April 14, 2008
SocketSite's San Francisco Listed Housing Inventory Update: 4/14/08
Inventory of Active listed single-family homes, condos, and TICs in San Francisco increased 3% over the past two weeks and is currently running 37% higher on a year-over-year basis. Our listed inventory count does not include listings in any stage of contract (even those which are simply contingent) nor do they include multi-family listings (unless the units are individually listed).
With regard to any months of inventory calculations, keep in mind that while recorded sales activity in San Francisco was up almost 15% on a year-over-year basis in February according to DataQuick, this activity includes newly recorded closings in developments such as Infinity and One Rincon Hill (inventories for which are not included above and contracts for which were signed up to two years prior).
According to the San Francisco Association of Realtors, sales of listed single-family homes, condos, and TICs in San Francisco were down 16% on a year-over-year basis in February with condos/TICs off by 27% and single-family homes off by a relatively modest 6%. And according to a plugged-in reader, early results for March indicate listed sales volume in San Francisco was down over 30% on a year-over-year basis with months of inventory running at well over two-times the level of twelve months prior.
First Published: April 14, 2008 7:45 AM
Comments from "Plugged In" Readers
(1) Inventory of Active listed single-family homes, condos, and TICs in San Francisco increased 3% over the past two weeks and is currently running 37% higher on a year-over-year basis.
(2) ….early results for March indicate listed sales volume in San Francisco was down over 30% on a year-over-year basis
Can someone please explain the apparant discrepancy between these two views -- are SFH listings up or down??
Posted by: LP at April 14, 2008 10:13 AM
(1) Inventory/Listings is UP 37% YoY
(2) Sales Volume is DOWN 30% YoY
So SFH listings are UP
Posted by: badlydrawnbear at April 14, 2008 10:20 AM
there is no discrepancy in your statement.
LISTINGS are up
SALES are down.
Posted by: ex SF-er at April 14, 2008 10:26 AM
Interesting that the disparity with previous years inventory figures appears to be reducing recently. Compared with last year, 49% up four weeks ago, 43% two weeks ago and now down to 37%.
Posted by: REpornaddict at April 14, 2008 10:27 AM
this is the pattern we saw in San Diego when the downturn started there.
(this was in 2005)
it wasn't until the following year (2006) that we saw some pricing pressure, and not until 2007 that San Diego was considered a "horrible" market.
thus, so far SF is eerily similar to SD> (no surprise, the same demographics caused the rise, why not the plateau?)
The big question:
as listings go up and we get into the spring buyers season, will sales occur fast enough to absorb the new listings?
If so, then pricing will likely not fall.
however if we get more and more supply without sales, then you'll FIRST see people simply pull their houses off the market (lowering inventory).
if they are in distress or if they need to sell, then they'll have to lower their price.
this is what's happening in SoCal right now where nearly 40% of sales in parts of SoCal are foreclosures. The rest of the inventory just sits there.
Posted by: ex SF-er at April 14, 2008 10:34 AM
Yeah, I noticed the same thing. There seems to be a mini-plateau. My thought is that this is some more of our pent up demand coming out of the woodwork. People who like the fact that they don't have to get in bidding wars for places anymore, etc. Still, my initial reaction is that this mini-trend isn't too significant. The overall trend is still rising inventory and this doesn't even take the big chunk of new construction in SF into account. Hard to see this as anything but bearish.
Posted by: lies...damn lies...statistics at April 14, 2008 10:39 AM
Would be interesting to see what happens in October/November of this year, if it will meet with 2006 and 2007 numbers.
Any wagers or forecasts?
Posted by: S&S at April 14, 2008 10:42 AM
No wagers from me, but I'm guessing somewhere between 1800 and 2000.
Posted by: lies...damn lies...statistics at April 14, 2008 10:54 AM
it is hard to use this data to forecast anything, given the sheer amount of data that is NOT held within.
that said, since the methodology for collecting the data is consistent, it still has merits. (unfortunately, the supply of new construction is changing IMO, which will artificially skew this chart that doesn't contain the new construction condos etc like ORH/infinity).
my hypothesis after going through a downturn:
-sales will increase on a month to month basis throughout the summer (as they always do), peaking in late july/early August
-however, sales will consistently be below the sales levels from the comparable month from 2007
-sales will not be enough to outpace the new inventory put on, so inventory will increase each month as well.
-prices will not change much nominally this year. we'll probably see further fragmentation of the market. (most pain in the lower price products, and the entry level luxury market, but strong luxury market doing fine)
-in the late fall/early winter we'll see another huge inventory drop as people take their homes off the market
-next year we'll see an even higher inventory rise... accompanied by the first true price declines.
this of course may change depending on what government does and whether or not we go into recession.
