Once again, our headline for November’s existing U.S. home sales gain of 7.4 percent: A Sprinter’s Or Marathoner’s Pace?
In December the pace of U.S. existing home sales fell 17 percent. And in January the pace fell 7.2 percent, “the second-largest decline ever, to an annual pace of 5.05 million, the National Association of Realtors said today in Washington.”
In 2009 5.16 million previously owned homes sold, 4.91 million in 2008.
A Sprinter’s Or Marathoner’s Pace? [SocketSite]
Will Our Sprinter Get A Second Wind? [SocketSite]
Sales of Previously Owned Homes Fell 7.2% in January [Bloomberg]

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Comments from “Plugged-In” Readers

  1. Posted by SFRE

    This is an interesting read, but not particularly relevant to large metropolitan areas, especially cities like NYC and SF (arguably the best cities in the US, or at least my favorite).
    From what I see, the market is extremely active here in SF, with many places receiving multiple bids over asking in the better parts of the city. I think there has been a lot of money on the sideline waiting to come in, and I also think that people feel they are missing the ‘bottom’, so they are more aggressive in bidding. In any case, its all guessing, especially with the ending of the tax-credits and the bolus of foreclosures supposedly waiting to hit the market.

  2. Posted by tipster

    ^ people said the exact same thing in 2007: declines would be limited to Modesto, etc.
    It’s the second wave, on it’s way to a neighborhood near you!

  3. Posted by SFRE

    “The sky is falling…”
    Normally I would like to agree with you, but the data I have seen has been pointing to pent-up demand, just look at the apples on SS that show multiple offers on some of the places out there. As a potential buyer I would love for it to fall for another couple of months, but I am not sure that is going to happen.
    I agree the situation is difficult out there, especially in terms of getting loans, etc. But unless the stock market tanks, I think things are going to settle-in around the current levels for a while.

  4. Posted by J

    “I would love for it to fall for another couple of months”
    You are in luck, it will take years for the bubble to fully deflate. In the meantime, you can rent for less.

  5. Posted by SFRE

    Any idea with relation to the last housing collapse, on how long it took from the start of the collapse for prices to reach pre-collapse levels?

  6. Posted by tipster

    ^you mean like the last time money was given to anyone with a pulse and you could get a loan that didn’t even require you to pay the interest?

  7. Posted by SFRE

    Yep.

  8. Posted by anonn

    ^ people said the exact same thing in 2007: declines would be limited to Modesto, etc.
    It’s the second wave, on it’s way to a neighborhood near you

    Shameless. You were playing Chicken Little SF in 2007 too. You’re just going to holler panic in the streets for a couple more years and then go away, right? Have your fun.

  9. Posted by J

    In terms of price to rent ratio, the last bubble took over 6 years to bottom out, and wasn’t nearly as inflated to begin with.
    http://3.bp.blogspot.com/_pMscxxELHEg/SaQT0LoQbkI/AAAAAAAAEmg/msaXwQnSUvU/s1600/PriceRentQ42008.jpg
    Price to income ratio, took 8 years to bottom out:
    http://4.bp.blogspot.com/_pMscxxELHEg/SaQV6nAzUMI/AAAAAAAAEmo/D55JJN1s5lo/s1600/PriceIncomeQ42008.jpg
    Real prices bottomed out in 3.5 years and took over 10 years to recover:
    http://1.bp.blogspot.com/_pMscxxELHEg/SaQa5PrOztI/AAAAAAAAEmw/ZVQ6aBvrzLk/s1600/RealHousePricesQ42008.jpg

  10. Posted by badlydrawnbear

    The early 90’s bubble took 5 years from peak to trough, 90-95. The SF MSA appears to have peaked in early ’06.
    However, there is a big difference between the 90’s bubble and our current one.
    In the 90’s the bursting of the bubble was the RESULT of a recession which lead to unemployment and price declines. This was typical of RE price declines.
    In the current bubble the bursting of RE prices was the CAUSE of a recession which is atypical.
    This makes it difficult to estimate the length of the downside of the cycle. Also, there is reason to believe that the recent price increases are largely due to massive government intervention and therefor not sustainable.
    Regardless, despite that fact that we are about to hit the 4 year mark for decline prices for the SF MSA there are still many reasons to expect further declines and to expect a long slow recovery in prices as more people treat real estate as places to live and not investments.

  11. Posted by Rillion

    I doubt the housing market will improve until after the employment situation improves. So we still have a very long time before housing will actually make sustained gains on the upside, I think the small upward trend in prices from the “bottom” is just a temporary bounce back resulting from purchases that were delayed when Lehman going under triggered the panic and then some demand being pulled forward by government incentives. That juiced the numbers a bit last summer/fall.

