April 28, 2008
SocketSite's San Francisco Listed Housing Inventory Update: 4/28/08
Inventory of Active listed single-family homes, condos, and TICs in San Francisco increased 5% over the past two weeks and is currently running 36% higher on a year-over-year basis. Keep in mind that 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).
And once again, while recorded sales activity was off by a little over 20% last month (on a year-over-year basis), listed sales activity was off by over 30%.
First Published: April 28, 2008 8:00 AM
Comments from "Plugged In" Readers
From your charts, a 5% increase over the last 2 weeks appears normal to low for this time of year, no?
Posted by: urban_angst at April 28, 2008 8:22 AM
Inventory up, volume down, by larger and larger margins with each iteration. Still much of the city is hanging on to it's pricing for dear life. It's hard to imagine buyers suddenly picking up the pace in this economic and lending environent, so when are sellers going to start blinking and how long can they hold out until they are forced to in significant numbers?
Posted by: missionite at April 28, 2008 8:28 AM
all the right questions IMO... my guess is that we're going to have a much bigger than average spike at the 'end' of the season (sept/oct), after all the alt-a resets start coming to market and the existing troubled lot have run out of reserves...
Posted by: tony at April 28, 2008 9:00 AM
Long time owners will be able to hold out for a long time indeed thanks to Prop 13 (assuming they didn't HELOC out all their equity)
The people who are at most risk are the buyers of the last few years who used exotic mortgages to stretch into a monthly payment and owner's who used their home like an ATM and no longer have any equity to fall back on during a period of financial need.
Posted by: badlydrawnbear at April 28, 2008 9:12 AM
I love it when these charts come out. Everyone sees what they want to see in the data.
Anyhow, the data is awesome! SS- Thanks!
Now for my "seeing what I want to see" analysis.
The gap has between last year and this year has stabilized at about 35% greater than last year. With the larger inventory out there, and slowing sales - prices will continue to decline, and even the untouchable areas will see weakness (and I'm not talking inflation adjusted weakness, I'm talking straight up declines).
Posted by: Treeman at April 28, 2008 9:19 AM
Active listed inventory 36% higher, volumes down in average with a 8.3 months inventory. And prices are holding their own. What would be interesting is to have the figures for the past 10 years, to see where we are compared to the moving average.
Posted by: San FronziScheme at April 28, 2008 9:29 AM
As someone who decided for life choice reasons to stop waiting and start seriously looking, I can tell you that good properties in district 5 and 6 in the $700-900K range still seem to be selling with multiple bids. Pricing is probably similar to what they would have commanded in 06, but they are selling nonetheless. Inventory also seems low in these districts.
If it has a significant flaw, it's probably not selling. Surprisingly, lack of parking doesn't seem to qualify as a flaw. Again - based on my limited experience.
As to even the good markets cracking....bring it on.
Posted by: mktwatcher at April 28, 2008 9:36 AM
First you hear from people that IT won't hit the bay area. When it does, you hear it won't hit the "real" SF. When it does, you then hear it won't hit San Francisco proper. Then it does, and now we're hearing it won't hit district 5 and district 6. I wonder what we will hear when it does.
Economic fundamentals don't change based on location. You might say that richer people live in district 5 and 6, to which I would then ask - is that you? If so, then you have nothing to worry about. If not... well... Good luck if you're looking to get in right now. We've got 15% to go still in price drops.
Posted by: Treeman at April 28, 2008 9:53 AM
There is inventory, and there are properties people want to buy. 750K to ~1.5M is relatively affordable to a seemingly large cross section of San Franciscans. Where are they located? Are they deeply flawed?
Posted by: fluj at April 28, 2008 9:56 AM
"We've got 15% to go still in price drops."
No. Putting a fine point on it like that is simply not credible.
Posted by: fluj at April 28, 2008 9:59 AM
When the aerospace industry went through its retrenchment, housing in LA got hit hard.
What you'll start to see by the end of the year is the financial services industry going through a retrenchment that will be equally as painful as aerospace.
That, coupled with the beginning of the alt-a resets will make next year a challenging year for real estate, particularly at the high end.
Posted by: tipster at April 28, 2008 10:01 AM
Most everyone who knows how to read and write is familiar with the "Boy Who Cried Wolf." Yet next year that won't stop you from probably also saying "next year." You did last year.