Posted by: ex SF-er at April 14, 2008 10:56 AM
How do you explain the three year lag time between the San Francisco and San Diego markets' shifts?
Posted by: fluj at April 14, 2008 11:00 AM
Overall, I'm not entirely sure, and I've never really put a lot of thought into it, but here are a few things off the top of my head. I'll ponder this a while later and come up with better "reasons"
1) San Diego was able to start it's appreciation faster because the Tech Implosion didn't affect it as much as SF. (SD's boom started in 2002, was in full swing in 2003-4-5). SF was still reeling from the tech collapse in 2001...
so the first part of SF's "boom" was recovering from the tech bust.
2) San Diego started off so much lower cost than SF did. So it had room to move (initially, conforming mortgages were enough, etc)
3) SD is not as restrictive in zoning/building. Thus you had lots of teardown redos all over the place as well as new units. so you'd get a house on the block torn down and redone and it would quadruple/quintuple in "value". That was then repeated rapidly around the city.
this simply doesn't happen in SF. It takes forever to get the permits and all... so not as much renovation, and what is done takes a long time lag.
thus a lag.
4) much of the increase was due to changes in the area. Over the last 20 years San Diego has essentially been absorbed into LA. as that happened, San Diego was absorbing some of LA's sprawl which caused rapid population increases in San Diego County.
I'll tell you though... every day people talked about how "everybody wants to live in San Diego" and San Diegans think that it's MUCH MORE desireable to live in SD than SF as example. It was inconceivable that RE could ever fall in SD. There used to be front page news articles in the Union Tribune in 2004 where they'd list the median house price, and it was going up $1,000 a DAY through spring/summer of 2004.
and since San Diego was one of the few places appreciating like that, there was a positive feedback on San Diego.
(that was then followed by las vegas and phoenix and miami and all that).
Posted by: ex SF-er at April 14, 2008 11:12 AM
the sd-sf time spread could be because sf has a stronger base of high wage earners. of course, i could easily just be fitting my guess to the data - not sure. but in that this economic downturn (or whatever word-du-jour is) has so far seen decent employment resiliency, and in that we've seen high-end sf properties keeping a bid relatively well, i feel like the explanation is reasonable / plausible.
Posted by: marina girl at April 14, 2008 11:15 AM
geez fluj aren't you the one hitting the "all real estate is local" button daily.
Not all market went up in lock step and not all markets will fall in lock step.
That doesn't change the fact that the housing prices in SF pulled away from historical supported levels during a period of easy credit and speculation and prices are now correcting.
Cheerlead all you want, it won't stop the correction.
Posted by: badlydrawnbear at April 14, 2008 11:17 AM
Fluj Said "How do you explain the three year lag time between the San Francisco and San Diego markets' shifts?"
Real estate markets are local and they move like ducks...one duck peals off in the pond and the change in direction is not complete until they all follow. The stonger ducks like NYC and SFO are only now starting their peal off and its just the start of a 2-3 year trend.
Posted by: cooper at April 14, 2008 11:18 AM
This is helpful data, thanks. It would be interesting to see this inventory data excluding SOMA, which is obviously a big portion of the increase. Is this available?
If not, anyone have any idea on what inventories are up year over year in the northern half of the city?
Posted by: G-man at April 14, 2008 11:27 AM
to Gman. I think they said it did not include inventory data from the big soma condos. if it did--it would be a few hundred higher.
Posted by: cooper at April 14, 2008 11:33 AM
"ould be interesting to see what happens in October/November of this year, if it will meet with 2006 and 2007 numbers.
Any wagers or forecasts?"
I'll take a shot and predict 2300
Posted by: Spencer at April 14, 2008 11:45 AM
You can look on sfarmls to see how many units are available in SOMA and the surrounding areas. Just type in the zip codes. If you include 94107 and Potrero Hill, there are 260 condos currently listed in 94103, 94105, and 94107. Again, many condos aren't listed on the mls so the number is probably much, much higher.
Posted by: sleepiguy at April 14, 2008 11:51 AM
One could also logically infer that there is no correlation whatsoever between distinct markets, Cooper.
Posted by: fluj at April 14, 2008 12:02 PM
no one could not infer that since historically that never happens. the ducks always toe the line. just like SFO has started to.
Posted by: cooper at April 14, 2008 12:17 PM
All real estate is local. Local conditions are definitely altering the up-and-downs in a specific market.
- Stockton/Modesto/Fresno. Low wages makes for a steep downturn.
- Las Vegas. Too many Fonzis in one place.
