August 18, 2008
SocketSite's San Francisco Listed Housing Inventory Update: 8/18/08
Inventory of Active listed single-family homes, condos, and TICs in San Francisco fell 4.3% over the past two weeks (which is typical in the weeks leading up to Labor day) and is currently running 17% higher on a year-over-year basis.
Expect to see listed inventory continue to decline over the next two weeks and then spike in the first two weeks of September.
The standard SocketSite Listed Inventory footnote: 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).
First Published: August 18, 2008 1:00 AM
Comments from "Plugged In" Readers
Somewhat off topic: Does anyone know what's going on with 1150 Folsom #1, MLS# 334811? It has been "Active Contingent" on the MLS for the past six months, as reported by sfarmls.rapmls.com.
Posted by: Delancey at August 18, 2008 1:59 AM
I don't see much from this graph (bearish or bullish)
on the one hand it would seem a positive that the listed inventory has stabilized over the summer. on the other hand, this year's graph is somewhat different than the last 2 years, so it is unclear if something has "changed"... will we get a bounce in fall like the last 2 years? Perhaps or perhaps not.
1) are more people trying to sell their places without listing them? (perhaps they can't afford the transaction fees?)
2) I wonder if people are taking their places off the market waiting for "better times"?
3) has there been a surge in sales? (I hadn't heard of one, but anything is possible)
I personally don't invest based on technicals, instead i'm more of a fundamental investor. the fundamentals still don't look too great IMO. but it'll be a slow grind (years). however, the lack of a major inventory boost could definitely be considered "good" (or at least "not as bad as it could have been") for those who desire expensive RE valuations
Posted by: ex SF-er at August 18, 2008 6:29 AM
SS, can you overlay the sales chart on top of the inventory chart? That gives a pretty interesting picture. As has been pointed out about a thousand times here, you really need to look at both elements (among many other indicators).
Barely on topic, it looks like the GSEs have resumed their death spiral. Stocks are now heading toward the new lows they hit several weeks ago. Barron's reported the "probably not needed" bailout almost certainly will be needed, which should wipe out all shareholder equity (except for that which the big investors arm-twist as part of the deal). At this point, it is difficult to tell what, if any, impact a bailout would have on the GSEs as they are acting under a de facto bailout already. It should call for more conservative lending standards but could just as easily result in loosening standards as the politicians try to give the people what they are clamoring for.
Posted by: Trip at August 18, 2008 7:22 AM
Off topic response to Delancy - An NOD was filed on 7/3/2008. I have no knowlege on the specifics, but it appears headed down the auction path.
Posted by: ozzie at August 18, 2008 7:36 AM
Sales are rising. Primarily lead by North Beach, SOMA, Mission Bay. Look at the July sales stats:
For condos, Mission Bay leads with 92 sales, a 33% increase over last year.
Those numbers will get extra pushes when Fibrogen's 130 employees move into Mission Bay in November 2008 and Pfizer's 100+ employees move in early 2010.
Posted by: SFReo at August 18, 2008 9:38 AM
On topic, I think this graph has continued to show relative strength in the market in recent months.
It's the 5th consecutive decline in the level, at a time when 2007 showed an increase.
The YOY comparison has gone from 40-50% down to 17% now. I don;t think many would have predicted the inventory would have been this low at this time of year around feb-march time, including myself.
Posted by: Repornaddict at August 18, 2008 9:40 AM
Here's the info on the Pfizer & Fibrogen move into Mission Bay across from UCSF and Radiance. http://www.bioregionnews.com/issues/2_32/features/148743-1.html
and in case you haven't seen them, here are the renderings courtesy of SFCurbed (Pfizer's buildings are in the foreground and Fibrogen is in behind) from the vantage point of Mission Bay Boulevard and 3rd street.
Posted by: SFReo at August 18, 2008 9:49 AM
The Pfizer & Fibrogen move of facilities to Mission Bay has near zero relevance. The very highest paid directors and managers will continue to live in the finest neighborhoods in the Bay Area, while most of their employees find shelter in the East Bay, typically renting.
What the graph shows is a very highly specialized market. In a city of around a million or so (very roughly), having only a thousand or two units available at any time along with the presence of obviously strong summer demand really sets this market apart from the rest of what is going on, even in the Valley.
