According to DataQuick, the median sales price for existing homes in San Francisco was $799,000 last month, up 3.1% compared to a revised July ’06 ($775,000) but down 3.2% compared to the month prior. More significantly, sales volume was up 4.1% year-over-year (564 sales in July ’07 versus a revised 542 sales in July ’06) but fell 10.9% compared to the month prior (633 recorded sales in June ‘07).
For the greater Bay Area, the recorded median sales price in July was $665,000 (a revised year-over-year increase of 4.1%) and sales volume was 7,423 (down 12.4% from a revised 8,476 sales in July ’06). At the extremes, Solano recorded a 9.8% year-over-year reduction in median sales price (and 36.7% fewer sales) while Marin recorded a 13.9% year-over-year gain (on only 1.0% fewer sales), and year-over-year sales volume continued to drop in both Contra Costa (down 24.0%) and Napa (down 38.4%) counties.
∙ Bay Area home prices steady, slow sales [DQNews]
∙ San Francisco: Sales Metrics Moving In Different Directions (Again) [SocketSite]
The DQ numbers continue to be encouraging but the real story will be down the road. It will be interesting to see the August/September numbers in terms of the number of sales given the ongoing mortgage crunch.
the silence is deafening.
It is pretty quiet. Of course, all the buzz lately comes with bad news. Encouraging news doesn’t get much recognition. I would expect sales volume to drop signficantly next month, but prices will likely hold their own. What’s most interesting in the DQ numbers is the beating that Solano is taking and the relative strength of Marin and SF.
New affordable homes in distant suburbs have been the first to feel the pinch…Solano, Eastern Contra Costa County…not to mention Sacto and Central Valley. These are the areas which first felt the problems with subprime mortgages (remember, we don’t really have them in SF to speak of..) And they are also the areas where builders have been throwing up homes like crazy assuming that demand is infinite. And when it wasn’t, those same developers dropped prices to try to clear the shelves. Homeowners do not tend to do the same thing…at least not quickly.
The next couple of months (and beyond) will be VERY interesting for San Francisco. Because now we’re having a credit crunch that is affecting Alt A and Jumbo loans…and that we DO have in spades. (As has been discussed here ad nauseum). With all the new condos coming on line, it only makes sense that we’ll see the same shelf-clearing behaviors in SF.
It’s clearly going to be a bumpy ride….
Any predictions for prices in the established neighborhoods (i.e., *not* SOMA/South Beach/Mission Bay) of San Francisco in the coming months?
Ok.
When SOMA/South Beach/Mission Bay goes down it will provide a cheaper alternative to the established areas and their prices will have to come down to compete.
Nope. Remember: location, location, location.
Not all neighborhoods have folks enjoying drugs in their cars or using storm drain cleanouts as urinals (I lived there for four years).
SOMA is an althernative to, say, Pac Heights, right by this logic? Both buyers may be getting loans from the same place, but after that — I don’t think you can lump everything into a pot and dial it down some arbitrary percentage.
And I don’t live in Pac heights or SOMA (anymore).
Yup.
The difference in neighborhood amenities is already priced into the current area prices.
If one area goes down the others will follow.
I’m with Diemos. There may be a time lag (as in far east bay falling apart now, while SF has been steady)….but ultimately everything affects everything else. And SOMA and Pacific Heights are a lot more linked than Pacific Heights and Antioch.
I would think condos will go down MORE, just because there is so much coming on the market at the same time, going after the same demographic. But the differential WILL encourage some people to choose SOMA over the Marina, and others to choose the Marina over Pacific Heights, blah blah blah affecting everyone in the end.
Ok, diemos, you keep waiting for your $200k Pac Heights house. The price of oranges usually does not drop because the price of apples does – Pac Heights is much less of a “housing” area than it is a “status” area. Perhaps a few condos might suffer, but you’re not going to see a big decline at the top end properties.
I don’t believe Diemos ever suggested such a thing, Diemos Checker. You’re putting stupid words in his very sensible mouth
$200K pac heights is a little lower than I would predict. But in previous threads I have already stated my prediction so I’ll say it again.
Based on historical rent and income to home price ratios, in 2011 everything in the city will be half off their peak values.
And I made that prediction when I thought it would take a couple of years to kill off the funny money lending and return to traditional standards. Never in my wildest imaginings did I expect that the non-traditional lending would stop dead in it’s tracks over the course of a week.
