September 29, 2008
SocketSite's San Francisco Listed Housing Inventory Update: 9/29/08
Inventory of Active listed single-family homes, condos, and TICs in San Francisco continued to climb over the past two weeks, briefly broke through the 1,700 units mark, and is currently running 14.2% higher on a year-over-year basis.
At the same time and based on our calculations, the number of new contracts written for listed properties in the fourth week of September was down roughly 25% as compared to the year prior (which was down roughly 17% as compared to the year prior to that), and is running roughly 22% lower on a year-over-year basis with respect to the last two weeks of the month.
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: September 29, 2008 1:30 AM
Comments from "Plugged In" Readers
Anybody else notice that one of these new active listings that hit the market was unit 4B at the Infinity. I didn't think they could flip those units but they had an open house last weekend.
Posted by: tom at September 29, 2008 7:42 AM
Posted by: spencer at September 29, 2008 7:56 AM
this is not good.
Posted by: bye bye at September 29, 2008 7:59 AM
It depends on what you consider good?
Do you consider gas at $4/gallon good? Are out of reach tuition good? Is expensive food good? I could go on and on and on.
Cheaper houses means people can actually buy and house and eat their cake too. Of course if they got caught up in the 2002-2006 hysteria that's sad.
The "ownership society" Idiot George successfully sold us brought us into an unaffordable life.
Cheap housing: Good.
No money left on the 15th of the month: Bad.
Posted by: San FronziScheme at September 29, 2008 8:09 AM
This is not good... in the sense that I feel the price deduction will finally come to SF. However, nobody can afford to buy because of the higher down payment requirement and higher mortgage cost.
Can anyone still get reasonable loan with 10% down? Please share the info if you can.
Posted by: John at September 29, 2008 8:16 AM
I like that formulation, Fronzi.
I think diemos once had a great comment on this (or maybe another?) blog, something like George Bush's "Ownership Society" has worked perfectly: The banks own you.
Posted by: Satchel at September 29, 2008 8:16 AM
tom, is Infinity 4B on MLS? Can you post a link?
Posted by: chuckie at September 29, 2008 8:16 AM
"However, nobody can afford to buy because of the higher down payment requirement and higher mortgage cost."
The smart ones with a lot of cash will buy them when the price is right. We'll rent them to the people who can't come up with the cash because they either didn't have the discipline to save or foolishly squandered what they had.
Posted by: Satchel at September 29, 2008 8:19 AM
I don't think any of this increase in inventory and decrease in [contracts is] attributable to the events of last week in Washington. I wonder if we will see anything noticeable in the numbers in the next few weeks.
Posted by: chuckie at September 29, 2008 8:23 AM
The problem is, is that a lot of renters who are looking to buy are getting their nest eggs pulverized by the stock market. Just look at today. The average renter who is saving and investing the difference is down about 18% today, but many are down 25-30%. Add to the fact that rents are going up, and money markets are maybe paying 3%... it's tough out there.
The only class that is really doing well is the landlord class who wants to be a landlord.
Posted by: Roger at September 29, 2008 8:25 AM
Yes 4B is on the MLS and I think I saw it on Zillow or Redfin? I thought I recalled seeing a posting with price quotes on this unit (and others)on one of the blogs and it was going for less.. if I was looking at the right info this person will actually profit if they sell for the current asking price.. something not many buildings can support in the current econ so I actually see it as good. Of course the blog post does not equate to what it actually sold for in past but still. Does anyone know how to get pricing on the units that have sold so far?
Posted by: lovininfin at September 29, 2008 8:25 AM
Also, when i write "doing well" it's a relative term as it relates to property/stocks as an investment. If you are a renter who is happy with living in your property and don't mind paying the rent, and if you are a homeowner who loves his/her house and can pay the mortgage, all this doesn't matter.
However, if you are a property speculator or stock investor, all this matters b/c you never intended to live in the house, and stocks provide no utility. By year end, there will be reports that SF rents have creeped up another 5-7%.
Posted by: Roger at September 29, 2008 8:30 AM
Clearly the "crash" is coming to San Francisco ... its just a question of when. I wouldn't stake too much on just a one-month pop in listings. When we get to about 3000 listed inventory... then wait a year until some sellers get desperate and you might see some activity (at the margins).