Posted by: Mole Man at August 18, 2008 10:39 AM
Actually, I think that these developments may indeed have a direct effect. Two relatively affordable, in SF terms anyway, neighborhoods are near Mission Bay. They are the Mission and SOMA. We have already seen the Mission buoyed so far this year. Bernal too is very close and sub 900K properties can be found there.
Posted by: fluj at August 18, 2008 11:39 AM
If 10% of those 230 biotech employees choose to live in San Francisco it will make a 1.7% difference in the active listings based on the August numbers. Near-zero but not insignificant, i.e it would push the present 4.3% drop to 6%.
Posted by: SFReo at August 18, 2008 1:28 PM
any update on the when the next CII will be coming out?
Posted by: spencer at August 18, 2008 1:43 PM
"Those numbers will get extra pushes when Fibrogen's 130 employees move into Mission Bay in November 2008 and Pfizer's 100+ employees move in early 2010."
Based in my experience in biotech, i would say maybe only 10 out of the 130 employees from Fibrogen will be able to afford even a 1bdr in Mission Bay.
For Pfizer, maybe 20 out of the 100+ can afford a 1bdr.
1 bdr are 700K+. You need a salary of 200K to afford this. Only VPs in small biotech make this much. And only sr. directors and above from pfizer.
Posted by: spencer at August 18, 2008 2:44 PM
I personally am not counting on many misson bay employees to buy homes in the neighborhood.....Then again, there will be a lot of office space (not all biotech and who knows who the other tenants will be).
But certainly once mission bay is completely built out in 10 years from now it will be a more desireable place to live, with many jobs, retail, and the cleanest and newest parks in san francisco.
Posted by: anon at August 18, 2008 3:06 PM
Those salaries you estimated don't count bonuses and stock options from my experience. Some of my friends work in Pharmaceuticals and they pull down $500-$700K.
Posted by: sparky at August 18, 2008 3:15 PM
I'd like to know which companies your friends work at. I have close family members who have Phds and work in biotech. None of them make anywhere near $500k much less $200k. I agree with Spencer that you have to be a VP to make $200k. And I'm willing to bet it's only senior managers that receive large bonuses.
Posted by: satchelfan at August 18, 2008 3:54 PM
To add another point, Fibrogen is private and Pfizer options are likely underwater given the stock performance over the past several years.
No one will be buying houses in SF on option money when they move here (maybe, maybe, in the future if there is a pop), and only the big wigs can afford to buy houses on salary (plus bonus, if any).
Posted by: Tom at August 18, 2008 4:03 PM
My friends are VP's. There seem to be a lot of VP's in these companies. They are MD's as well.
They work at The Medicines Company.
Posted by: sparky at August 18, 2008 4:26 PM
I hate to break this to you, sparky, but your friends are almost certainly *padding* their salaries when they talk with you. $400-500K for just VPs at some company that basically makes fancy aspirin? No big deal. It happens, hehehehe.
For any public company, it's pretty easy to get an idea of base + bonus compensation by looking at the public proxy statements (14A filings).
The latest proxy for MDCO shows that the CEO (Clive Meanwell) receives $566K in salary. This is the highest from what I can tell, and is about what a 28 year old trader on a prop desk in NYC makes (or used to make, hehehehe).
The next highest is the President (John Kelley) and he makes $450K. The others quickly fade. For instance, the EXECUTIVE VP and CFO makes $315K.
Now, there is a bonus program, but the max targets are 50% of salary it seems from the public filings. Again, these sorts of programs are typically very top-loaded, and it is rare for mid-level management to approach the targets, but I guess anything is possible.
The stock has meandered about, and has basically gone nowhere since 2000 or so (with some wide swings). Like a lot of companies, MDCO seems like it has done a better job of enriching its execs (at least a little - heh, this isn't Wall Street compensation that's for sure!!), while basically pissing away its investor's money. No dividends of course - it's pretty hard to pay dividends when you are running a negative EBITDA.
I guess there's a possibility that as MDs your friends are being paid more than the senior management (only exec compensation needs to be disclosed in a proxy - unless you are also one of the top 5 earners at the company ususally), but I doubt it.