Posted by: fluj at April 28, 2008 10:06 AM
Treeman, we've heard that all before on nearly every thread on this site. It's getting a bit tiresome to see the immediate kneejerk response to any slightly positive post the tired lectures about economic fundamentals (which I completely agree with, but I feel don't need to be brought up in EVERY thread).
Mktwatcher is giving you his anecdotal observations of what he's seeing out there right now.
He's not disagreeing with the data. He's providing additional data. He didn't say it won't hit 5 and 6. He said nice houses in 5 and 6 are selling for similar prices in '06 with multiple offers.
Sorry to pounce on you. You just happened to be the straw that made me post. :)
Posted by: noseeum at April 28, 2008 10:09 AM
Wasnt there an article in the chronicle this weekend about how the impact of all of the alt-a and arm resets was not as bad as was predicted?
I have been reading this site for a while now and I thought the s*t was supposed to hit the fan last October according to the similar comments that were made all summer.
Posted by: yeah at April 28, 2008 10:20 AM
far too early to see actual price declines IMO.
unless they are in distress (divorce, job change, can't afford reset etc) sellers this year will ask for a certain price and if they can't get it they'll just pull their property off the market until "things get better"
IMO, we'll only see significant price drops NEXT year IF the spring selling season is poor again.
housing downturns take time (5-10 years). we're arguably only in the first 12 months or so (and some posters would state that we aren't even in a downturn at all).
watching these is like watching the paint dry of a painting of grass growing.
Posted by: ex SF-er at April 28, 2008 10:25 AM
"No. Putting a fine point on it like that is simply not credible."
And why not? If the basis for my statement is fundamentals, then that's where I have to get to.
Your point is well taken though. There are sub-climates where it would have to drop more.
Posted by: Treeman at April 28, 2008 10:27 AM
Noseeum is right about my stance. I'm not saying it won't hit 5 and 6. Believe me, after sitting on the sidelines for years and reading all that I have about the fundamentals, I am nervous as hell that the thing will tank the day after I sign a purchase agreement. But I had to ask myself how much longer am I willing to sit and wait. I've made a long term commitment to living in the city and am looking forard to get into something better than my small rent controlled apartment. The longer this goes on, the longer the larger economy has a chance to chew through the problems.
I'm not looking to flip the place and feel fortunate enough to qualify for decent financing. It's a crapshoot but sitting on the sidelines has been making me crazy.
Posted by: mktwatcher at April 28, 2008 10:32 AM
That wasn't my point. My point was you can't call it.
Did you predict how high the market would climb? No, you didn't. So if not, how can you predict how low it will fall? You can't.
No, but what you CAN do is present econ 102 till your fingers grow weary of typing. There might be one or two readers who haven't seen this argument so don't let me stop you.
Posted by: fluj at April 28, 2008 10:32 AM
An anecdote from my open house travels this weekend. 57 Webster. Asking price was $1,049,000 two weeks ago. I live near it, and I'm pretty sure the for sale sign was not put up until about a month ago.
Price reduced to $998,500. Almost 5% Nice place. I think it's about 1800 square feet or so. It was purchased in '06 in the low 800s I believe, but there's been a lot of remodeling, esp in the kitchen. Gorgeous stove. Poor layout though. Nowhere near a work triangle, that's for sure!
We'll see if it sells at the reduced price.
Posted by: noseeum at April 28, 2008 10:35 AM
the anticipated reset schedule: (as of Jan 2007)
FIRST PEAK: MAY 2007-DECEMBER 2008 (due to subprime loans)
(this has happened now, and is why we hear of this as a "subprime problem"... it's happening faster than they thought, as people are defaulting at record rates BEFORE they were supposed to reset)
break from Jan 2009-July 2009
SECOND PEAK JULY 2009-NOVEMBER 2011. (due to combination of Alt A, Agency, Prime, and Option ARM loans)
(there is reason to think that this will progress faster than hypothesized, because current the Alt A loans are defaulting right now at faster rates than estimated)
You can see the graph itself
"1" = January 2007
"13" = January 2008 and so on.
Ivy Zellman's research, Credit Suisse
Posted by: ex SF-er at April 28, 2008 10:36 AM
Just an anecdotal observation ... I have been to several open houses lately to see properties that have been listed for more than 30 days ... in 3 cases the real estate agent was saying that the seller didn’t really “need to sell” and if the property was not moving in a couple of months the seller would rent it out.
Not sure if this is a real trend or the latest realtor story but it might show some pretty stubborn sellers wanting to hold on to their price and trying to ride the whole housing slump to re-list in a few years ...
