October 14, 2008
While Seasonality Is In Effect, That's Not What This Is About
As we wrote two weeks ago:
…based on our calculations, the number of new contracts written for listed [San Francisco] 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.
As we wrote yesterday morning:
…based on our calculations, and setting the stage for tomorrow’s “on topic” post, new contract volume last week dropped 45% from the week prior and was off by 31% on a year-over-year basis.
And as Redfin wrote yesterday afternoon (about the markets in which they play):
…the past few weeks have seen a major reversal. As the stock market wiped out prospective down-payments, tours and offers dropped 30%. Transactions that were done came undone. October will still be pretty good, then we’re headed for a big dip.
Keep in mind it's the same story in brokerages and sales offices throughout town – the transaction downturn not the layoffs (as far as we know) – they just haven't had any reason to let it be publicly known.
∙ SocketSite's San Francisco Listed Housing Inventory Update: 9/29/08 [SocketSite]
∙ SocketSite's San Francisco Listed Housing Update: 10/13/08 [SocketSite]
∙ Sequoia’s Take On The New New (And Quite Local) Economy [SocketSite]
∙ A Very Tough Day [Redfin]
First Published: October 14, 2008 6:45 AM
Comments from "Plugged In" Readers
One of two things is going to happen now:
*Either a lot of sellers are going to recognize the market conditions and pull their listings.
*OR prices are going to fall 20% in one fell swoop, as home sellers throw their hands in the air and run around like chickens with their heads off. This will hit the untold throngs of subprimers in Pac Heights the hardest, and at long last, the SS crowd can swoop in and buy their $400/sqft homes on Green Street. ;)
Posted by: NewBuyer at October 14, 2008 8:03 AM
I love reading the continued up-beat posts! You must throw one helluva fun, lively, and rip-roaring party. Just make sure to invite Shiller and Bloomberg and it'd certainly be the party of the year.
Posted by: alex at October 14, 2008 8:03 AM
I for one would like some cold hard numbers, not percentages.
Posted by: nowonderitcostssomuchhere at October 14, 2008 8:12 AM
Hey there's an idea... upbeat stories :) Just make some up :)
Posted by: chuckie at October 14, 2008 8:14 AM
"One of two things is going to happen now:
*Either a lot of sellers are going to recognize the market conditions and pull their listings.
*OR prices are going to fall 20% in one fell swoop, as home sellers throw their hands in the air and run around like chickens with their heads off. This will hit the untold throngs of subprimers in Pac Heights the hardest, and at long last, the SS crowd can swoop in and buy their $400/sqft homes on Green Street. ;)"
How about a combination? There will be people who are in the position to hold their cards so, they will take their homes off the market. Then, there will be the people who need to sell. They will be dealing with price reductions.
Then, there are the stories of the little old ladies who bought a home valued in the millions so long ago that even with a huge reduction, they are pocketing a fortune....
Posted by: chippers at October 14, 2008 8:26 AM
@chuckle. They're out there. Not in droves like before, but still many a transaction taking place, and many a good story.
Posted by: alex at October 14, 2008 9:03 AM
Just not as many as before. :)
Posted by: missionite at October 14, 2008 9:17 AM
Not nearly as many as before, but wasn't it you that was involved in that Foreclosure sale? ;-) A bit of activity on that wasn't there? Of course that was before the market meltdown.
Here is an example of a good story:
Sold in March for $1,605,000, came back on the market (cosmetically modified) mere months later for $793,000 more....
Just closed $2,415,000, and it's on Fulton. Just one example, but worth noting nonetheless.
[Editor's Note: If by "cosmetically modified" you mean a totally remodeled kitchen, bathrooms and closets; a bathroom added to the fourth floor and a bedroom, bathroom and laundry room added to the basement (while extending the garage to accommodate "new 2-car tandem parking"); and 33 new windows...then yes, this is a great example.
And we agree, worth noting (but for very different reasons).]
Posted by: alex at October 14, 2008 9:29 AM
alex, very true. After all the glass is 1/16th full, not 15/16th empty.
Posted by: San FronziScheme at October 14, 2008 9:35 AM
One mitigating factor here is that agents in this town are waaay more savvy than other markets. This led to the rise and will aid in the decline. Agents are fielding calls from owners are a furious pace and the agents in this town are savvy enough to control over anxious owners and keep them on the sidelines. This is absolutley happening.
There will certainly be some owners that MUST sell, and others with top-tier properties will be advised to sell -- but I firmly believe that agents are purposefully dissuading owners from listing their properties in order to control the damage.
Further, I'll go on record as stating this market rally is short lived. More bad things to come in the markets and in our back yards.
Posted by: eddy at October 14, 2008 10:40 AM
"but I firmly believe that agents are purposefully dissuading owners from listing their properties in order to control the damage"
do you mean the agent will sell the property but dissuading the owner from listing on the MLS, or the agent is telling the owner to not sell it period?
in either case, how will the agent make money?
Posted by: condoshopper at October 14, 2008 11:02 AM
Did you go in the home at anytime while it was on the market?
Posted by: alex at October 14, 2008 11:54 AM
Freudian slip in the SS edit to the post above:
"And we agree, worth ***nothing*** (but for very different reasons)"
[Editor’s Note: Damn that Freud (and since corrected).]
Posted by: tipster at October 14, 2008 12:00 PM
Someone comes on here and not only bashed the editor/owner of this site, but also:
"Just make sure to invite Shiller and Bloomberg and it'd certainly be the party of the year."
As if Shiller's numbers aren't completely unemotional. It's a formula dude.
And FWIW, home prices going down is cause for a party, and happiness - just as a lower cost of household goods would be. Prices going down is a good thing for consumers.