Posted by: Satchel at August 18, 2008 5:01 PM
In sparky's defense, he did say his friends make between $500 and $700,000. That's a big range and it looks like it is much closer to the $500 half of that line.
Posted by: anon at August 18, 2008 5:09 PM
I actually have there 1040's because they invest with me in real estate stuff. So they aren't padding and I'm not padding and you can bite me. Plus, I clearly stated that I was including bonuses and stocks (which was my initial point about the employees of these companies). One of my friends cashed $1M of the company stock, so it is not worthless. So serious bite me, asshole.
I will definetely make a point of not giving out any information on this site anymore, so you won't need to fact check me.
Posted by: sparky at August 18, 2008 5:23 PM
Those salaries you estimated don't count bonuses and stock options from my experience. Some of my friends work in Pharmaceuticals and they pull down $500-$700K.
genentech is the most successful biotech in bay area and only high level employees even with options, bonus and a rapidly appreciating stock are consistenly bring home greater than 300K per year. ocassionally, there is a windfall, like right now at genentech.
but these are exceptions, not the rule. The majority of options held by biotech employees are worth zilch.
Posted by: spencer at August 18, 2008 5:29 PM
sparky, all Satchel did was call your B.S., which you now admit was B.S. and your friends are not representative of pharma employees at all, which was your initial intimation when you criticized spencer's statement. I don't know why they'd give you their tax forms anyway just because they "invest with you in real estate stuff."
Posted by: anon at August 18, 2008 5:33 PM
"My friends are VP's. There seem to be a lot of VP's in these companies. They are MD's as well.
They work at The Medicines Company."
The 3 yr chart on MDCO (the medicines company) shows the stock has gone up 9% in the alst 3 yrs(total)and the 5yr chart shows the stock is down 15% from 2003, so its hard to figure out how they are making money on options.
Also, the CEO looks to be making about 800K so you're friends must be the most sr. VPs.
Posted by: spencer at August 18, 2008 5:37 PM
You guys need to stop calling everyone who volunteers useful information on this site liars if it doesn't dovetail into your archly negative outlooks. It's really lame. You have no idea what these people make or do not make just because you looked up the stock performance and may have correlating anecdotal salary evidence
Posted by: fluj at August 18, 2008 5:40 PM
800K post-bonus for CEO
Posted by: spencer at August 18, 2008 5:40 PM
I didn't admit anything was BS, and it's not. And yes I think it's shitty the way Satchel says "hates to break it to you", *padding*, "hehehehehe", "piss away investors money", "I doubt it" any and all of that wasn't needed.
So they may not be representative of Pharma, but they are the only Pharma employees I know. So that is my only experience. I said in my post "my friends work..." and didn't claim to say anything else. So why jump on me as well.
As far as why I have there 1040's I could tell you but that would break my new rule. So I won't.
Posted by: sparky at August 18, 2008 5:42 PM
not sure how your friend cashed out millions in stock...
The 3 yr chart on MDCO (the medicines company) shows the stock has gone up 9% in the alst 3 yrs(total)and the 5yr chart shows the stock is DOWN 15% from 2003, so its hard to figure out how they are making money on options.
Posted by: spencer at August 18, 2008 5:42 PM
fluj, I agree with your point, but this was not useful information. The discussion concerned whether these biotech moves would impact housing in that area. Spencer offered good info indicating that it probably would not because earnings in the industry are not high enough. Then sparky countered with what has been shown to be either complete B.S. or a one-off example that does not disprove spencer's point at all. Sparky should have come clean with what his numbers really represented.
Posted by: anon at August 18, 2008 5:45 PM
1)his friends make more than the CEO?
2)they cashed out millions in options on a stock that has gone down over the past 5 yrs.
the basic premise that fibrinogen employees can afford mission bay condos. the average salary is probably around 70K with a 5-10K bonus and there is no stock awarded.
the CEO and top 3 -5 VPs may be able to afford a 1bdr.
Posted by: spencer at August 18, 2008 5:45 PM
I said $1M, you all rounded it up to millions. I said $500-$700 all included. You say that is more that the CEO. They get the stock + pay, so the up or down doesn't matter as much it has value when you get it.
