San Francisco Listed Inventory: 9/28/09 (www.SocketSite.com)
Inventory of Active listed single-family homes, condos, and TICs in San Francisco increased 3.6% over the past two weeks but is currently running 11.3% under last year’s levels on a year-over-year basis (down 16.2% for single-family homes and down 7.8% for condos/TICs) and within two percent of listed inventory levels at the same point in 2006 and 2007.
Thirty-three (33) percent of active listings in San Francisco have undergone at least one price reduction while the percentage of active listings that are either already bank owned or seeking a short sale is down to 10%.
Keep in mind that listed sales volume in August was down ten percent on a year-over-year basis as well.
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).
SocketSite’s San Francisco Listed Housing Inventory Update: 9/14/09 [SocketSite]
San Francisco Listed Sales Volume In August: Down 10% YOY [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by steve

    so much for the post labor day flood of listings. I appreciate that one theory is that shadow sellers are trapped by low comps and aren’t listing; however with most tech stocks at 52-week highs, some approaching all-time highs and consumer confidence on the rise you’d think there’d be more folks testing the waters.
    overall, a pretty surprising and positive graph.

  2. Posted by REpornaddict

    There is also a big difference between being ‘trapped’ and not wanting to sell right now.
    Some, and and probably an increasing number are, of course, but the growing notion on here is that every owner who isn’t selling right now is ‘trapped’.
    I don’t think thats true.

  3. Posted by tipster

    I wonder if the stock thing is the tail wagging the dog.
    Stock prices went up, yet the price of a hamburger at McDonalds didn’t budge, so I don’t think the causation with housing prices is any different.
    Stock prices also went up in an era of ever increasing expectations. You could part with your stock wealth because there was always more of it to be had. And why not spend it on housing, which always went up.
    But now, no one really expects tons of stock money to be thrown at them for awhile, and housing prices have only steadied with massive government spending, which is largely running out. So even though stock prices have risen by 30% or more, housing prices have not because the expectations are different this time around.
    Taking a one time windfall that one may not see again for a long while and putting it into a declining asset just doesn’t seem like the smartest strategy. People are being more cautious.

  4. Posted by 45yo hipster

    ^ you need to think in terms of cycles. Stocks move up and down much faster than housing. In 2-3 years SF will regain what it lost, and will likely again trend upwards (as long as the general economy is trending up.). Given the magnitude of the problems we have economically, SF going down 10-20% is pretty minor compared to most other places worldwide. Within 3 years this will be a blip. If you buy and hold, you can do very well with Well located RE. It’s been proven time again, and this cycle is no different.
    And btw, where are LMRiM and sanfronzi these days? Stats like this chart, and feedback on the ground (sub $mil props are selling well in real SF) are not ‘bearing’ them out so well these days!

  5. Posted by Mole Man

    This supposed strong stock market is being led by a small number of big companies. The stock market overall remains weak.
    Consumer confidence is way down and has only risen slowly.
    Recovery in property markets is driven by the recovery of labor markets which is a long way off yet. That a third of listings have reduced asking prices shows a lack of strength in the market which discourages possible sellers from listing their properties.

  6. Posted by matlaw

    If you integrate all the housing listings from January until now, there were significantly more listings compared to any other year. But unless I’m mistaken, there haven’t been an equivalent an increase in sales over the same period in time. Surely that means unrealized sales which would be on the sidelines/trapped/or however else you would like to characterize them, no?

  7. Posted by anon

    “In 2-3 years SF will regain what it lost, and will likely again trend upwards”
    45yoh, what could you possibly base this prediction on? Currently, the only thing really selling is at the very low end, and prices have continued to fall through the peak selling season. SF prices are quite a bit below the “10-20%” from peak you note, and I don’t see anything that could stem the current decline over the next 2-3 years, much less reverse the trend and capture back all losses. SF has high and rising unemployment, rising foreclosures, a looming recast problem, very little moving above the low conforming-loan price, and we’re part of a state and a nation that have terrible budget situations. What do you think will drive your predicted imminent reversal of the housing market?

