You Make The Call: Bullish Or Bearish Data Point to Be (324 Williams)

Ermm. Blearishesque??

Who buys a three bedroom house with one bathroom?

i can’t believe anyone will think it is worth 267k
maybe 175k, maybe 200k max, that’s it

Silver Terrace stats: 46 foreclosures (NODs, NOTS, bank owned) and 21 homes currently for sale. Plenty of pent up supply to keep the comps coming for awhile. The bulk of the foreclosures seem to be in the $400k-600k range.

The potential sale of 324 Williams isn’t bullish yet, but just wait until it goes “over asking” with 42 offers (every one “20% down or all-cash”) roll in, and the realtors get a chance to spin it.
Mortgage fraud? Maybe – I can’t see the loans and don’t have a good feel for what prices were at the peak in Silver Terrace. But from what I saw in places like Oceanview in those days, there seemed to be an unending supply of utter fools, and plenty of sleazy realtors on commission, appraisers and lending officers determined to cash in on the frenzy. If SF hadn’t existed, Wall Street would have had to invent it – so many willing fools, and so many with actual assets to sacrifice!
On a related note, my favorite 50% off Oceanview house now appears to be in contract after 150+ DOM:
http://www.redfin.com/CA/San-Francisco/262-Minerva-St-94112/home/1465061
I hope not too many people put down real cash on houses that used these places as “comps”!

^^^
Umm….
You toss out a self-described “ill-informed” $550K-$650K range for “peak valuations,” start talking about pickup trucks & Michigan, but implore others not to throw out random opinions on cost-value?
Okay….

i wouldn’t pay $267k either, but 42 offers sounds about right…. selling for $350-ish

Don’t get too excited there, hangemhi, about 42 offers and $350K.
From the listing: “Tenant Occupied.”
If the prior owner was truly one of my “heroes”, he will have gotten a Section 8 protected-tenant type in there. Government distortions – like the entire housing market finance system – exist to be scammed. And everyone has to admit, a system that managed to levitate the price of this POS to almost 10 times the median household income of SF is truly a thing to marvel at.

Of course this is a bullish sign. Anyway desperate enough for a house and willing to pay anything for that piece of uh… property shows just how some desperate people are. If people are that desperate for housing then it must be bull-ish. 🙂

I think that about 40-50% below the peak prices is about right for this area of District 10 right now. I live up the hill in Bayview Heights. 3 years ago my house was appraised at 950K, and out of curiousity I recently had it reappraised at $575,000. That hurt, but I am still doing better than most in this District. My feeling is that investors (if they still exist) are buying these affordable properties and renting them out. Several people I know are in this situation. Due to this fact, the demographic is changing quickly. Although the demographic was mainly African-American, there is now a mix of majority Hispanic, Asian, and some Anglo/White residents, believe it or not. Not that this change is bad or good for the neighborhood; it is just different than years before.

SF ain’t the only crazy place
On this we agree 100%. I’ve discussed this countless times. SF was caught up in the nearly worldwide credit bubble just like most major metros around the world. In other words, it’s rise from 2003-2007 was not due to anything “special”, rather a general mania about RE (among other appreciating assets).
much of SD was far crazier than SF was. And Vegas/Phoenix/Miami were even crazier. and clearly the Bay Area burbs were crazier than SF proper too.
this is one of those times where the ridiculously difficult zoning/building/rehabbing process in SF may help to limit the coming pain, at least for SFH’s. (due to less supply coming online than otherwise would have).
this will be counterbalanced somewhat by the sheer size of SF mortgages, since a small % drop in SF RE ends up being a huge loss when expressed in dollars. (a 15% drop might be $200,000 or more in SF, where as it would take a 50-90% drop to get that in other parts of the country)

“If SF hadn’t existed, Wall Street would have had to invent it – so many willing fools, and so many with actual assets to sacrifice!”
I think ol’ Satch meant to say…..
“If Manhattan (or South Florida or any of the places ex-SFer mentions above) hadn’t existed, Wall Street would have had to invent it – so many willing fools, and so many with actual assets to sacrifice!”
LMRiM and his obsessive fixation on the idea that SF was “special” in this respect. This is just as laughably ridiculous as the notion that SF real estate would go up forever because SF was “special”.
He makes the observation that people in San Francisco were foolish for keeping the bubble going after viewing the initial meltdowns in other parts of the country. Fair point, but weren’t people in prime parts of NYC, Washington DC, Seattle, etc…just as foolish?

He makes the observation that people in San Francisco were foolish for keeping the bubble going after viewing the initial meltdowns in other parts of the country. Fair point, but weren’t people in prime parts of NYC, Washington DC, Seattle, etc…just as foolish?
That’s very true. Many got suckered without knowing it even as the story unraveled. People were blaming subprime but dismissing danger in prime or the upper crust simply because people were more liquid in these segments.
The crisis churned through “vapor” equity in subprime, and it is now eating its way through REAL wealth everywhere else. After all, every bit of new debt led to either more debt or actual wealth. As the underlying layers of debt disappear, some of this “Real” money has to burn as well.
That supposedly financially savvy people got trapped into thinking they were immune from wealth destruction is a lesson to all of us.