Posted by: sparky at August 18, 2008 5:55 PM
I for one didn't even say Mission Bay. I know it's expensive. I said Mission, Bernal, SOMA, and these first companies are just the tip of the iceberg (well if Gavin Newsom and co. had their druthers that is.) I'm not interested in looking up stock performance and trying to put a fine point on complete strangers' salaries. Not only that, but I get creeped out by some of the almost ghoulish digging that goes on around here. Couple it with Satchmo's "hee hee hee" and it no less than the Cryptkeeper from Tales from the Crypt who springs to mind. Furthermore I believe Sparky, who said "plus options and bonuses" in the first place anyway. It was an anecdote. Don't jump down someone's throat in such a weird way all the time. Jeez.
Funny isn't it? Whenever something doesn't dovetail into uberbear myopia it's "liar this liar that" or else it gets ignored.
Posted by: fluj at August 18, 2008 5:57 PM
You mean people exagerate how much their incomes are?!
One thing that fascinates me about SS is you begin to think everyone in S.F. makes mare than 300k a year, yet tourism is still the #1 employer in the city, and last time I checked, desk clerks and waiters were not shopping for homes in Noe Valley. Anyone outside of the real estate industrial complex has a pretty good handle on what people are making and what they are "worth". Even in a city which claims to be wealthy, only a VERY small percentage earn over 250k a year. I grew up in Newport Beach where people used to do the opposite and claim to earn and have much less money than they actually did.
Posted by: anon43 at August 18, 2008 6:07 PM
SEC filings of public companies (i.e., Pfizer) are not "anecdotal salary evidence."
Posted by: Tom at August 18, 2008 6:41 PM
sparky: get over it. you offered a data point which satchel refuted with good analysis and hard numbers. the fact that your friend cashed out a million isn't close to "pulling down $500-$700K" year after year which is what you implied.
fluj: you get creeped out by people relying on analysis rather than anecdotal "i have a friend..."? that's scary considering your profession.
satchel: great analysis.
Posted by: nonanon at August 18, 2008 8:05 PM
The discussion on the affordability of Mission Bay and Biotech careers seems to assume a single source of income. I think this reveals a lot about the people who post here. If you assume a dual income for two professionals things will work out.
Posted by: non at August 18, 2008 8:23 PM
Gotta chime in on the pharma/biotech salaries. The idea of a 500K salary for a scientist of just about any level is laughable. Or my job at the world's largest biotech just pays really poorly. If you want anecdotes, come to my basement apartment where not one but two people earn these fat biotech salaries and yet we still can't afford a San Francisco SFR at a sane multiple of our salaries, say 5X. I can also tell you about my boss with many, many years of experience (and some real options money, not underwater like mine) who's sweating the October reset on his 2 bed /1 bath bought in 2003. Yeah, he's interest only and hoping the appraisal comes with sufficient equity to refinance.
Maybe Pfizer and Fibrogen are stocking a building full of vice presidents (and I really don't know...), but if there's a lab in the building forget about a big pool of buyers for SF properties. I wish it were different, but the truth of the matter is that the biotech and pharma industry is shrinking. Industry layoffs are shockingly high. I can't attest to the absolute integrity of the data listed in the link on my name below, but I can confirm most of those numbers through news reports or my friends at these companies.
As great as the stock bump at Genentech is, the people that I know there are worried about the future. More so, the folks at Roche Palo Alto of which some will get moved to DNA, some might get moved to Nutley. NJ, and many of which will be layed off. Or so the gossip goes. I'm sure there is still money to be made in this industry, but don't let the words "biotech" or "pfizer" elicit visions of of options rich millionaire secretaries getting into bidding wars over SOMA shoeboxes.
Posted by: Stu at August 18, 2008 8:37 PM
well, again. The stock he cashed wasn't part of the salary numbers, it was to refute that the stock was not worth anything. Which was one of the comments about my post. To Stu, same friend owns a place in SF and NY so maybe you are getting hosed at your job.
nonanon, no I won't get over it. Satchel said so it's true. That's BS. My numbers are right, and the above $1M cash out goes for your post as well.