  8. Posted by eddy

    Anyone that tells you to lever up and buy a home in this market because you can, “do well in RE”, is out of touch with reality. The sky will not fall on SF RE but those that aren’t using fiscal responsibility will likely get burned.
    The homes being bought on the high end, north of $3M, are selling much lower and are being bought by buyers who are largely price insensitive. Demand in the $1.5 – $3M range is very challenged as these buyers are using leverage and a large portion of their wealth to buy a home. There are some nice homes on the fringe out there not selling. This to me speaks volumes as it shows a general sense of concern for buyers no prepared to lose capital in the quest for home ownership.

  9. Posted by spencer

    Don’t want to sound like a broken record, but it would be reeally interesting to see the Socketsite Complete inventory index (CII) that inlcude new listings from new building + shadow inventory. What is in this chart cannot be real.

  10. Posted by diemos

    “Anyone that tells you to lever up and buy a home in this market because you can, “do well in RE”, is out of touch with reality.”
    I’m afraid hipster has already made his bet and taking his bet off the table would involve going back to being a working stiff.

  11. Posted by Kathleen

    A 400K mortgage versus a $2500 rental payment may be a good idea in this market.
    The decsion rests on individual credit and cash availability.
    There is growing amount of not listed listings, emailed flyers agents and brokers recieve everyday entitled “not listed on the MLS”.
    These are due to a bank limitations on equity lines of credit being one major motivator to keep listings “Off Market.”

  12. Posted by anon

    “In 2-3 years SF will regain what it lost, and will likely again trend upwards”
    Well, I don’t doubt this. By then unemployment will be back to an optimal level and much of the global economic issues should be in the rear view mirror. The investments of many people including myself is today at an all-time high and 2-3 years from now will be much higher still.

  13. Posted by Mud

    @ Anon – can’t tell if you’re being sarcastic or not… but if no, please pass a hit of what you’re smoking.

  14. Posted by J

    Without 2006’s NINJA loans, we won’t see 2006 prices for a looooooooong time…

  15. Posted by Shza

    A 400K mortgage versus a $2500 rental payment may be a good idea in this market.
    I have no idea why you’re comparing a 400k mortgage to a $2500 rental payment. For the space you can get with a $2500 rental payment, if you’re at all savvy, you’d spend $1M+ to buy. We just signed a new lease for less than $2500 for a home that would sell at $1-1.2M based on recent neighborhood comps. It’s a good deal, granted. But I would hope even idiots aren’t paying that kind of rent for a $400-500k dump.

  16. Posted by diemos

    “These are due to a bank limitations on equity lines of credit being one major motivator to keep listings “Off Market.” ”
    I’m afraid that sentence doesn’t even parse Kathleen. Would you care to expand?

  17. Posted by J

    Even at $400k, once you add on HOA, property taxes, loss of liquidity(and money market interest) on downpayment, and further downside risk, it is way cheaper to rent.

  18. Posted by steve

    I continue to be surprised by the resiliency of the (real) SF housing market, and even more so by areas like Palo Alto and Menlo Park.
    Seriously, at this point Noe Valley has survived DJIA at 6500, double-digit unemployment, rising NODs, short sales, foreclosures, NINJA loans, option ARMs, and a financial crisis believed to be the next great depression. Yet, it still managed to keep prices above $1.5M for anything decent. I think the lack of mounting inventory is bad news for anyone waiting for the 50% off-sale.

  19. Posted by Trip

    These numbers do remain surprisingly lower than I expected. It looks like we’ve had 800+ new listings in the last 30 days. That’s a lot. While public info is hard to piece together, it looks like September’s closings are down from August (someone correct me if I’m wrong). So have there been a lot of withdrawns? A lot of places going contingent? Something else?
    Sales are down, particularly so outside the very low end of the market. So the supply/demand curve is pushing prices lower regardless. But the supply part of the picture is a curious development. The lack of complete info always makes for better debates, at least.

