Inventory of Active listed single-family homes, condos, and TICs in San Francisco rose 3% over the past week, up 7 percent over the past two and versus an average 6% increase for the same two weeks over the past four years.
Current inventory levels are now up 7% on a year-over-year basis and up 19% versus the average of the past four years (up 23% if you exclude 2009) and up 40% as compared to 2006/2007. Inventory of single-family homes for sale in San Francisco is up 15% on a year-over-year basis versus only a 1% increase for condos. Keep in mind that if new demand was increasing faster than new supply, inventory would be dropping.
36% of active listings in San Francisco have undergone at least one price reduction with the percentage of active listings that are either already bank owned (85) or seeking a short sale (152) up to 14%.
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).
∙ Listed Inventory Crosses 2009 Mark For Four Year Seasonal High [SocketSite]
∙ SocketSite’s San Francisco Listed Housing Inventory: 6/1/10 [SocketSite]
∙ Will Pent-Up Demand Outstrip Pent-Up Supply? [SocketSite]
Has the fabled foreclosure tsunami finally reached SF’s shores?
Or are homeowners putting supply on the market to take advantage of the uptick?
Exciting times. Maybe the paint will finally dry on ex SF-er’s painting of grass growing.
Exciting times. Maybe the paint will finally dry on ex SF-er’s painting of grass growing.
ROFL. Thanks for thinking of me. Unfortunately, I don’t believe this is the case yet. We still have a long ways to go. even my optimistic forecast from years ago was Dec 2011… and I see nothing that pushes that earlier. if anything, all this stimulus etc has pushed the drying date later.
the inventory rising this quickly certainly isn’t a good thing IMO, and I find it interesting that the SFH inventory is rising more rapidly than the condo inventory since thus far in this downturn my impression is that SFHs have been holding up well.
struggling to think of a reason, it may be only that the “new” condo towers have already listed all their inventory and there hasn’t been much new builds these last 18 months or so…
regardless, all advance indicators for NATIONAL home sales has been quite negative. Applications for home purchase loans plummeted the second the FTHB credit expired. I don’t have SF county specific data, and SF has performed better than the nation on several metrics over the last 12 months (along with San Diego, Minneapolis and 1-2 other cities I think)
All that said: forecasting is still impossible given the level of govt intervention. I fully expect another round of housing stimulus (either covert or overt) as the summer wears on and the housing market worsens post stimulus (FTHB credit and Fed purchases of MBS and Treasuries).
risky time to buy a home IMO. Earlier I said I would consider buying when SF posted 12 consecutive months of YOY appreciation… and it may have done that now I’m not sure… but I don’t feel good about the future of RE right now given the state of the economy. that might just be my bear-tinted glasses though. Risk=reward… so maybe one needs to jump in to get the reward. too bad rent:buy metrics aren’t improved that much.
“If new demand was increasing faster than new supply, inventory would be dropping.”
Well, that is true in absolute terms but not in relative terms. I’d argue that relative terms is a much better way to look at this. Here’s an example. If there were 100 units on the market last June and 10 units sold, that would represent 10 months of supply. If however the following June, there were 200 units on the market and 25 units sold, the months of supply would be only 8 months. While, inventory is increasing in this example, the relative rate of sales has increased by more.
For the record, I’m not sure if that’s what’s happening here, but it is theoretically quite possible. That’s why I always say it’s dangerous to make conclusions using partial stats. I think we’ll have a much better read when the dataquick numbers are released later this month.
36% of active inventory with at least one reduction, 14% of active inventory is distressed, and total active inventory is significantly higher — and rising more steeply — than at this point in the last five years. Clearly a sign of market weakness, but we can all debate the depth of the weakness, the causes, and how long it will continue.
I’m not as certain as ex SF-er that we’ll see much in the way of further significant RE stimulus. The gov’t — through refis using the GSEs — has now taken about as much bad mortgage debt off the banks’ hands as it needs to. The big banks are now fine financially, and that was the point of all the stimulus programs. The debt fear-mongers are also winning the PR battle. I agree with ex SF-er that all those efforts pushed out the date of the “bottom” — probably would have already hit it but for all those measures, but it is now pushed out a few more years. SF won’t be at the bottom until the rent vs own comparison is far closer than it is right now.