On a more mundane note, does anyone know when WB (Wachovia) starts trading again? I want to exercise my $10 put options but can't yet. WB should begin trading at about 90 cents ... which will make for a sweet payday ($9.10 return on a $4.00 investment in 2 weeks).
Posted by: Jimmy (Bitter Renter) at September 29, 2008 8:46 AM
roger, i, for one, welcome your perspective.
"The only class that is really doing well is the landlord class who wants to be a landlord."
Posted by: paco at September 29, 2008 9:03 AM
"By year end, there will be reports that SF rents have creeped up another 5-7%."
I don't think this will happen. if the rents are up for the year now, i think we will see them creep back down over the next few months. Rents outside of SF have plummeted, and I think we will start to see a downturn in rents as well.
its a heck of a lock cheaper to rent in the east bay or pennisula and take BART or drive to work (actually Marin too). Even with high transportation costs, the difference in rents more than make up for it. SF rentals, much like housing prices, are not immune to a downturn.
by the way, this credit bubble started with reagan. i saw a chart very recently that charted creidt since 1920, and this credit bubble, which started in the early 80s, looks much worse than the Great depression. I think the chart graphs GDP vs.the country's credit
Posted by: spencer at September 29, 2008 9:12 AM
Nice concern trolling there Roger, but not all investors are 100% into US stocks and have therefore not lost all that much - if anything.
There are other investment vehicles beyond real estate and the stock market.
Posted by: shocked at September 29, 2008 9:16 AM
Nice call on WB. I think they're changing hands now at 0.94. Officially I think the deal is at about $1 per share, with FDIC picking up any losses in excess of $42B on WB's more than $300B portfolio.
Call your broker and collect your green!
Posted by: Satchel at September 29, 2008 9:17 AM
I think you guys are right. The end of the world is near. Ugh. As if Mondays didn't suck enough. I look forward to read the discussions on here. They are starting to sound like DailyKos the day after Bush beat Kerry.
Posted by: anon at September 29, 2008 9:17 AM
I've made a good amount of cash this year in markets, as have many I know (nothing earth shattering - I've made as much this year as last, and the year before, and the year before that, etc. - more or less).
If the pool of savings available for buying real estate has declined significantly (and I don't doubt that it has), the price of the real estate asset will just go lower. No big deal - there's a price for everything and markets always clear. It's just that when government tries to micro manage it the adjustments take a longer time, and in the process snare a lot of people into making the wrong decisions.
Posted by: Satchel at September 29, 2008 9:21 AM
@Rog: Another chime-in to disagree with your post. This renter is doing just fine with both his downpayment $$ and his investments.
Posted by: Foolio at September 29, 2008 9:26 AM
Roger's point has some validity, but I think the emphasis on how the stock market downturn has hit renters has it backwards.
It is true that most of those thinking about buying have had their nest egg hit in recent months. But this is only further going to reduce the pool of qualified and interested buyers even as credit tightens -- a double whammy. Google is now at its 52-week low and below $400. The rest of tech is also flirting with or below its 52-week lows. That has a big impact on SF incomes. The pool of willing and able buyers has considerably dried up right when the pool of sellers is growing. You know what happens to prices in that situation -- we're seeing it now very starkly (was a little fuzzy in much of SF before about 6-8 months ago).
But lower incomes and a slackening economy don't bode well for rents either. Rents are more directly correlated to incomes. Rents plummeted in SF in the mid-90s right along with housing prices. Look for that to repeat. Solid market info on rents is even harder to come by than on sales, so I'm sure we'll see lots of spinning all around on this point.
Posted by: Trip at September 29, 2008 9:38 AM
I would think most renters waiting on the sidelines to buy that had sizeable downpayments were smart enough to not put their downpayment in risky investments when their horizon was so short term.
Mine has been in money markets and CD's for the last two years. Isn't that the conventional wisdom of what to do with your downpayment money when you may need that money in the short term?
