San Francisco Listed Housing Inventory: 6/30/08 (www.SocketSite.com)
Inventory of Active listed single-family homes, condos, and TICs in San Francisco decreased 1.4% over the past two weeks and is currently running 34% higher on a year-over-year basis.
We still haven’t seen a significant post Memorial Day bump in inventory and new listing volume is down on a year-over-year basis, but sales volume has started to slow as well. And perhaps as a measure of mismatched “expectations,” thirty-three percent (33%) of current listings have undergone at least one price reduction versus twenty-six percent (26%) at the same time last year.
Keep in mind that our listed inventory count does not include listings in any stage of contract (even those which are simply contingent) nor does it include listings for multi-family properties (unless the units are individually listed).
SocketSite’s San Francisco Listed Housing Inventory Update: 6/16/08 [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by "Dave"

    Something occurred to me over the weekend as I looked at TICs on the market in my neighborhood (Noe). They don’t seem to be selling at all. I have a friend who recently tried to sell off 1/4 of a 4-unit building and not a single taker, even with a pretty modest asking price.
    So, as I look at the inventory listed here, I’m curious about TICs. What percentage of them make up the current market? What are the trends? And more importantly, what impact are TICs having on overall prices, DOM, etc.?
    TICs seemed to gain huge favor in the last few years as more and more marginal buyers sought entry into an increasingly unaffordable market. Any thoughts out there? Or, better yet, any data out there to support your thoughts? What say you, fellow readers?

  2. Posted by badlydrawnbear

    I would venture to guess that those potential buyers are asking themselves the same question I ask myself.
    Why buy an SF TIC, which has some major drawbacks (like not being able to tap the equity in case of emergency, one of the big pluses of purchasing in the first place), when I can spend the same money and get a full fledged condo/SFH elsewhere in the Bay area for less then the TIC?

  3. Posted by FSBO

    The current active inventory contains 605 SFH’s and 864 units in the condo/TIC/coop category. Of the latter, 187 are TIC’s, 665 are condo/loft condo, and 12 are coop’s.
    MTD sales in June are 35 TIC’s and 149 condo/coop (and 182 SFH’s). So the implied months of supply is slightly higher for TIC’s than other condos.

  4. Posted by diemos

    TICs with fractional loans I would expect to behave much like condos but I’m curious what happens when there’s a group loan and one owner wants out and has to lower the price to below the nominal value of their share.

  5. Posted by Jimmy (Bitter Renter)

    I looked at mortgage rates for San Francisco yesterday, and noticed that for Jumbo loans they are up around 7.8%-8.0%. Probably even higher for someone with my middling credit rating.
    So your run-of-the-mill 3BR condo (costing about $1.1 mil) would run you somewhere north of $7k/mo + taxes and HOA dues assuming 20% down.
    Is it just me or is that a lot of money to spend every month?
    Also, I remember running the numbers two years ago when I moved here and that cost to own was more like $5000-$5500/mo. Now its closer to $8000/mo.
    I guess it doesn’t really matter for most real buyers in real SF, but still…. this housing bust isn’t working out the way I’d imagined. Prices are flat to up and monthly purchase costs are up about 40%.

  6. Posted by enonymous

    real jumbo mortgage rates (provided you actually do a bit of research) for anyone with a reasonably good credit rating are still between 6.125 and 6.75%
    https://www.penfed.org/productsAndRates/mortgages/mortgageCenter.asp
    try the above link
    anyone paying 7.8-8.0% needs to have their head examined

  7. Posted by Jimmy (Bitter Renter)

    Does that bank write loans in San Francisco? Just out of curiosity. Because the nationwide jumbo loan rates look OK but when you narrow it down to SF Bay Area, things aren’t quite so nice …
    Admittedly I didn’t dig very deep.

  8. Posted by enonymous

    yes they do write in SF
    and local lenders will get you between 6.375 and 6.75…

  9. Posted by Enthano

    enonymous – agreed, real jumbo rates are in the 6% range lowering overall housing costs as outlined by Jimmy substantially.
    diemos – although fractional financing can help (but doesn’t necessarily), every situation is unique and it’s still a TIC. TIC “share” or percentage ownership and % responsibility of loan can and does vary; your share of ownership will always be set (say 25%) but your share of the overall mortgage may be substantially higher if you buy into an established TIC when prices were lower. Bottom line, you need to pay off your portion of the group TIC loan no matter your resale price/profit/loss.

  10. Posted by Jimmy (Bitter Renter)

    Ok, so one last question. If you wanted to get a 30-year fixed-rate jumbo with a 15-year fixed rate, interest only (and then 15-years fully amortizing), where would you get a loan like that & approximately what % interest?