- Los Angeles. Wait. They have jobs that it pays pretty OK. What happened then? Irrational exuberance is what that is.
And why wouldn't it happen to SF?
- Some areas QUADRUPLED in 8 years
- Bubble 2.0 is starting to pop
- Financial sector a major employer
- Daly / Oakland used to be 75% of SF. Now they are 55% and going under at a very fast pace. Plenty of houses for sale under 450K in Daly. Oakland sees houses in the mid-100s. We're back to 2003. Expect us to go back to 2000.
The foundations are collapsing under SF's feet. It's still holding by a thread thanks to the Googletards and rich retirees. Once they see the prices go down more in the upper market they'll be scared to death to lose their play money.
Posted by: San FronziScheme at April 14, 2008 12:35 PM
Here's my theory:
You could buy homes with subprime loans in SD. Subprime loans reset quickly, and the overhead costs associated with refinancing can overwhelm the savings. So people in SD were less likely to refinance every year. Thus, their resets hit them sooner, and there currently are a lot of people who need to sell.
The monthly payments on Alt-A loans, like those used in SF, move up over a longer horizon, and people were more likely than people in SD to refinance because the higher home costs meant the overhead (e.g. points and fees) wouldn't overwhelm the monthly savings. So even those who bought in 2004/2005 probably refinanced at least once by 2007 when the problems hit, and those loans won't reset for a while.
So when the easy money dried up, SD people got hit much sooner. That, coupled with the So Cal propensity to live on the edge of their finances meant that there was really no cushion. That difference is what is hitting LA now.
It's people who NEED to sell who define the market. Very few people NEED to buy. The same problems are coming here, but the bulk of those problems will be here later than they were in SD. They are really just starting for us now.
Posted by: tipster at April 14, 2008 12:43 PM
Positing Los Angeles the way you did is erroneous. Numerous LA areas such as Hollywood and surrounding, Beverly Hills and surrounding, all west side areas, are just as expensive as they were two years ago. And they are selling too. It's a lot like here.
Lumping LA in, sequentially, after Stockton/Modesto/Fresno, then Vegas, is not valid. You need to put a much finer point on it than that.
And "Bubble 2.0" is what exactly? Google, and Google alone?
Last, "Oakland" -- try writing an offer at 75% of asking in Rockridge or Piedmont. See what happens.
SanFronzischeme, I dub you the new buzzword king of SS.
Posted by: fluj at April 14, 2008 12:47 PM
hollywood prices have gone down substantially in the last 2 yrs. beverly hills and santa monica may be holding up for now, but quite a few areas west of 101 in LA have begun to crumble.
Posted by: Spencer at April 14, 2008 12:50 PM
"Interesting that the disparity with previous years inventory figures appears to be reducing recently. Compared with last year, 49% up four weeks ago, 43% two weeks ago and now down to 37%."
I don't really see it as the gap reducing (YOY increase):
Mid Jan: 23%
Mid Feb: 37%
Mid Mar: 49%
Mid Apr: 37%
What do you take away from this for a trend? You could look at the last 3 data points and say its trending down, or look at it vs. Jan 1, and say trending up. I'd say it's too early to tell.
Posted by: Treeman at April 14, 2008 12:54 PM
Not from what I hear. I literally spoke to a Silverlake realtor last night. You mean to tell me Los Feliz is cheaper than it was two years ago? It isn't.
Posted by: fluj at April 14, 2008 12:54 PM
"I literally spoke to a Silverlake realtor last night."
A *realtor* told you things were still hopping? That's a very useful data point.
Posted by: Foolio at April 14, 2008 12:57 PM
los feliz is east of 101 and is not hollywood.
does not fit criteria
Posted by: Spencer at April 14, 2008 12:58 PM
I spoke at length with someone I have known for over 20 years about the vagaries of the Los Angeles real estate market. He had a listing that did not sell, recently, in Echo Park. He has another one that is getting tons of interest in Silverlake. Go ahead and be dismissive. It doesn't matter to me.
Posted by: fluj at April 14, 2008 1:00 PM
Uh huh. I said "Hollywood and surrounding," Spencer. Los Feliz and Silverlake both border Hollywood.
Posted by: fluj at April 14, 2008 1:03 PM
actually tipster does bring up a good point that I hadn't considered... loan mix.
San Diego had/has more subprime than does SF.
SF has more Alt A than does SD.
many of San Diego's Subprime loans were written in 2002-2005
the subprime option arms/IO arms typically have a 2 year reset. thus they reset in 2004-2007.
hence the strain happened then.