Posted by: il_guru at April 28, 2008 10:42 AM
I'm curious, why do you feel like you must buy a home if you plan on living in San Francisco for a while? It seems you have made an economic decision to sit on the sidelines the past couple of years but now you have become impatient or changed your mind about the fundamentals of SF housing prices.
And if your main consideration is getting a better place couldn't you get more bang for your buck by renting rather than owning? At least under current prices? I understand that there's a slight possibility of being evicted or rental prices increasing but those possibilities seem much less risky and less of a big deal than losing a huge amount of money by buying just before a steep downturn prices.
Posted by: SFHawkguy at April 28, 2008 10:43 AM
"as people are defaulting at record rates BEFORE they were supposed to reset"
I think that was the point of the article I mentioned. The actual *resets* are not having the effect that was expected. Basically, people are defaulting because they couldnt afford the house to begin with, not because the reset makes it unaffordable.
Posted by: yeah at April 28, 2008 10:48 AM
I agree we will see declines in the next few years. Not because of ARMs or foreclosures which are not likely to hit SF directly, but by ripple effect from the surrounding city/distresses nabes.
Not that people in BH will flee in droves to lower prices in the Bayview, but even a freeway separation cannot explain a 100%+ difference in prices. People will wake up and smell the NAR BS.
Again, this is my opinion and I could be wrong.
Posted by: San FronziScheme at April 28, 2008 10:52 AM
The 50K lower price could be:
1 - A marketing tactic to generate a bidding war (wink wink)???
2 - A sign of distress. come on, if the price had been right, he'd have gotten at least one offer at less than 5% from asking.
In any cases, this means buyers are pickier and that they're moving back into the driver's seat.
Posted by: San FronziScheme at April 28, 2008 11:03 AM
Does anybody have any idea as to how much of San Francisco's overall housing inventory is 100% owned (or mortgaged for less than 50% of the current value)?
Posted by: urban_angst at April 28, 2008 11:09 AM
SFHawkguy - I have not changed my opinion about the fundamentals but to the point made earlier about watching grass grow, I now believe it will be a slow process taking years. This has more to do with the emotional sense of putting down roots and committing so this is a very personal thing to me. I'm really wrestling with the economics and ofcourse have considered renting a better place instead but that just puts me in a new "holding pattern".
I'm suddenly feeling the need to get onto the couch and start talking about my childhood.
Posted by: mktwatcher at April 28, 2008 11:13 AM
Isn't that location right at the intersection that is already across from public housing and also across from the location where The City wants the replacement project at the UC site to be 50% affordable? FYI, those things don't bode well for a $1M price...
Posted by: urban_angst at April 28, 2008 11:18 AM
urban_angst, no 57 Webster is at Hermann, not Haight or Page. It's actually a nice spot. If you're on the other side of Waller, it's a huge difference.
Posted by: noseeum at April 28, 2008 11:25 AM
Noseeum's example is a condo on Webster and Herman for a million dollars. A million. For a condo, there. Two blocks away @ Webster and Haight is one of the most dangerous intersections in the city. This is an example of a seller who priced very high previously. Now it is down to merely astronomical.
Posted by: fluj at April 28, 2008 11:25 AM
I agree that that hood changes up considerably south of Waller. But still. That's really expensive in my professional opinion.
Posted by: fluj at April 28, 2008 11:29 AM
Fair point about the prediction on the run-up. No, I definitely did not predict that. In fact, I predicted the opposite in 2003 (for full disclosure).
Anyhow, it would seem you're in agreement about the fundamentals part. Not sure about that though. You didn't dispute it. Anyhow, my question to you then becomes - what makes you believe that over the long term, fundamentals will stay out of whack?
Yes, my position is one that has been said the same way a number of times. I apologize if it's redundant.
Anyhow, how is this for non-redundant: I have it on some very good sources that the 4 top revenue generating consumer goods companies are in the process of increasing their prices to retailers. Rest assured that this will be passed onto consumers (the price hike). So your grocery bill in the next 6 months is going to go up a non-trivial amount. Do you think this plays in the overall housing market? Do you think the 2 will be un-related?
As always, we'll see.
Posted by: Treeman at April 28, 2008 11:30 AM
Oh, now I understand.
This condo is about 9 lots (200 feet?) away from the Waller dividing line that you both mention as being sketchy. I mean that's almost a full (short) block.
