February 4, 2008

SocketSite's San Francisco Listed Housing Inventory Update: 2/04/08

San Francisco Active Listed Inventory: 2/04/08 (www.SocketSite.com)

Inventory of Active listed single-family homes, condos, and TICs in San Francisco increased slightly (5.2%) over the past couple of weeks and is currently running just over 29% higher on a year-over-year basis (up 38% compared to 2006). And yes, our Q1 2008 Complete Inventory Index (Cii) will be published this afternoon tomorrow.

UPDATE: While listed inventory is up, according to a plugged-in reader preliminary sales totals for last month are currently down 35% on a year-over-year basis, down 46% as compared to January 2004, and could possibly represent a 14+ year low.

SocketSite’s Complete Inventory Index (Cii) [SocketSite]
SocketSite’s Complete Inventory Index (Cii): Q1 2008 (San Francisco) [SocketSite]

First Published: February 4, 2008 6:45 AM

Comments from "Plugged In" Readers

Listed total sales for Jan 08 stands at 199 - 100 SFH's and 99 condos. For Jan 07, there were 143 SFH sales and 164 condo sales for a total of 307. (Here are some other Jan totals: Jan06 - 295, Jan05 - 352, Jan04 - 371, Jan03 - 334 ... Jan94 - 293.) Keep in mind that the Jan 08 total will continue to rise as additional reportings trickle in - but it may be the lowest monthly total sales dating back to 1994.

Posted by: FSBO at February 4, 2008 9:19 AM

So we're at about 5 1/2 months worth of inventory. Does anyone know how far back you'd have to go to see that level?

Posted by: anon at February 4, 2008 10:00 AM

Interesting data, FSBO.

As of December 2007, the SF median price ($731K) was down 12.5% from its June 2007 high ($835K), which means that it was falling at 23.4% annualized rate (if my math and numbers are right).

Rising medians in conjunction with falling sales volumes can sometimes be explained by the "beauty pageant" effect - meaning prices may be falling on an apples to apples basis, while medians are going up.

The converse - falling volumes AND falling medians implying that prices are actually rising on an apples-to-apples basis - is almost statistically impossible.

These severe volume dropoffs, in conjunction with falling medians AND increased listings, should be the occasion for an "Oh $h!t" moment for anyone who bought a place here after 2004 or so. (There will be exceptions of course, but the trends are not promising for "hold and hope" buyers.)

Especially in light of the increasing listings (indicating pent-up suppply), the median data over the next few months should be very interesting. I'm guessing median SF prices will be back to late '04 levels well before fluj's "6 month-10%-decline-bet" is settled (how do we settle this bet after all?).

Posted by: Satchel at February 4, 2008 10:10 AM

The graph doesn't have to start with January....

just sayin.

Posted by: anonymouse at February 4, 2008 11:05 AM

Median home prices tend to be lower in December than in summer, so really the best way to look at the annual change in median price is to compare December to December, or better yet, to compare 2007 as a whole with 2006.

Posted by: Dan at February 4, 2008 11:38 AM

Why would median home prices tend to be lower in December than the summer? Don't expensive homes sell in the winter too?

Posted by: anon at February 4, 2008 12:06 PM

Well we've crossed the Mendoza line - Jan 08 sales are now up to 202! The data I have access to goes back to mid-1993. The lowest total sales (SFH + condo) for San Francisco for any prior month during this period was 221 in Feb 1995. (Jan or Feb are usually the low months of the year.) Given that late reportings will continue to come in, I think that Jan 08 has a chance to exceed 221. (I think we'll at least beat Mendoza's actual lifetime average of 215!) Looking ahead to Feb 08, this month will benefit from the leap day which will give the month 5 Fridays (the most popular closing day of the week).

Posted by: FSBO at February 4, 2008 12:26 PM

It went from "anyone with a pulse can buy any bay area home they want" to "only 1 in 9 can buy".

I don't see it getting better any time soon. Freddie Mac can't even sell off the loans they are standing behind (ha!): things have gotten so bad that they are looking to resell apartment mortgages because their business of pretending to back mortgages is essentially shutting down, along with their stock , which has dropped by 50% in 4 months. While there are always greater fools for homes (especially people who don't pay their bills), there are no more greater fools for the mortgages.

And in the meantime, Goog is now no longer skirting, but actually *into*, the 400s at 494.

No money from stock, no money from investors, no money period is left to pump this bubble up. So does it surprise anyone that inventory is up and sales are down, with major price reductions on the way? It should surprise you if it weren't that way, with even more of the same in the future.

Posted by: tipster at February 4, 2008 12:30 PM

On Satchel's point, I really would be interested in hearing anyone provide an analysis of how rising inventories, falling sales volumes, and lower medians for both listing and sales prices could reveal anything other than a pretty significant downturn. There may be one, but I just can come up with it.