SF's loans were mainly written in 2003-2006. And they are Alt-A, which tend to have 3-5 year resets (but more loans reset at 5 years than 3 years)
this would mean that SF's reset schedule would be 2006-2011 but especially 2008-20011.
this jives with the national reset schedule that i've posted before (Ivy Zellman's research from Credit Suisse)
Posted by: ex SF-er at April 14, 2008 1:04 PM
One could also logically infer that there is no correlation whatsoever between distinct markets, Cooper.
unlikely especially since lending standards are national.
there are clearly distinct markets that have low vs high correlation, but few that have no correlation.
and anecdotally, too many markets have followed each other in too similar of a pattern to really give that idea much credence. (remember the old "there is no national housing bubble" theories from 2005? and "RE values can never go down" from 2006?)
but I will agree with one point... even in the hard hit areas, there is assymetric "hitting". some areas are getting pounded, while others are not doing that poorly.
using San Diego, the exurban areas are getting hit worst, followed closely by the downtown highrise condos and the not-quite-gentrified parts of the city (like south SD or Normal Heights).
some neighborhoods are holding value "ok" (Like Hillcrest) and some are doing pretty well still (like La Jolla and the neighborhood of Mission Hills)
Posted by: ex SF-er at April 14, 2008 1:10 PM
I'm curious about the SF to SD disconnect as well. My sense is that a more relevant comparison for SD is the entire Bay Area. As we often hear, SF is a small portion of the SF MSA, which I believe that SD is a large (or at least larger) portion of its MSA.
So, I wonder if the real glamour areas of SD like Del Mar and La Jolla are still holding value like Pac Heights, etc. seem to be doing for now (my thought is for now only, I don't think the prices of even high end areas are immune)?
I also wonder about the job situation in SD. My sense (like Marina Girl) is that it is and has been much harder to get jobs in SD than it is here or in LA, resulting in fewer people who could purchase based on wages alone (i.e, the debt bubble started sooner and crashed faster with resets, as Tipster posits). And, I believe that the push for high rise condos and downtown revitalization in and around the gaslamp started long before any similar construction in SOMA (both of which are good things in theory), creating "easy flipping" opportunities far earlier than in SF.
I also think it was easier for the "hot money" from speculators to move from SD to Phoenix and Vegas, sucking money out as soon as a peak hit (but that is a big guess).
Posted by: Tom at April 14, 2008 1:13 PM
"Hollywood and surrounding" is not the same as areas surrounding hollywood. your statement includes hollywood and hollywood prices have gone down.
Posted by: Spencer at April 14, 2008 1:13 PM
Finally, some intelligent discussion (by Tome).
A better comparison is bay area vs LA area vs SD area. All those regions have suffered greatly during the last couple of years as a whole. All three regions have spots of price staying the same or even appreciation.
There is little or no "time lag".
Posted by: John at April 14, 2008 1:23 PM
yet another thread where satchel's input would be very heplful/insightful... hopefully the "retirement" won't last too much longer!
Posted by: satchelfan II at April 14, 2008 1:24 PM
Then LA has a few bright spots. But it's the same money chasing the upper crust. They aren't affected by the downturn, yet. Just like the guy who has his PacHeights empty-shell of a mansion for $65M since mid-2006. No takers, but who cares, he has 1B+ in assets. Point is, LA saw its median price down 20%+ YOY and volume down 40%.
By "Bubble 2.0", I refer to the survivors of the 2001 meltdown. Google is only one of them. But I'll include CSCO, AAPL, AMZN, EBAY, ORCL, BEAS plus others (LucasFilm, Pixar, ...). They have a good cash flow, good business model and execution, but their share prices are exponentially exposed to any economic downturn. And the reason is too much money chasing too few good companies. A LOT of growth was factored in their prices. When the economy grows 5%, they grow by 30%. What happens when the economy contracts is anyone's guess...
Cash-based RE only goes that far. At some point the RE has to relate to salaries, and they haven't been growing much lately.
Oakland used to sell at 75% of SF, give or take a few %. Upper market included. Now it's a little above 50% of SF. Of course, we're comparing apples with oranges. But you know a city is never isolated from its suburbs. It's a time-delayed balancing game.
I've seen it first hand in Paris, France in 93-96. Prices were holding tight from 91 to 94 inside Paris, when a friend was having problems selling at 60% of 1990 price in her suburb. A lot of people then fled to the suburbs, seeing prices so low they couldn't resist when Paris was so high. Another friend sold his 700SF Marais appartment to buy a 2000SF house in the North-East 'burbs.
Then the crisis started hitting downtown Paris.
Some areas lost 60 (SIXTY) percent. And more locally as good deals never made it to the local MLS. And the collapse of the Paris prices led to a further collapse of the suburbs as first-time buyers and investors would get great deals in Paris. Why bother with the commute?