Posted by: Treeman at October 14, 2008 12:04 PM
"Prices going down is a good thing for consumers."
True, but transactions don't happen when prices are falling. Bad for business :( if you are an re professional. On the other, rising prices or perception thereof is good for business :)
Posted by: chuckie at October 14, 2008 12:51 PM
Transactions are way up in places like the Inland Empire and the Central Valley. So eventually, if prices fall enough, then transactions start to go back up. This is usually a sign that the market is building a base.
Posted by: NoeValleyJim at October 14, 2008 12:59 PM
A smart Realtor would know there is such a thing as price elasticity. Falling prices mean more transactions in the long term. Heck, I know of an agent right now that is making more than they ever have - she is focusing solely on REO homes right now.
Too many short-term focused RE agents.
Heck, this guy alex, as his "zing", asked if the editor had actually been in the house - as if that makes his point of mass renovations less valid.
RE speak- mass renovations = cosmetic changes = higher selling price = strong (or at least stable) market. That's 2 too (sic) many equal signs.
Nothing to see here. SF is 3/16 full. Keep on buying. A friend of a friend of a blog commenter, just made 30% on a flip. Market is strong.
Sounds like someone should be an economist at the NAR - at least the local SF chapter. Now that would be the easiest job ever. Just keep repeating the following 3 quotes:
"Limited inventory will always keep prices up in SF"
"Buy now or forever be priced out"
"2 types of people - people who buy, and people who will rent in perpetuity, which one are you?"
Posted by: Treeman at October 14, 2008 1:04 PM
condoshopper -- agents have clients and those clients listen to their agents. Especially the more powerful / influential ones. Trust me -- they are proactively keeping owners on the sidelines.
Posted by: eddy at October 14, 2008 2:00 PM
I'm sorry to pile on, but I'm finding this hilarious (the non-comp on Fulton). Reminds me of the stats fluj used to throw at Satchel - $/square foot based off of 2 stale comps, both ignoring square footage added, etc.
But then again, this is real estate we're talking about. Why let the facts get in the way of a good story?
Posted by: Dude at October 14, 2008 2:02 PM
@Dude: Really, nothing SFRE agents do surprises me any longer.
It's now to the point where even the ones who supposedly have good reps (like this Alex guy) are losing credibility.
Posted by: Foolio at October 14, 2008 3:02 PM
@dude, foolio, et al
cut it out. you guys chased the last reator who offered insight wiith exactly this same bullshit: insipid self-congratulations, constant realtor bashing and snideness. "I'm not buying even though the evil realtor wants me to. Reinforce to me how smart I am, fellow renter. Justify me." How on earth you expected the guy to do time consuming research when all you did was ridicule is beyond preposterous. Fluj just gave stats from the MLS. It isn't like you were clients. Yet you bash him daily still! And here you are bashing somebody else.
Posted by: [Fluj] at October 14, 2008 3:53 PM
How is it that Alex did anything to slight anyone on here. He says there are "not nearly as many" as many deals going on. And then that the cup is "3/16th full" in regards to the market. Plus he didn't say that Fulton was an apple to anything just that it is a good story. Guy remodels house and makes some money, without waiting years for city permits. That is a good story.
Posted by: sparky-the-bear at October 14, 2008 3:54 PM
"How is it that Alex did anything to slight anyone on here."
No one said anything about being slighted, but his "cosmetically modified" statement appears to me to be misleading at best.
Posted by: Foolio at October 14, 2008 5:04 PM
It is not misleading; it is just saying remodeled with no addition, no foundation.
Houses are often listed as cosmetic fixers. That doesn't mean they just need a paint job. And no one is misled by that statement.
Posted by: sparky-the-bear at October 14, 2008 5:33 PM
I heart sparky-the-bear t-shirts on sale on thefrontsteps.com soon! Get yours while supplies last!
Posted by: alex at October 14, 2008 6:13 PM
"It is not misleading; it is just saying remodeled with no addition, no foundation."
sparky is as out of touch as alex. i'll give you some remodeling but "cosmetic" is not two new bathrooms, a new bedroom, a new laundry room and more parking. that's just all kinds of stupid.
Posted by: toni at October 14, 2008 7:13 PM
"that's just all kinds of stupid."...well, you said it.
so, ""cosmetic" is not two new bathrooms, a new bedroom, a new laundry room and more parking. "
the bath/bedroom/laundry rooms can each be done in a week's time with two workers plus materials, which in this case is tile,fixtures, drywall, & paint. if you're sharp you can sub contract each of these to other contractors while you facilitate.
the parking expansion could be just some new framing and 1 day's work, or it could be concrete&steel and one month's work. if you line it up correctly, as it appears these fellows did, you will be rewarded.
some contractors are slow and expensive and some are fast and efficient. the latter tend to focus on their own deals, while the former are working for clients.
Posted by: paco at October 14, 2008 7:39 PM
I'm "out of touch". I do this every day; I am in touch. Do you really think that cosmetic fixers don't need new baths and kitchens? What do you think "some remodeling" is? They didn't add any square footage to get the bedroom and laundry, they put up a few partion walls. "All kinds of stupid", man people on this site just bash and bash.
Posted by: sparky-the-bear at October 14, 2008 8:19 PM
toni, not so much.
Posted by: paco at October 14, 2008 9:08 PM
Please, paco and sparky, you ain't got nothing on me. I can build an entire 1500 square foot 2BR luxury condo in just three days using nothing more than duct tape, bailing wire, and some abandoned two-by-fours. You guys and your contractors are amateurs. ;-)
Posted by: anon at October 14, 2008 10:44 PM