Posted by: urban_angst at April 28, 2008 11:32 AM
I'm not defending the price, that's for sure.
But it is a nice place on a nice corner in an area where it is easy to commute downtown or south of SF and walking distance from Hayes, Mission, Upper Haight.
I would LOVE it if it sold for $800k. :) I'll keep you posted.
Posted by: noseeum at April 28, 2008 11:35 AM
I am no economist. But I do know on thing for sure, economics is not science. It is many theories. I agree the fundamentals have been out of whack for some time. What I find interesting is how a guy at Princeton will say the fundamentals are one thing and a guy at Yale another. A lot of smart people thought SF was undervalued for decades prior to the last runup. A lot of other smart people think it that's nonsense.
Posted by: fluj at April 28, 2008 11:35 AM
Kathleen Pender's article in the Chronicle this weekend only discussed the interest rate component of regular arms. The article only claims that the Fed's recent interest rate cuts would help alleviate the pain of interest rate resets because short term money market rates have declined. However, she doesn't spend any time discussing the negative amortization component of arms with low initial teaser rates, option arms or interest only mortgages. Negative amortization causes the principal on a mortgage to increase if the borrower choses to pay the lowest payment on his option arm or is only paying a teaser rate. People are indeed defaulting at record rates on these types of mortgages and will continue to as the principal increase on their mortgage add to their debt burden. It is a huge problem for lenders like Washington Mutual, Countrywide, and Wachovia, just to name a few, who have billions and billions of dollars of option arms in their portfolios. These types of loans are no longer being made because they have proven to be horrific investments. As these mortgages continue to reset, and borrowers suddenly can't refi, we should see an increase in defaults. It seems impossible to imagine that this will not affect even the very richest neighborhoods in SF.
Posted by: K10 at April 28, 2008 11:39 AM
No, Waller is not sketchy. Webster is sketchy. Even the change from Webster to Waller is dramatic. The low income housing is between page and haight, so hermann is two blocks away, and the Mint, with security 24/7 patrolling, is right there.
Trust me, if you lived nearby, you would know that the difference of two block can mean everything.
Just look at Waller and Fillmore, two blocks from Haight and Webster. Pet store, Cafe du Soleil and Thep Phanom, along with hair dressers, designers, and other restaurants. Duboce park down the street. Access to every muni metro line. Octavia on-ramp right nearby.
This is a neighborhood a lot of people love. Just choose your blocks wisely. Webster and Hermann is a good block.
Posted by: noseeum at April 28, 2008 11:43 AM
The "Baron mnagnate" flat is still for sale for 749K. It is 1600sf+ and the Nabe is better than 57 Webster with more or less the same concerns about nearby projects. I think 1M will be a hard sell.
Posted by: San FronziScheme at April 28, 2008 11:43 AM
Correction, Haight is sketchy above, not Webster. Haight and Webster, to be precise.
Posted by: noseeum at April 28, 2008 11:45 AM
I would have agreed that in the 1980's through to 1997 SF was slightly undervalued. Hence people make a killing if they bought then and decided to sell now.
Posted by: Treeman at April 28, 2008 11:46 AM
That one's a TIC. Always a price discount. I don't know that Golden Gate block, but it's pretty close to Alamo Square so probably not bad. Some parts of Golden Gate are downright scary though.
What do you think would be a good price for Webster? Place your bets folks, and I'll track it.
Posted by: noseeum at April 28, 2008 11:52 AM
True, TIC vs. condo. But still the TIC has not sold yet at this price.
What about 57 Webster? It shows as a 2-level but the building appears as a basement + 2-level. Where is the other unit? Is it the right-hand-side upper window?
Plus, what about square-footage?
Posted by: San FronziScheme at April 28, 2008 12:01 PM
I'm pretty sure it's over 1800 square feet.
Master suite in the "basement" with deeded garden right outside the suite. Two other bedrooms upstairs with dining room and living room. Pretty big place. One deeded parking spot.
Posted by: noseeum at April 28, 2008 12:05 PM
Sorry, this one is ground floor and master suite below. Other unit is second floor.
Posted by: noseeum at April 28, 2008 12:07 PM
Posted by: noseeum at April 28, 2008 12:08 PM
Pretty nice setting.
- Deeded garden
- Master unit downstairs when you are the one with the middle level (no noise from the upper unit at night).
And "Carrera" marble cut by Ferdinand Porsche himself...