Anyhow, 2008 reminds me very much of 1993. Same hype, same situation, and I believe: same consequences.
Posted by: San FronziScheme at April 14, 2008 1:28 PM
A lot of people then fled to the suburbs, seeing prices so low they couldn't resist when Paris was so high.
Dublin is only a 'short' BART ride from downtown SF. How about this for a metropolitan lifestyle.
Posted by: EBGuy at April 14, 2008 1:57 PM
@Tom, very good insight. My only critique is about the comparison of La Jolla to Pac Heights. I went to UCSD for under-grad and always thought of La Jolla as being more like Palo Alto (waaaay west of 101), Los Altos, or some of these other multi-million dollar only neighborhoods. Their respective owners have cash-flow greatly exceding the value of the real estate & thus they are heavily insulated from market fluctuations. Also, these neighborhoods are inhabited by older folk with older money.
Posted by: BBSmurf at April 14, 2008 2:33 PM
Those of you who think people in Palo Alto have cash flow greatly exceeding the value of their homes have not read the Millionaire Next Door. I'd highly recommend it. In summary: most truly wealthy people do not lead the lifestyle you think they do, and a lot of people living that lifestyle aren't very wealthy.
Although there are many wealthy people in Palo Alto and Pac Heights, there are also a lot of people pretending to have money who are living day to day. That $750 per day house payment burns up a lot of cash. When times go bad, they have to unload that lifestyle to eat.
Posted by: tipster at April 14, 2008 3:32 PM
Id rather live wealthy than be it.
Posted by: OldMiser at April 14, 2008 4:14 PM
" 'Hollywood and surrounding" is not the same as areas surrounding hollywood." -- LOL.
Cooper, fixer upper bungalows in Hollywood cost a million. I'm sure you know how much crime there is in Hollywood California.
Posted by: fluj at April 14, 2008 5:17 PM
I am not sure why that comment was directed at me Fluj. Are you trying to sell me that bungalow?
As far as why local markets differ so much, I'd argue they differ only in sequence in timing, but real estate as an asset class across markets correlate close to 1 over time.
Here in SFO, the subprime crisis hit the lower end first and very quicklu. Alt A's and liar loans are only starting to hit now. But the big impact will be from the cruddy jumbo market...fewer jumbo loans are getting written and when interest rates start to rise again --those rates will be the first to hit 8 and perhaps even 10% a lot sooner than people think. That's what's really driving prices, the lack of ability to get things financed. Much as cheap money was being poured onto SFO, now the dearth of it will be the undoing of it.
Posted by: cooper at April 14, 2008 9:23 PM
sleepiguy @ April 14 11:51 AM
"Again, many condos aren't listed on the mls so the number is probably much, much higher."
Interesting. I thought (perhaps naively) that the msl contained a fairly complete list of all available properties in a given sales area. Why would a number of condos not be listed on the mls, and where does one go to find these non-listed properties? Are you referring to condos "FSBO"?
Posted by: newbieQuestion at April 15, 2008 2:25 AM
Do we need to bring up the CS index again?
It shows one thing - the bay area (as a whole) is not different from SD area, LA area, or US. There is no so called lag. Each area has its bright spots which are surrounded by disaster areas.
Posted by: John at April 15, 2008 9:08 AM
I said cooper but I actually meant spencer. Sorry.
Posted by: fluj at April 15, 2008 9:17 AM
It's funny to read these threads and comments. A lot of rally cries for the market defending SF till the death. Lot's of folks on these boards predicted with startling accuracy the current issues facing the broader housing market. And while SF has certainly held strong relatively to its neighbors -- you really have to wonder if the same people who's insights have been basically validated (just not in San Francisco) could have been so right but just completely missed the mark on assessing the situation in San Francisco. It was these very boards calling BS on NAR and the mortgage practices back in 2006 -- and although the rally defenders have changed -- the same predictors hold the same predictions.
I don't know, but I tend to trust those folks with a track record of validated predictions and am skeptical of one off contrarian fact. Not saying those facts are not helpful and accurate -- but they are not helpful at predicting what is likely to happen over the next 12-18 months. And they certainly aren't a reason to jump in the market of you are a first time buyer.
I tend to think that if you are a first time buyer you really have NOTHING to lose by sitting on the sidelines and watching the fallout. I still can't believe at how quickly some homes are flying off the market. There is almost zero risk that you are going to get priced further out of the market and the most likely scenario is that you will get more for your housing investment down the road. So keep saving and think of it as dollar cost averaging.
Posted by: eddy at April 16, 2008 12:59 AM