I find it fascinating that SF is selling as many homes in July of 2007 as were sold in January in the dead of winter of 2004. No wonder the mortgage industry had to fill the pipeline with all sorts of liar loans, etc. They’re running on half the volume of 2004. And without the 70% of the loans that were alt-a (i.e. highly likely to default) volume would be at 15% of 2004. What industry could survive on 15% of the volumes?
Now you see why they gave a loan to anyone. They had to, just to keep their volumes at HALF of what they were.
The disaster now unfolding should have been obvious just from that graph. You can very clearly see that they ran out of buyers three years ago and started handing out three year teaser loans like candy just to stay alive. What a coincidence that it’s three years later and the problems are exploding like an overstuffed marmot.
Those that were foolish enough to buy a house based on a ‘liar loan’ and could not have afforded to buy a home otherwise will definitely suffer the most. There are still plenty of people out there that can afford to buy, and are doing so. Markets are local, as a matter of fact, very local, even specific to zip codes. The same thing is going on in other cities such as New York, Miami, and many parts of Washington, DC. There is no ‘disaster’ unfolding for everyone, as many of you wish to believe. This blog is more entertaining than anything, all post center around the ‘unfolding disaster’ and the doom and gloom that awaits all homeowners in the Bay Area and around the world. So entertaining!
Well countrywide JUST announced (4:50 AM PST) that is was drawing on ALL of it 11.5 billion global line of unsecured credit to maintain liquidity and will tighten it’s lending standards and expects 90% of all loans to be GSE complaint, meaning it is basically getting out of writing jumbo mortgages.
Too funny BadlydrawnBear…
I just posted the same thing on the previous thread.
here’s the link to CountryWide’s statement:
http://about.countrywide.com/PressRelease/PressRelease.aspx?rid=1041245
(their site is overwhelmed with traffic right now, and can’t handle the volume).
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SF will drop eventually in price, but IMO it will be a combination of nominal price drops and inflation… but mostly inflation losses
I foresee a total drop of maybe 30-35%, BUT most will be due to inflation (like the last downturn in 1988-92). So perhaps 10% nominal price drop combined with 3-4% inflation per year for 5 years. e.g.; an $800,000 house will go for $720,000 in 2012 but the dollar will be worth 20% less than it is today.
The downturn will take an agonizingly long time… I’d guess 5 years or so… like watching paint dry.
this would go much quicker, but governmental interference will soon commence.
we’re coming up on an election year and the treasury secretary had to spend yesterday and this morning assuring people that we probably won’t slide into a recession. The U.S. markets have lost 10% in a month. I think government is going to be forced to do something because now the pain is affecting wall street and big corporations through declining share prices and tighter financing. Freddie Mac just announced it’s stepping up it’s purchase of Alt-A and Fannie and Freddie are going to take another shot at getting the Senate (House is a lock) to allow them to purchase bigger mortgages. A couple of weeks ago I would have said this wouldn’t happen, but after the market losses, all of these Senators running for president are going to want to do something to claim they are easing the crisis and helping the economy.
I also think the fact that the lax credit market has unwound so quickly is a sign that this whole process will play out much quicker than many anticipate.
@BDB, ex-SFer: The AP press release has a funny and misleading statement in their story about countrywide:
That’s not why the loans are considered safer — they are safer because they can be sold to someone, anyone (e.g., Fannie/Freddie) 🙂
The government has already decided that other than dealing gingerly with panic situations, they are going to let this thing blow.
And there’s really no political support for helping people get jumbo mortgages. Other than a handful of very small cities, the rest of the country really doesn’t use them very much.
“I think government is going to be forced to do something”
Do what though? The government is as leveraged as half these homeowners/speculators now defaulting. They can’t really borrow for a bailout. The US runs on foreign capital, which is now fleeing. To encourage it to return, you need to raise rates, not lower them. Personal, corporate, and government leverage is near record highs, rates and dollar near record lows…..and let’s not get started on that whole Iraq thing.
I think the government will try to do something, at least for window dressing. But just not sure what levers they can pull that fix this and don’t cause huge problems in other parts of the economy.
Ummm… actually the article about Countrywide said that 90% of loans will be conforming or otherwise comply with it’s tighter lending standards. It never said that 90% of originations would be conforming loans. That’s a pretty big difference.