Posted by: San fronzischeme at April 28, 2008 1:22 PM
"I would have agreed that in the 1980's through to 1997 SF was slightly undervalued. Hence people make a killing if they bought then and decided to sell now."
Through the "retrospectoscope", yeah housing during that time period now seems undervalued. However, unpredictable things happened, aside from the loose lending standards and nationwide run-up in house prices. For better or worse, the dot-bomb bubble brought in lots of new residents, many of whom stayed on in the Bay Area even after the crash. The usual "scapegoats" of Google, etc have brought in even more housing demand.
So, perhaps housing seemed overvalued, but given the economic climate of the 1980's-90's, the housing market merely reflected local economic conditions, much like they do now.
IMO, that's why the Bay Area and SF in particular continue to have relatively strong housing markets compared with almost everywhere else in the US. Unless there are significant job losses in the Bay Area, I personally don't see significant price declines here in the mid to high price ranges. The entry market has clearly declined already, mostly from the subprime mess and the related credit crunch, but the higher-end market will probably hold steady for some time.
Just my $0.02
Posted by: greater fool at April 28, 2008 2:32 PM
From the pics, I'd actually be quite interested in buying the 57 Waller place (though not at a million). I actually think the location's a plus. I'll have to check it out... and possibly lowball. 800k you say?
Posted by: 99paa at April 28, 2008 3:42 PM
99paa, as Socketsite says, feel free to invite me to the house warming! :)
Posted by: noseeum at April 28, 2008 4:38 PM
This is a one year comparison to last year, where listing volume was down something like 40.9%, per my E&O agent. (E&O agencies make ther money on volume, so they usually know the inside story on home sales volume numbers pretty well, it links direclty to their bottom line)
The chart reads to me like we are back to normal sales volume levels for Q2, the spring, normally a strong listing and selling quarter.
Posted by: Kathleen at April 28, 2008 4:57 PM
"This is a one year comparison to last year..."
Listing volume in 2007 doesn't look too much different from 2006 - both around 1,060 compared to 1,450 in 2008.
Posted by: toni at April 28, 2008 5:06 PM
kids is this loooooong from over and the home builders and financial institutions agree
Eli Broad ... said he expects home prices to drop another 20 percent.
``I don't think we're anywhere near a bottom in housing,'' Broad told Bloomberg TV at the Milken Institute Conference in Beverly Hills, California. ``We're going to have a big inventory of unsold, unoccupied homes that's going to take three or four years to clear out.''
``People were using their home equity as really an ATM machine,'' Broad said, referring to an automatic teller machine. ``They were spending more money than they were earning by taking equity out of their home. That couldn't go on indefinitely. We're now paying a price for that.''
"More capital hikes and dividend cuts (are) coming as our credit deteriorates and forward earnings decline," [Morgan Stanley] analysts led by Betsy Graseck wrote in a report. "We think we are only in the third inning of the credit cycle and expect this credit cycle will be worse than (the slump in) 1990-91."
This goes a long way to explain why the housing bears refer to even primest of prime areas in SF as not having cracked 'yet'. Because there appears to be a long road ahead before we hit bottom.
Posted by: badlydrawnbear at April 28, 2008 6:26 PM
"...Before we decide the answer is to throw 15 year olds in jail, lets see if we can build a better school system and social network that might deter them from the crime in the first place. I really can't stand the "lock em up" mentality...."
The progressives in this town spend much more effort on fighting r.e. development and promoting public power than making a cause of education for minority youth. The average grade of AfAm males in SF high schools is a 'D'. The juvie incarceration rate is amazingly high.
It's hard to fix public education. It involves taking a lot of responsibility and being serious. It's much easier to strike radical poses and keep others, e.g. the police, from doing their jobs.
All that said, we have our own version of a national issue here. The most important single contributor to social welfare in America is a strong job market, not just for the educated, but for all. We haven't cared in decades about working Americans, and we have the alienated youth, the declining wages and benefits, to show for it. The truth is, bandaid social policies will not compensate for a bad job market.
Posted by: dissent at April 28, 2008 7:47 PM
It's not an apple (too much remodeling since its last sale), but 57 Webster (referenced in a number of comments above) closed escrow on 5/15/08 with a reported contract price of $983,000.
Posted by: SocketSite at May 15, 2008 1:53 PM
It's no apple. The baths and kitchen are much nicer now. But 983K for a Lower Haight condo is astonishing.
Posted by: fluj at May 15, 2008 3:20 PM