Posted by: MikeW at September 29, 2008 9:39 AM
Just checking in on all of the parties who were supposed to "Save" housing:
Goog is now in the 300s.
Foreigners aren't coming near US investments.
Haas MBAs are lucky to have jobs at all and aren't getting any bonuses.
DNA, supposedly going from 95 to 120 where everyone would vest, is at 88.
So what's left:
People without SIGNIFICANT savings can't qualify.
People with jobs and savings can't qualify at these prices.
Owners who took short term loans 3/1s 5/1s etc. can't qualify for refinancing.
Is it any wonder the inventory is rising? The realtors can try to postpone the listings, telling sellers there is too much on the market in their area right now, but that only lasts so long.
It's looking to be a long hard winter for real estate.
Anyone who thinks the sideliners, who stood on the sidelines when real estate only went up, are now going to wade in when everything is clearly poised for a fall, just because the market, which can be shorted or avoided altogether through treasuries or FDIC insured savings accounts, is tanking, is engaging in wishful thinking.
NONE of us are thinking we should buy real estate right now.
Posted by: tipster at September 29, 2008 9:39 AM
MLS #: 347876
Infinity 4B - nice unit! 1.499MM 826/psf
Posted by: Ryan at September 29, 2008 9:44 AM
Yet, people are buying some stuff, because I keep getting overbid (on my lowball offers). They must, some magical way, not fit into any of the vast 4 categories of buyers you list.
Posted by: sparky-the-bear at September 29, 2008 9:46 AM
i think you mean "NONE of us (armchair RE pros) are thinking we should buy real estate right now."
unfortunately there are still others competing for the listings i'm watching. the worse the uncertainty gets the more the opportunities have of bubbling up...
Posted by: paco at September 29, 2008 9:53 AM
Ok, free money is fun! Time to double-down.
So which bank goes down next?
Does anyone have a list of the remaining banks with the most Option-ARMs in their portfolio (excluding Option-ARMs in "real" SF of course).
WB was #1 -- they are deceased. (PS, did anyone notice that according to the news release, the FDIC provided Citi with a guarantee against loan losses in WB's $312Billion portfolio as part of the deal?).
National City looks poised to fail
Sovereign isn't doing to well either.
Wells Fargo, in contrast, may come out of this fiasco a winner.
Perhaps I should go long Wells Fargo and short NCC and SOV?
Posted by: Jimmy (Bitter Renter) at September 29, 2008 10:01 AM
Closed out my WB puts for a sweet 100% gain in 2 weeks.
Going long NCC. I predict a bounce tomorrow.
The Fed/Treasury has gonna trot out some new trick tonight now that the bailout flopped.
Posted by: Jimmy (Bitter Renter) at September 29, 2008 12:00 PM
I'm with MikeW and other savers who chimed in. We have our down payment money in savings and CDs. Actually, my only $$ in the stock market is my 401K, because I'm not savvy enough to do shorts and other strategies discussed by investors on this site.
And I agree with Tipster–– why buy right now unless you have to? I think there may be a little dip in response to the bailout, so perhaps you could get a deal on one of the properties on the market. But I'd hate to be the "winner" in a multiple bid situation right now. (Unless, of course, your dream house comes on the market, you plan to stay there long term, and you can get it at a price that works for you.)
I suppose a year from now, I'll be bidding against other SS readers, though. There seem to be plenty of folks on this site that have a down payment and good credit that are waiting for lower prices.
Posted by: RenterAgain at September 29, 2008 12:02 PM
Thanks for the info, Ryan.
Posted by: chuckie at September 29, 2008 7:28 PM
"The only class that is really doing well is the landlord class who wants to be a landlord."
Sure hope so. I'm a semi-former landlord (80% liquidated) bought out of this market by insane prices. Looking forward to cheaper prices that the next few years could bring us.
Wake me up when buy/monthly rent ratio goes under 100. Otherwise don't bother.
"This Sucker could go down".
George W. Bush.
Posted by: San FronziScheme at September 29, 2008 11:16 PM
"Wake me up when buy/monthly rent ratio goes under 100"
when was the last time this ratio was close to 100 in sf?
Posted by: paco at September 30, 2008 9:19 AM