Anyway like I said, I'm just going to view the REporn on the site from now on, and not comment on anything else. I don't need this.
Posted by: sparky at August 18, 2008 8:55 PM
I'm sure they are not typical biotech/PhRMA employees, but the most expensive house on my block was bought by a guy who works for Genentech (from another guy who worked for Genentech). And someone I know who works for PhRMA bought a stunning house in the Castro.
I think everyone is right on this thread-- most employees in any industry don't get rich, but some people somehow are still buying in SF.
Posted by: Dan at August 18, 2008 9:24 PM
I an MD and a past-researcher. My field was/is the most sought after field in biotech right now (stem cell research).
Most researchers in the Bay area make less than 100k/year. top researchers will make up to 200k/year.
only the superstar researchers with a lot of clout will make more than 200k/year.
some of the executives can make a bundle, but not many. biotech in general has to stay relatively lean because you can go years and years without a hit product... and once you have it the search is immediately on for the next product... for every "winner" you get tons of disappointments. for example: Genentech's earnings are heavily dependent on Avastin and Rituxan (1.2B of their 3B revenue) followed by Herceptin (300M) and maybe Lucentis (200M). now that those drugs are completed the race is on for the next one to replace earnings once their market share is complete. Other companies are not as fortunate to have 3-4 big earners like Genentech does.
Most researchers (single OR double income) will have difficulty buying in SF. the salaries are just too low.
that said, there are not an insignificant number of MDs and researchers who have "outside money" (trusts, parents, etc) and thus they use that to afford the SF lifestyle. many more will stretch like crazy because they feel like they "deserve" a nice place after the years/decade of hard work they put in.
I highly doubt those biotech firms moving in will create too much buying clout, many of them will rent in the city. but some WILL buy.
SF prices are just that high unfortunately.
Posted by: ex SF-er at August 19, 2008 4:47 AM
and remember; many researchers have been researchers for a LONGGG time. thus they have a possibility of buying because
-many of them bought their first house a long time ago (1980's to 1990's) when homes were much more affordable. Thus they rode the appreciation wave up... so they could sell their current place and buy a new place in the city if they chose
-if they're older they have had many years of making $100-200k/year thus they may have savings with which to buy a house. Many Bay Areans think nothing of having most of their retirement savings in their homes...
so we need to segregate the "who is buying RE" argument into different age brackets IMO. there is no way a researcher under 30 will buy... not likely but possible chance the 30-40yr old set could buy... but very possible that the 40-70yr old set could buy easily.
that said: some of the older folk won't want to sell their current home and move... I would presume that they live in their current home for a reason... but it all depends on where they work, their spouse works, their kids go to school... etc.
just too hard to know.
Posted by: ex SF-er at August 19, 2008 4:59 AM
You can be either a bull or bear, but you have to be consistant.
Some of you say SF was a bedroom community for SJ...until others showing you the statistics that SF's population gains during the daytime. I forgot the exact number...was it by 25% or 75%?
OK, let's use the high number (75%). That means, among the 230 biotech employees, 130 would probably live in SF, 100 would commute from from outside SF.
70% of SF residents rent. So, among the 130, 90 would rent, 40 would buy.
This calculation gets more complicated for married couples. I am not a math wiz so I cannot give you the numbers for that.
A couple with 150K combined income can easily afford a 800K property. That's about $5000/m PITI, $3500/m after tax deduction. That's enough to buy in some of the new condos in SOMA.
That's exactly how SOMA will work. New residential condos are built, creating available housing units. New companies are moving in, creating jobs, and the employees would buy close to the work.
Posted by: John at August 19, 2008 7:33 AM
I concur. And I think the Mission's one-shot (16th street) proximity, coupled with its enormous number of flats that can and will become TICs, is going to factor in. I think there's a chance Bernal with its sub-900K SFRs will also. Potrero Hill, despite being so close, IMO will not. It's too expensive and mostly SFRs.
Posted by: fluj at August 19, 2008 9:39 AM
"A couple with 150K combined income can easily afford a 800K property."
you must be kidding. you are suggesting someone to pay 5.35x their salary to buy, when they can rent for 2x their salary that is ridulous.