  11. Posted by enonymous

    jimmy – you will get such a product in exactly one place – nowhere
    if it did exist, the rate (especially in this environment) would need to be very high, or would certainly need to be an ARM product.
    think about it – you want a 30 year loan, with a fixed rate, and an interest only provision for the first 15 years – you are asking, essentially, for a 0% rate for the first 15 years, with no compensation to the mortgage servicer for that excess risk from their end (and excess return from yours).
    maybe in 2004-5 such a prodcut could have exisited, but certainly not now

  12. Posted by trixie

    @ Dave: when I was shopping around, my mortgage broker warned me off TICs simply due to the higher mortgage rates one usually gets – seems like the fractional loan business is very much a seller’s market.

  13. Posted by Jay

    Your mortgage broker warned you off to TIC’s because TIC mortgages don’t go through mortgage brokers. :) Rates are competitive; usually within half a percent. But they don’t change as quickly since they aren’t at the whims of a secondary market.
    In addition, many TIC’s have assumable loans. I’ve been to a few TIC open houses where they advertised that you could assume the TIC loan at around 5% because it was set based on some long ago long term rate. (Or sometimes short term rate if it was an ARM)
    Before the bubble burst TIC’s sold nearly at parity with condos. It appears now that they sell for a 20-30% discount to condos. So there are some good deals out there that are worth the at times 0.5% higher rate.

  14. Posted by Jimmy (Bitter Renter)

    enonymous– I figured a long term interest only loan would be a great way to put off that pesky amortization thing until inflation had done its dirty work.
    I googled it and Freddie Mac or some such outfit referred to a loan product (15/15) like this and also a 10/20 loan.
    Either would do but a 15/15 at around 6.25% fixed would be just the ticket.

  15. Posted by Ryan

    Dave, dlemos-
    I am not a real estate professional, but I can tell you that the (vast?) majority of available condos are in new construction buildings. We would have taken a condo when we purchased, but there simply weren’t any available that fit the size/location/style we wanted. TICs will still be saleable as long as the lottery lines stay long, which is for the foreseeable future.
    On a group TIC loan you can’t ‘sell’ your share for less than the nominal value because the lender won’t allow you to discharge your debt that way. However, you can let the new buyer directly assume your mortgage and get what value you can back via cash from the new buyer, either directly or a secondary loan.
    More likely is that you’ll end up refinancing into individualized loans, which makes the transaction easier, but the full value of the old mortgage has to be paid off. Still, you can take a loss this way, if you have the assets to finish the old group loan.
    Mortgage brokers can do individualized TIC loans. I know this first hand.

  16. Posted by John

    So few comments? Usually any kind of chart gets a lot of comments from both bears and bulls. Bears would say “30% increase in inventory! Sky is falling!”. Bulls would say “Only a few percent higher than 2006? This market is pretty good”

  17. Posted by FSBO

    John – I thought the inventory levels would be much higher and rising. Inventory is actually down to 1,420 at this moment. Total MLS sales for June stand at 381 (at this moment) with an overall median price of $799K. June 2007 had 545 sales at a median of $830K. Jun06 – 617 sales @ $799K, Jun05 – 656 sales @ $800K, Jun04 – 708 sales @ $717K.

  18. Posted by Trip

    Does anyone know whether the 2006 trend (inventory dip in summer then leaping up in fall) or the 2007 trend (levels steady through summer then leaping in fall) is more in line with, say, the past 10 years? While it is too early to tell for sure, 2008 appears to be following the 2006 pattern but with higher inventory levels.
    Thanks for the sales numbers FSBO — pretty significant drop. Last month I used FSBO’s “5 Fridays” theory to predict lower June sales (most closings are on Fridays, so months with 5 Fridays see more closings — June ’07 had 5 Fridays while June ’08 only has 4; May ’08 had 5 Fridays, hence the surprisingly strong sales numbers in May). Nothing too concrete or scientific about overall sales trend predictions, I admit, just an interesting point FSBO identified that seems to materially affect the month-to-month data.
    With 30% higher inventory and 30% lower sales, the price-supply curve only leads in one direction. I see that asking $/sf are significantly lower than last year. From Altos Research’s charts, SFRs are down from about $610/sf to $519/sf for SFRs city-wide; condos down from about $725/sf to $683/sf. Nevertheless, I too am surprised that inventory levels are not even higher given the big sales slowdown. There is certainly plenty of ammo for any position in the bear-bull-flat debate (well, not too much for the bull position). But with much tighter lending standards, higher down payment requirements, still-rising interest rates, a plummeting stock market (flat at best in tech — not good for options), higher unemployment, higher inventories, and lower sales volumes, my bet is still with the laws of economics rather than with some SF exception.

  19. Posted by John

    The law of Fridays is interesting…and makes sense. Thanks

  20. Posted by Spencer

    Dear socketsite.
    According to my estimates and a note you sent me last month, the Socketsite complete inventory index (CII) should be coming out on Monday. Just wanted to check in because i am going to visit my family away this weekend and will need this to look forward to to ease the tension of my weekend

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