  12. Posted by A.T.

    “You were playing Chicken Little SF in 2007 too.”
    Huh? There was an unprecedented real estate crash from 2007 to today, in SF and most places in the U.S. That “Chicken Little” prediction was right on!
    Maybe that internet thing will stem the fall in SF, or Chinese or French buyers, or trust funds, or all the other proposed factors than have failed to materialize to date. Sorry, anyone who denies that the bears were right on target is simply delusional. Sure, you can all debate the future, but you certainly can’t credibly deny the facts about the past three years.

  13. Posted by anonn

    Yeah well in 2007 the crash had already ravaged much of the country, but not here. Flash forward three years. We have seen a much milder correction. Nobody is denying that a correction occurred. What I deny is the ridiculous things you, Tipster, and others say, such as a 3% gain on a 5-E SFR purchased in 2005 is somehow indicative of a 15 to 20% correction.

  14. Posted by A.T.

    Are you seriously contending that real estate prices did not rise in SF between 2005 and 2007?
    You’ve got to be kidding. You have little credibility as it is, but don’t totally blow it.

  15. Posted by tipster

    “So they threw away $120,000 away on “non rent”, and lost another $50,000 when transaction costs are factored in.
    No doubt every realtor in town will tout their “gain”
    Posted by: tipster at February 25, 2010 9:41 AM”
    Ha ha, you clowns are so predictable.

  16. Posted by anonn

    No, I’m not contending that. It wasn’t any 20 percent tho. I provided numbers speaking to same in the other thread.
    Now you’re exaggerating what I’m saying and arguing against your own exaggerations. The onus is on you. You’re the one saying wild made up stuff, such as a 3% gain from 2005 represents a 15 to 20 percent drop. Own it.

  17. Posted by anonn

    Um, the property gained? Not, the seller? I clearly called it a net loss.
    You’re predictable. You parse language and argue against tangets of your own interpretation. Well that and make all sorts of stuff up to be a flaming irritant. Clownish indeed.

  18. Posted by tipster

    15 to 20 percent drop. Own it.
    Where did I say it was a 20% drop?
    Here’s what I actually said (the day before it sold, when I predicted a 1.350 price):
    So this seller should do quite well: he has an asset that is more in line with today’s economy than it was when it was purchased 5 years ago. So they should at least not have to bring any cash to the closing, even to pay their realtor. [I was wrong about that – only the Realtors made money – no one else] I doubt they’ll make the entire premium they paid to renting.
    Own what? Your ignorance?

  19. Posted by A.T.

    From mid-05 to mid-07? Sure, up 9-10% or so each of those two 12 months periods in this neighborhood and just about everywhere in SF (except D10) is about right. 20% total. I was there. I saw it and so did you. Look at any metric in SF. Off by, at most, a few percent. That was a big, bull period. Crash started slowly after that and then quickly.

  20. Posted by anonn

    Tipster, embrace the concept of having two separate conversations in a BBS thread. Ignorant? Moi? You speak your navel’s mind daily. That’s textbook.
    Prove what you’re saying, AT. The MLS data doesn’t reflect it. It looks like about 5 to 7 percent more than 2005 for 2007 and the first part of 2008. Most would agree with that.
    I get that you never even saw the property in question too. I did, last time ’round. No way does it ever sell for 1.56M. Not in the last decade. So here you are, slapping your own ideas about what went down onto a property that you never even saw. Nice one.

  21. Posted by A.T.

    Here’s what I’m talking about:
    http://www.redfin.com/CA/San-Francisco/214-Arguello-Blvd-94118/home/587741
    Sold for $1.6 million in late 2007. Do you really think it would have fetched only 5-7% less in 2005? That’s a joke.
    Sold for $1,137,500 (down 29%, and below asking) today.
    True, not a Modesto-type decline, but an epic crash here in good ol’ immune SF.

  22. Posted by tipster

    Great find, A.T.
    Wanna know who the most accurate poster is on this site? Watch this:
    “If I didn’t think it would be 1.1M next year, I’d go look myself.
    Posted by: tipster at December 20, 2008 12:35 PM”
    {at the time, it was listed for 1.395)
    http://www.socketsite.com/archives/2008/12/perhaps_its_more_the_market_thats_unbelievable_to_some.html
    Wanna know who is just a real-estate-cheerleading hater? Watch this:
    You’re off by 160K right now. That’s not very accurate at all for a condo guess.
    Posted by: anonn at December 23, 2009 11:49 AM
    http://www.socketsite.com/archives/2009/12/a_not_so_absolutely_unbelievable_foreclosure_and_coming.html
    Anyone want to discuss my inaccurate sky-is-falling predictions any longer!!!!