You are suggesting a couple spend $5K plus on mortgage payment alsone with their 8.4K monthly take home pay. That's 60% of their salary and you forgot HOAs and otehr added fees. This $150K couple should be looking at a $450K condo to remain in sound financial shape. maybe they can be one those new CUBIX studios.
Based on my math and historic and current principles; (3x salary should be the max one send's on mortgage). That would suggest a salary or combined salary of $267K, almost double what youa re suggesting.
Thes $800K condos will be less than $700K in SOMA soon enough (June 10 is my prediction) anyway
Posted by: spencer at August 19, 2008 10:04 AM
Well you are more conservative than your average California Spencer, now aren't you? I wish you guys would also stop projecting your own sentiments as definitive paragons on here.
Posted by: fluj at August 19, 2008 10:25 AM
"Well you are more conservative than your average California Spencer, now aren't you?"
Well, it sounds like the average Californian has something to learn, now, doesn't it? Mr. Market will only be too happy to oblige. Now, why can't everyone see the societal good here?
Posted by: Satchel at August 19, 2008 10:36 AM
"Well, it sounds like the average Californian has something to learn, now, doesn't it? Mr. Market will only be too happy to oblige. Now, why can't everyone see the societal good here?"
If you're going to continue to be so arch you're not going to be hearing from me very often on this blog, dude.
Yesterday you asked for D4 values. I obliged. You said nothing. Wonder why.
Posted by: fluj at August 19, 2008 10:40 AM
"Yesterday you asked for D4 values. I obliged. You said nothing. Wonder why."
Thanks (belatedly) for that data. The D-4M data that you showed demonstrated an approximately 30% DECLINE in mean $psf from 2006 through 2008YTD.
Here is the data that you provided:
"So far this year, 4-M: Six sales 1.35M to 1.65M 511 a foot. Two contingent properties, three active, one of which is the Yerba Buena property for 4.25M.
2007: 7 sales, 1.31 to 3.05M, 650 a foot.
2006: 8 sales, 1.225 to 2.7M 733 a foot.
My take -- not enough data."
Well, well, well. "not enough data", hehehehehe
Look, fluj, I understand VERY well the limitations of statistics for heterogeneous assets like SF houses. I try to be fair in thinking about it. Prices are down, apples to apples in D4 since 2005. Nothing else is consistent with the data that we can observe. It is an open question how much. My informed guess is around 5-10% on average since 2005, maybe 15-20% from the "spike" peak in 2006. As we have seen, there is variation in the type of property and the neighborhood, with larger relative declines on the more undesirable neighborhoods/properties and lesser declines on the more desirable.
So far, the observations (for the most part) are consistent with my estimate.
Posted by: Satchel at August 19, 2008 10:56 AM
No. Not worthy of response.
Posted by: fluj at August 19, 2008 11:08 AM
"Well you are more conservative than your average California Spencer, now aren't you?"
Isn't this "liberalness" with spending how we get into this mortgage crisis and subsequent recession in the first place? mybe that's why california home values are down 30% and there are record foreclosures. I am imagine a large % of people who are spending 60% of their income on housing are feeling a pinch right now.
maybe the market, average joe and those people who overbought will learn that principles always win out and 3x salary is where they should be looking
Posted by: spencer at August 19, 2008 11:10 AM
Spencer, I agree to an extent. But telling other people how to live is telling other people how to live. Does it make sense in light of your metrics? No. Could others live that way? Yes.
Posted by: fluj at August 19, 2008 11:17 AM
Actually, I'm paying for them to live in this unsubstainable manner via bailout and taxes.
Posted by: spencer at August 19, 2008 12:09 PM
So am I, I guess. So are a lot of people. So are they.
Posted by: fluj at August 19, 2008 12:28 PM
""Well, it sounds like the average Californian has something to learn, now, doesn't it? Mr. Market will only be too happy to oblige. Now, why can't everyone see the societal good here?"
If you're going to continue to be so arch you're not going to be hearing from me very often on this blog, dude."
I thought that was an apt response. channeling the Joker from Dark Knight..."Why so serious?" fluj.
Posted by: akrosdabay at August 19, 2008 12:48 PM