On tipster's post, when looking at the last 6 months of numbers, it is stunning to see the impact of the mortgage blow-up that struck in August last year. While numbers were drifting to that point, they have since really started to fall fast. I suppose one can still argue "you have to compare year over year -- Spring will be different" to try to explain away the last several months. But the implosion in the lending markets really changed the rules almost in an instant. I don't see how you can remove maybe 75% of the previously "qualified" buyers and not have a dramatic downturn as a result. And this was all when the economy was still buzzing. The Fed and Freddie and Fannie can do whatever they want. I can't see this accelerating trend reversing, or even slowing, anytime soon.

Posted by: Trip at February 4, 2008 1:00 PM

Trip,

"There may be one, but I just can come up with it."

You can really only have these concurrent conditions (rising inventory, falling median and transaction volumes) under general conditions of radically increasing market segmentation, in which markets which formerly traded in equilibrium as a unified whole (through the idea of economic "substitutes") now trades as disjointed micromarkets. There is some of this going on as SF increasingly becomes segmented and parts do gentrify, but let's not get carried away. These trends are gradual, as they literally require the uprooting of people and the improvement of the physical housing stock, and that has not "suddenly" accelerated to the moon over the past few years.

Prices - on an apples-to-apples basis are going down, and they have been for some time now (there are exceptions of course, and different neighborhoods "peaked" at different times).

Posted by: Satchel at February 4, 2008 1:17 PM

Man you guys are depressing. What about the Rich Foreign Investors? And all the high-paying jobs that will be created by turning Alcatraz into the world peace center? Oh, and let's not forget that Starfleet Headquarters will one day be built right here in San Francisco (anyone know which cult cab goes best with Klingon food?).

Wisecracks aside, Chronicle had a great piece this weekend, written by an attorney in San Mateo critiquing the stimulus plan. One point I found surprising:

"I've spoken with borrowers who stopped making mortgage payments seven or more months ago. None has received a default notice. Defaults may be much higher than banks are letting on. The data lags are growing suspiciously long. Nobody knows what's going on."

So inventory, as shown above, may even be understated. Here's the link:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/03/IN8LUO095.DTL

Posted by: Dude at February 4, 2008 1:19 PM

Trip,

Never underestimate the impact that losing house after house, to an itinerant farmworker with a $1.5M loan, has on a legitimate buyer.

I suspect it's those buyers who continued bidding fast and furious for awhile, even months after the funny money left the system, when there were enough legitimate, but previously frustrated buyers, who essentially just bid against the other few, and kept the market going for awhile longer than they needed to.

I suspect this will still happen here and there, for awhile, until they are out of the system or their memory of being beat out so many times starts to fade.

For me, it was the opposite. I have a seven figure income, and the day in 2005 I got beat out on a $2M property by a secretary, I decided that such a market was unsustainable, and bailed out of the market entirely, rather than increase my bid.

Like every other bubble, it lasted longer than anyone suspected. I'm just glad to see it finally fizzling in the last holdout areas. The problem is that, now, the other areas have had so much of a head start on THEIR drops, that they are rapidly sucking purchasers out of the SF market, because the difference in values is truly astounding.

Anyone considering purchasing in SF proper should head over to the east bay for an afternoon and see what half as much money will buy, and consider the impact on your lifestyle that the money saved will make.

Posted by: tipster at February 4, 2008 1:31 PM

"Anyone considering purchasing in SF proper should head over to the east bay for an afternoon and see what half as much money will buy, and consider the impact on your lifestyle that the money saved will make."

Agree 100% with this. Not to mention, since the time approx. 12-18 months ago when I stopped looking in SF, I've gotten 12-18 months older. Suddenly, warmer weather, better schools, and a backyard seem like good things, and being within stumbling distance of my favorite watering hole seems less so. I'm so old. Sigh.

Posted by: Foolio at February 4, 2008 2:07 PM

"Anyone considering purchasing in SF proper should head over to the east bay for an afternoon and see what half as much money will buy, and consider the impact on your lifestyle that the money saved will make."

I couldn't agree more. I was checking out listing for East Bay and the price differential is HUGE. I know for some there will always be this SF is where it is at mentality but at some point 'prestige' of living in SF has to give way to the opportunity to live in twice as much place for half the cost and still be able to eat out and go on vacation.

Posted by: badlydrawnbear at February 4, 2008 6:06 PM

7 figure income?? wtf? I would hire people to write my blog posts if I had a 7 figure income. Or buy a couple of houses and not bother to bitch about the prices.

Posted by: chuck at February 4, 2008 8:34 PM

*boggle*

Posted by: agree with chuck at February 4, 2008 9:09 PM

Post a comment


(required - will be published)


(required - will not be published, sold, or shared)


(optional - your "Posted by" name will link to this URL)

Remember Me?

(you may use HTML tags for style)


Continue Perusing SocketSite:

« It’s Always Nice To Know They Eat Their Own Dog Food: 2062-64 Pine | HOME | New Designs For Dwellings And Retail At Market And Sanchez »