  23. Posted by Rillion

    “From mid-05 to mid-07? Sure, up 9-10% or so each of those two 12 months periods in this neighborhood and just about everywhere in SF (except D10) is about right. 20% total. I was there. I saw it and so did you. Look at any metric in SF. Off by, at most, a few percent. That was a big, bull period. Crash started slowly after that and then quickly.”
    I bought my place for in 2007 for 6% more then the person who bought it in 2005 paid. But I guess an apple isn’t a good way to measure actual price movement compared to ‘metrics’.

  24. Posted by anonn

    Tipster, you really should be the last candidate to encourage searches back for things said.
    AT, so you cherrypicked one competitive sale. It didn’t even prove a single thing. (And remember, we were talking SFRs and not condos anyway.) But do I think that one would have sold for 5 to 7 percent less in 2005? Yes, I do. Was that even a point? You who always ask for numbers and not anecdotes? When I provide them, what do you do? Say they don’t count. Typical.
    So good luck with your 2007 was 20 percent more than 2005 routine moving forward. And kudos to you, Tipster, for jumping on that bandwagon. You guys are gonna do great with that one.

  25. Posted by Rillion

    Oh and a very similar unit (same floor plan) had been on the market for at least 4 months (since fall of 2006) and undergone at least 3 price reductions. That is probably another sign of a big bull period, places sitting on the market and undergoing price reductions.

  26. Posted by anonn

    Special kudos to you, Tipster, for saying that 2007 was 20 percent more than 2005. You know, considering you said that SF RE was tanking utterly in 2007 every chance you got. I’ve noticed a change. You don’t even think about anything you write any more. Personally speaking, I’m sort of enjoying the new you.

  27. Posted by anonn

    “big bull period” is it? Where did you infer anybody saying that, [Rillion]?

  28. Posted by tipster

    “Special kudos to you, Tipster…you said that SF RE was tanking utterly in 2007 every chance you got”
    Yes, I accurately predicted the fall in price from 1,600,000 to 1,137,000 a year in advance, but you ridiculed the prediction only a bit before it sold for nearly my exact prediction made the year before.
    I think you got pwned on this thread. And if you don’t think that someone who paid over 40% more than their unit sold for this year feels like the market tanked, there isn’t much hope for you.

  29. Posted by anonn

    I am aware of your “Hoo boy. I better drown out the fact that I look like a dunce in this thread with sheer posting volume noise” tactics. And I’m not going to participate. But yes, I got a completely unrelated CONDO prediction incorrect one time. Pwned? What are you, 19? Bad look.

  30. Posted by Sell now

    It’s clear, if you are thinking you need to sell your house, you better do it now, prices are not going up anytime soon.

  31. Posted by J

    Existing home sales peaked when tax credit was initially supposed to end in November 2009:
    http://1.bp.blogspot.com/_pMscxxELHEg/S4gTLFGCw_I/AAAAAAAAHn8/hU5FBBvAcwU/s1600/StimulusAutoHomes.jpg
    Who could have predicted?

  32. Posted by Rillion

    Annon – sorry for confusing you, I had my info in the wrong boxes. If you review it you will see I was adding on to my previous comment (something I would have done in the original post if this site used a platform that allowed us to edit our posts). So you should now be able to figure out that my reference to a “big, bull period” was sarcastic and I was quoting AT.
    So now hopefully my name thing has been straigtened out (thanks editor) and everyone can just forgot I messed up in the first place…”these aren’t the droids your looking for.”

  33. Posted by SFRE

    @J: I think its tied more closely the gains we have seen in the stock market. Take a look – the stock market (S&P 500) started to rise around the same time, and is now about 20-25% above where it was in mid-July. The housing market and stock market are so closely linked, you can’t ignore it, and call it all tax credits, when that only applies to a portion of the population.
    http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=1y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

  34. Posted by J

    Come on now, Existing home sales tanked exactly when the tax credit was supposed to end, in November. S&P 500 did not.
    And seriously, if we are depending on S&P 500 investors to create real estate demand, forget it. That only represents a TINY fraction of the population. Especially if you don’t count 401k’s. And I certainly don’t let my 401k balance determine how much I spend on housing.
    To top it all off, existing home sales were FLAT from Oct 2008 through March of 2009 when the S&P 500 was really tanking.
    Occam’s Razor

  35. Posted by SFRE

    Hey, I just think the two are certainly related, and any recovery in housing will be tied to a recovery of the stock market.
    Many strange things happen during holiday season, and “tanking” in Dec/Jan is partially caused by the holiday season.
    I think if we are talking specifically about properties in the good parts of the city, then the tax credit really doesn’t mean much, because people either earn more than the allowed, or the properties are greater than the pricing allowed.
    My point was that its all related, and to call out tax credits as the main reason for what appears to be a rise (or dead cat bounce) in SF real estate prices, is just silly.