  20. Posted by RG

    “Yet, it still managed to keep prices above $1.5M for anything decent.”
    Umm, not sure what you’re talking about. Just looked at a nice 2br 2ba SFR with expansion potential in Noe for $1,049,000 yesterday. The week before I saw 2 nice 3b/2ba for around $1.3M that have been sitting for a while. The 3br/2ba Noe SFR market has fallen 15% since peak and some places are still sitting.
    Prices are absolutely coming down on SFR in good SF neighborhoods. Sellers have realized that they need to lower prices to get people in the door. People are starting to buy b/c prices are becoming attractive. But the uptick in buyer activity doesn’t mean that prices won’t continue to trend downward.

  21. Posted by D

    A 400K mortgage versus a $2500 rental payment may be a good idea in this market.
    I concur with Shza. I recently rented a three bed, full floor flat on Alamo Square for $2500. I’ve been watching prices nearby. $400K won’t get me anything close to what I have now.
    I wonder if there’s ever any incentive to buy. For buying to be a financially viable option, prices would have to come down a lot. And by a lot, I mean more than Satchel and LMRiM have predicted. With rent control, I basically have the same rights as an owner anyway, so why ever buy in SF?
    Note, I own investment property outside of SF, so I’m not generally adverse to buying.

  22. Posted by D

    I was referring to my particular situation, not others, in my previous comment. I understand there are reasons for others to buy. For myself, I have difficulty realistically envisioning a time where buying makes sense.

  23. Posted by Legacy Dude

    @ D:
    For us Soma folks (aka Unreal SF), that time may yet come. Figure a nice 2-bedroom condo rents for about $3K today. If you can buy that same condo for around $550K, you’re breakeven to renting (rough math here) assuming 20% down. 2-bedroom condos, from what I’ve seen recently, are selling in the high 600s/low 700s. So not that far off assuming rents are stabilizing.

  24. Posted by SF renter waiting to buy

    @ Legacy Dude
    Could you explain your calculation ($550k with 20% down roughly equivalent to $3K rent)? My math shows you would come out ahead buying at $550K with 20% once you take into account the tax credits. However, I am new to this and a novice, so would appreciate if you explained your math.

  25. Posted by Legacy Dude

    Sure. $550K with 20% down is $440K financed. Assuming 5.5% interest on a 30-year fixed gives you a payment of about $2,500/month. I assume tax deductions reduce that by about 25% (this is the rough math portion) for a net payment of about $1,900 per month. Factor in HOA fees of $600/month for a newer condo, plus property tax of about $570/month, and you’re around $3,000/month all-in.

  26. Posted by 45yo hipster

    D- don’t kid yourself, you do not have nearly the same rights as owners. And unless you want to sequester in that Alamo flat for the next 20 years, you’re paying market rent. In the meantime you could be ellise’d or omi’d. You can’t change anything permanent (including wall paint) w/o landlord concent. And if you do hang in there long enough, it will be a disincentive for your LL to upkeep the unit beyond minimum standards. In most cases long term tenancy is a downward spiral. (Fortunatly I’ve gotten quite adept at sensing who is a potential long term tenant, and I don’t rent to them.)

  27. Posted by Fante

    What does 45yo hipster mean? Are you really a hipster landlord with property in the Mission who knows how to spot a long term tenant from a mile a way? Did you play in a band once? Is that what happens when you’re a hipster and you turn 45? You become the all-knowing landlord?

  28. Posted by Fish

    Great, a 45yo who wants to pay for the privilege of painting the walls. Just put that on the lease and you are good to go for $2500/mo.