You always get defensive about this issue, nnona, perhaps understandable because it does seem like I am picking on SF. It’s more that this is where I have been based for the last 7 years or so, so I’ve got the first hand experience of SF during this latest bubble mania, and not of the other places.
That being said, you’ll have to admit that SF, and California generally, has a very special place in this mania. A stat has been making the rounds recently is that 58% (!!) of all option ARMS in the entire united states were originated in California. A lot of banksters retired off those fees, I can tell you that!
As regards SF and environs in relation to NYC and other metro areas, I’ve mentioned that the mania seemed subjectively crazier here, and more people seemingly drank the koolaid to a greater extent but again, there is some representativeness bias at work here I’m sure because I didn’t witness first hand the nuttiness in the NYC and Miami suburbs, for instance (although I do have family in both areas, so have some sense of it).
To flesh it out, losses for the SF MSA are the largest – BY FAR – in dollar terms, and they are right up there in percentage terms with the “best” (meaning “worst”, or most foolish). For instance, the average losses shown by Case Shiller from peak for the areas you mentioned (all MSA data):
NY: -$105,348 -19.7%
Washington: -$143,159 -33.9%
Seattle: -$91,517 -22.5%
SF: -$343,391 -46.1%
All the metro areas of the US, to one degree or another, fulfilled their assigned roles of sacrificing their wealth and their resources to their betters,the banksters, but I’m sure you’ll agree that SF is particularly noteworthy.
(All the data and some other tables are collected nicely in a monthly post by Mish, the latest one of which is here: http://globaleconomicanalysis.blogspot.com/2009/06/case-shiller-and-car-housing-declines.html )

Good point about the option ARMs.
I brought up NY, Washington, and Seattle not to compare losses in percentage or dollar terms, but instead to point to other cities besides SF where, particularly in the “prime” parts (read most expensive), people continued to buy after mortgage issuers started to implode in early 2007. You expressed amazement that buyers in SF continued the bubble during this time even as the “writing was on the wall” in much of the US re a housing bust.
I agree that the San Francisco MSA is noteworthy and will be extremely high on the list of dollar loss and percentage decline from peak when all is said and done.
But it is a clever bit of “data mining” to compare SF to other cities RIGHT NOW when all the individual MSAs are declining at different rates and from different peak dates. Even within an MSA, different locales had (and have) different peak dates (had “prime” SF peaked by May 2006?) and different trajectories of decline. The comparisons will mean something when all regions have completed their declines.
Let’s say that in mid 2007, you used the CS data and the same reasoning you use above to determine which MSA was the “most” foolish. Without having crunched the numbers, I would bet that San Francisco was considerably “less” foolish than now using your methodology. In fact, San Francisco isn’t even the “most” foolish area in percentage terms RIGHT NOW as it trails Phoenix, Vegas, and Miami (point referred to above by ex-Sfer). Will San Francisco be the “most” foolish if you revisit the data in mid 2011, or mid 2015? Possibly, and at that point I will say that the data paints a more accurate picture.
I suppose we can argue about percentage vs dollar loss in determining who is “more” foolish. But if we go by absolute dollar terms, is a person who loses $200K on a $1M investment twice as foolish as someone who loses $100K on a $100K investment?
We can also parse the difference between “prime” locales within an MSA and the MSA as a whole. I notice you kept referring to the MSA or to the “suburbs”. I would argue that Manhattan by itself is a significant “region” for the sake of looking at bubble mania and foolish behavior. If San Francisco has the option ARMs, Manhattan had an unusually massive amount of money floating around for a few years. A lot of which was spent (foolishly?) on real estate.
Are people in the Bay Area “more” foolish than people elsewhere because they got caught up in the national bubble so soon after the implosion of the dotcom boom?
Maybe, but if the dotcom bubble had happened in New York or Miami or Vegas or San Diego or Los Angeles or Phoenix, etc…, do you really think people in these locales would have acted any differently during the national housing bubble than people around here?
I don’t know if me being defensive about San Francisco is quite accurate. I would posit that a significant number of buyers in this latest bubble came from somewhere else anyways. And for every “fool” who bought during the bubble(s), there was a seller who benefited from the mania. Common sense would suggest that a good number of these sellers were native/long-term San Franciscans.
Thus, I’ve always taken your opinion as one that more accurately describes “recent buyers in the San Francisco housing market (which of course includes San Franciscans)” as opposed to “San Franciscans” or “(Northern) Californians” per se. I do see, though, how the first-hand experience of viewing and focusing on the local (admittedly massive) carnage up close and personal could cause you to exaggerate the foolishness in SF vis-a-vis Manhattan, London, or Moscow (or Phoenix, Vegas, or Miami for that matter).