report I saw here… but the only copy I’ve seen is copywrighted.
    One can construct SF’s chart though using data already known on this blog:
    (Warning long post):
    First, I’d like to reference the original Ivy Zellman/Credit Suisse report, not a bubble blog (nothing against bubble bogs, but let’s use the real report!)
    The report is EXCELLENT. Here is the March Revision. The chart referenced above is on page 47.
    The report is (I think) interesting and intelligible, even to those who are not financially oriented. (if the first part is too dense or boring, scroll down… it’s lots of charts and tables…)
    Ivy Zellman/Credit Suisse’s ENTIRE report:
    http://www.recharts.com/reports/CSHB031207/CSHB031207.pdf
    ——————————–
    As for your question:
    Let’s describe what we see in Credit Suisse’s chart.
    -there are 2 peaks. The first peak is very tall, peaks around October 2007, and its entire duration is about 2 years. (from Jan 2007 to Jan 2009)
    -the second peak is not as tall, peaks maybe around October 2011, and is spread out longer, over 3 years from Jan 2009 until Jan 2012.
    the first peak is mainly due to Option ARMs (which reset after 2 years). Thus, it is due to the Option ARMs that were originated from January 2005 through Winter of 2006.
    The second peak is mainly due to Alt A and Prime and Jumbo ARMs, most of which reset on a 3, 5, or 7 year schedule. Again, the peak of origination for these was also 2004 until late 2006.
    thus, it makes sense that the first peak is 2 years after 2005 (for option arms) and then 3-5 years after 2005 (due to Alt A/Jumbo ARMs)
    —————
    Looking at dates, and recalling facts, you can create for yourself SF’s chart.
    SF did not have as many Subprime loans originated in 2005-2006. Thus, its first peak is not as striking as the Credit Suisse Report.
    However, The Bay Area DID have a disproportionately high amount of ALT-A and Jumbo ARMs originated from 2005-2006. Thus, its second peak is MUCH higher, although slightly delayed. (those ARMs reset 3-5 years after origination… which means 2008 until 2011).
    So overall: COMPARED TO THE CREDIT SUISSE REPORT:
    1. SF’s reset chart is delayed a little due to SF entering its boom a little later than other markets that used these ARM products. (e.g. San Diego, Miami)
    2. SF’s first peak moulds more with the second peak. this is due to the fact that instead of having ARMs with 2, 3, and 5 year resets originated in 2004-2006 they had ARMs mainly with 3 and 5 year resets originated in 2005-2007
    3. So SF’s reset is more unimodal, and really starts around Jan 2008 (3 years after 2005) and goes through Jan 2012 (5 years after 2007)
    That said, the graph IS bimodal… just less strikingly so… and more due to Alt A and Jumbo ARMs than due to Option ARMs and Subprime ARMs.

  44. Posted by Trip

    Tipster, one part of your “lull before the storm” prediction has some merit — sellers will be on the increase because they either have to sell with re-setting ARMs or because they see that they will only do worse if they wait 3-4 years. But the buyers are gone. You can’t get a jumbo loan anymore (about the only kind that anyone gets in SF) unless you have a big downpayment, very good credit, and a high verifiable income. Add in the element that on the buy-side, anyone who can wait will wait because deals are only going to get better. We’ll see a lot of sellers, but not a lot of sales. I agree that if realtors want to make ANY money they are going to have to start knocking sense into sellers about appropriate pricing, but the real estate boom is over for a long time.
    As an aside, I don’t buy into your flood of retiree sales prediction. Prop 13 makes it very, very cheap for retirees to stay in the homes they bought long ago. They’re in SF because they (like me) like it here, and they aren’t going to be selling in droves.

  45. Posted by ex SF-er

    “Would the SF-specific Credit Suisse chart look the same as that? Maybe, maybe not…”
    that said:
    it doesn’t matter.
    This report isn’t looking at the pain certain metro areas will experience. It’s looking out for INVESTORS in the housing and finance industry as well as certain securities.
    The mortgage lending and securitisation system is (inter)national. they don’t care about SF specific resets.
    If the secondary mortgage market continues to unravel, everybody in every market will pay more for mortgages. You may pay less than someone in Detroit, but you’ll still pay more for a mortgage than circa 2000-2006

  46. Posted by Spencer

    “The inventory is WAY UP. It’s just that the SF real estate establishment is hiding the inventory so it doesn’t appear on MLS”
    Well, if you include pending new home sales and upcoming developments, then of course the inventory is going to be higher.
    But I think we were talking about owners rushing to sell before the crash and pushing the inventory WAY up. So far, there’s no evidence that is happening in San Francisco.
    That may happen in the months ahead, but it’s still running behind the inventory of last year.”
    there are also a lot of homes that have been unlisted from MLS but are still for sale that are on the socketsite complete inventory that i posted. The increased invenotry is not all about new condos. Even when you don’t inlclude those new condos (but do include the ones that have been artifically removed from MLS), the inventory is much higher than last year.

  47. Posted by anono

    Except for new developments, I think this whole “for sale but not listed on the MLS” is a bunch of nonsense. What this really means is that someone can’t get the price they want for their house but they have 3 months left on their listing contract so if their agent happens to pull a “I have this great house you just have to see that’s not listed yet” and talk someone into overpaying then it’ll sell. Otherwise, no one looking for a house is going to know about it- or be very interested in it- because it’s not listed and thus is likely way overpriced.
    If these unlisted homes needed to be sold, the owners would drop the price.

  48. Posted by maieutic

    “Add in the element that on the buy-side, anyone who can wait will wait because deals are only going to get better.”
    I’m still smarting from being a super-qualifed buyer with 20+% down (pre-inspections to boot) in a pack of buyers clamoring to overbid on properties. I’m sure I’ve bid on 15 or more properties! I’m wondering if there’s a right-now opportunity for the likes of me to offer 10-15% less than asking, win the day and not find myself too off the mark in 2-3 years. Live the dream or be the last fool in?
    Testa dura

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