  29. Posted by Jimmy (No Longer Bitter)

    A long-term, rent-controlled tenant who elects not to make leasehold improvements and lives in squalor deserves what they get. You can paint, just kiss your damage deposit goodbye. If you’ve lived there for 15 years, who cares anyway?
    Might as well enjoy your life for the additional 0.5% per month you’re paying in rent as a result of the (theoretically) lost damage deposit.

  30. Posted by J

    I concur with Fish and Jimmy.
    Interestingly, I’m in an area with few rent controlled units, and the rent vs buy equation is not as far out of whack as in other parts of SF(Fault the SOMA condo glut).

  31. Posted by 45yo hipster

    Jimmy- of course that’s better for the tenant, but that is also when tenant/landlord interests clash. LL has no interest in RC tenant having any amenities if it could lead to the tenant finally leaving. In your example, tenat repainting on their own is grounds for eviction- certainly the LL can create legal hassels for the tenant. The situation is a bad one for both sides, as the LL is forced to subsidize the tenant with RC, so they have no incentive in improving their unit quality. Hence how slumlording is created in SF and why I avoid long termers.
    Fante- chill out. Haven’t you heard of irony?

  32. Posted by 45yo hipster

    Diemos: “I’m afraid hipster has already made his bet and taking his bet off the table would involve going back to being a working stiff.”
    exactly. Live by the sword, die by the sword. (I’ve been meaning to use that phrase for awhile now.)

  33. Posted by Trip

    This rent control discussion is all a bit academic when we’re looking at falling or flat rents for the next several years. A landlord’s concern these days is not finding a tenant who will not stay too long but finding a tenant who will not leave for a cheaper, market-rate place next year.
    FWIW, a tenant’s painting the apartment would never constitute grounds for eviction in SF. Improving the place is not a material breach of the lease by any stretch. The landlord could waste a lot of attorneys’ fees trying to push for eviction, but it would be money flushed down the toilet.

  34. Posted by Rincon Hill Billy

    Wow…inventory below 2006?? This is great news. Bring out 2005…how loooow can you go???

  35. Posted by Fishchum

    Why is it automatically assumed a RC tenant lives in squalor? My wife and I have a RC apartment in the Marina and we’ve painted different rooms, gutted the walk-in closet and converted it into a home office, and we’re currently talking to the building manager about replacing the wall-to-wall carpeting. All because we know we’re going to be there for a long time and feel the improvements will only benefit our enjoyment of the apartment – and the manager loves the fact we’re keeping the unit in good condition.

  36. Posted by EBGuy

    Continuing to keep an eye on the pent up supply. Currently, 1587 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is up from 1552 two weeks ago.

  37. Posted by Sonnyboy

    Correct again, Trip: Old landlord wouldn’t lower the rent, so I moved (one block near Pacific/Buchanan) last month. I’m paying 20% less in rent. Traded a view but gained 15% more square footage and still have parking. Will begin looking to purchase my dream SFR in a year or two…if I still have a job.

  38. Posted by SF renter waiting to buy

    @ Legacy dude
    Thanks — I had assumed a lower interest rate and forgoten about the HOAs.

  39. Posted by spencer

    fischum, i’m with you. I have replaced blinds, painted my walls, remodeled my bathrooom and am a long term renter in a Pac Hts rent controlled apt. My landlord loves me and hasn’t even raised the rent at all in the past 6 yrs
    I have bought several properties outside of SF, but my cost basis is 3x less to rent than to buy in SF. I can’t think of any reason to buy unless prices come down much more substantially.

  40. Posted by 45yo hipster

    Fischum/Spencer- we need to pass a measure to add means testing of income for RC, and eliminate this entitlement from people who have above average incomes, or who own property outside of SF.
    I know you guys are getting a free ride at the expense of a private party (your LL), but do you think it’s fair? And don’t be surprised when LL’s like me do everything we can to circumvent the system, including renting to a select segment of the population that Is upwardly mobile and won’t be likely to stay in units long term.

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