  36. Posted by anon

    It seems like one thing to claim that the *stock market* is related to real estate demand vs. specifically naming the S&P 500. When someone says the former, I typically think of the IPO lottery and things of that sort. When someone says the latter, I think of a typical index investor. Those two crowds seem distinct to me.
    I certainly know a few folks who cut down on their general spending because of their 401(k) declines (e.g. trying to save more and cut their expenses so as to be better positioned for the future), but I’m not convinced that most people’s 401(k)s had that much of an effect on housing, given the types of investments that are in typical 401(k) plans and how locked up those funds are.
    In addition, it would be odd to use, say, down payment money for investing without knowing what the hell you’re doing, but maybe most people don’t know what they’re doing. If you were to put down payment money in something other than extremely safe assets (e.g. a CD), you’d want to put it in some asset class that mimics housing (although it’s not clear that a general REIT fund, to give one example, would do that).

  37. Posted by SFRE

    I just used the S&P 500 as one of many metrics to measure stock market performance. My comments were related to the broader stock market, I could have easily put the Dow or Nasdaq, but for simplicity purposes I chose the S&P 500 as a quick measure.

  38. Posted by J

    “you’d want to put [downpayment money] in some asset class that mimics housing”
    Not if you are waiting for housing to bottom out.
    “although it’s not clear that a general REIT fund, to give one example, would do that”
    ICF and IYR do. SRS does the opposite.
    “My point was that its all related, and to call out tax credits as the main reason for what appears to be a rise (or dead cat bounce) in SF real estate prices, is just silly.”
    Yeah, but this report is not just about SF. The exact same thing happened with Cash for clunkers. As soon as the tax cut ended, sales tanked big time.
    The problem with all this talk of tax credits not impacting SF or other expensive markets is that no home sale happens in a vacuum. Their is normally a chain of operations.
    Person A sells their starter home and buys a medium sized/priced home from Person B, Person B buys a McMansion from person C, and so on and so on. That chain has been broken since home sales have been driven so heavily by foreclosures. Persons B and C are left with overpriced houses with triple digit D.O.M.

  39. Posted by anon

    “I chose the S&P 500 as a quick measure”
    Yeah, that’s fair, SFRE — I wasn’t specifically picking on your principles. I think you’d have to have fairly significant non-retirement investments to be pulling money out of your investments for housing, in which case I’d be with J that this is a fairly small percentage of the population overall. Unclear what percentage of the Bay Area population that might be.

  40. Posted by SFRE

    Another perspective could be they felt that things were turning, with the rise of the stock market, and that the bottom was over, hence they started to buy houses again.
    I also doubt that people would be pulling money out of investments for housing…I think it was more of a confidence-type thing.
    I also think that a relatively small portion of folks took advantage of the tax credit, especially in the city, and especially in the better parts.
    I agree the report was not just about SF, but this is an SF blog, so I was commentating on the SF situation.
    Furthermore, if access to credit dried up, then who cares about a small $8000 tax break. The ones who bought had a boat load of cash, and had great credit, which implies to me that they would likely not be eligible for the tax break anyway. That was sideline money that came in, not people who would commit to housing in this crappy market for a lousy $8000 tax break.

  41. Posted by Goin' East

    Don’t forget, SF prices have to have some relation to surrounding areas. They can hold up for awhile, as pent up buyers snap up what comes through, but I decided to go with 4000 square feet in the Berkeley Hills for $900K (yes, bank-owned), after concluding that I’d rather have that than a bungalow in SF. I figure about $350-400 per square foot ought to be about the proper premium for SF, ultimately over what I paid.

  42. Posted by Sandra Israelson

    An interesting article. However, national statistics are rarely relevant. There’s a saying that all real estate is local. This is so true. I’m in Sarasota, Florida. Certainly the Sarasota real estate market is different from the San Francisco market. So while it’s interesting to compare notes, it’s important to get local information.

  43. Posted by J

    Yeah, yeah…
    Ignore the economy…
    Regression to mean never happens…
    It was just a coincidence that SF went up at the same time as the rest of the country…
    Loose credit had nothing to do with it…

  44. Posted by anonn

    You can say that, J, and ignore San Francisco’s behavior during 2007 and on, when it was performing quite well and the “rest of the country” took it on the chin? Or how about the levels attained during the runup, which individually are repeated daily, at levels never seen prior to the runup?

  45. Posted by J

    Well thanks for the useless statistics… “Levels” that have increased since 2007:
    Inventory
    Average (true)DOM
    Notice of defaults
    Foreclosures
    Idle realtors…
    Sounds like the trajectory of a truly healthy market…

  46. Posted by anonn

    I see you are not willing to entertain any sort of debate and would rather just issue flat statements. Fine. But your “SF went up at the same time as the rest of the country” statement begged a question and I gave it.

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