The ’08 and ’09 knife-catchers are already kicking themselves, and the ’10 crop (one born every minute) will be doing the same over the next few years. On the plus side, I’ve got a couple friends who found extremely nice SFRs to rent in the last month at very good rents. One just sold their house in Noe and decided to rent for a few years until the market falls further.
year over year # of MLS sales of homes, condos, tic’s, lofts, coops for the period of Jan 1 thru May 31 for the years in the above chart:
’06 = 2272
’07 = 2231
’08 = 1826
’09 = 1265
’10 = 1802
^What were May numbers for those years?
during March 1 thru June 10th (shorter more recent time period than above)
SFR’s only
’06 = 831
’07 = 706
’08 = 647
’09 = 553
’10 = 714
Condos only:
’06 = 634
’07 = 698
’08 = 542
’09 = 343
’10 = 566
TIC’s only
’06 = 160
’07 = 200
’08 = 148
’09 = 97
’10 = 89
hangemhi, thanks for posting the sales figures. That’s kind of stunning that we’re below 2008 sales numbers. I would not have guessed it. That was a slow year with pretty significant price declines, and 2010 inventory levels are quite a bit higher than 2008 right now. The second half of 2009 really picked up from the moribund first half, and it will be interesting to see how 2H ’10 compares. Economy seems a little better now, but the stimulus programs are tailing off, and distressed inventory seems to be growing (re-casts?).
AT:
I agree with you, I’m not willing to bet big bucks that there will be another stimulus. this is my “going out on a limb” prediction that I’ve had for about a year now, but it is not a certainty, although I do believe the govt has proven that it is willing to do ANYTHING to jump start housing, even risk a currency crisis.
But you lose me with this “The big banks are now fine financially”.
This is a load of tripe. They are zombified and totally insolvent.
the only thing keeping them as the walking dead are the loosened accounting regulations, ZIRP, and covert bailouts (like continued support through AIG, continued FHA/Fannie/Freddie support, and Fed programs).
as example: most or all of the big banks would crash spectacularly tomorrow if we made them go back to the original FASB 157 rules (their level 3 assets are astronomical)
After 2 years we have not dealt with any of hte structural problems in our economy, instead we have papered over the problems and transferred private liabilites to the public’s balance sheet. How do you spell J-A-P-A-N again? (if we’re lucky).
Based on the March 1st to June 10th numbers, the TIC market looks exceptionally weak in comparison to sfh/condos. Reasons?
ex SF-er wrote:
Don’t know if you were thinking short or long term, but…from Friday’s Washington Post, entitled Bill would extend home buyers’ deadline for tax credit:
The excuse here is that so many people wanted to take advantage of the homebuyer tax credit that some buyers are having trouble closing before the deadline. The Senator and his co-sponsors are hoping to attach the measure to the American Jobs and Closing Tax Loopholes Act of 2010 that would extend other tax breaks and emergency unemployment funds.
I’d say a combo of:
1) less profit to be made in Ellis Acting a building and converting it to TIC’s.
2) increased city regulations limiting ability to convert TIC’s to condo’s.
3) less availability of fractionalized loans for TIC’s
“The excuse here is that so many people wanted to take advantage of the homebuyer tax credit that some buyers are having trouble closing before the deadline”
The one thing I’d want to know before enacting legislation on this is exactly how many people this could actually affect. Best I can tell, this just invites fraud. Sure, we’ll just backdate that nice little contract… But hey, fraudulent receipt of stimulus is still considered good stimulus.
Two thousand 8 wasn’t a bad sales year in SF till after the summer was over. This year seems likely to surpass it.
And, Rillion, wouldn’t there also be
4) increased affordability of condos makes TIC a less attractive alternative.
I have not seen TIC prices come down enough to make the convincing case that they are significantly more affordable than condos, and given that you buy into so much uncertainty (financing, condo conversion,etc)they really do need to make that case.
Condos loans are incredibly cheap right now – TIC loans are not. They are also much easier to qualify for.
It’s also the phenomona of a slower market when buyers can cherry pick and look for the “perfect” thing. TIC’s are simply counted out as not being “perfect” right now.
imho TIC’s have never been a big enough discount to Condos – it should be the carry-cost difference in the loans plus a 10% inconvenience discount. So TIC ought to be 30% cheaper than a comparable condo. but they’ve always been in a 10% to 20% range because buyers just see the dollar difference and are too caught up in the purchase when they realize their carrying costs would have afforded them a more expensive condo than they had allowed themselves to look at. with time on their side, that’s not happening now so TIC sellers will have to discount even further to stimulate their market.
Hangemhi, thanks for the sales data. It does look like a good example of what I said was possible — months of supply is actually down (better) than it was last year despite inventory being up. I’m sure that AT and others will point out that it’s still up to historic levels, but relative to last year (which for now was the bottom), the metrics are significantly better.
I think it’s way to early to start talking about the paint being dry, and as others on here have suggested – the back half of the year will be more telling. Even though, we won’t really know for many more months.
To spell out Lance’s theory in numbers:
year inventory sales/mo* inventory
2008 1496 402 3.72 months
2009 1630 298 5.46 months
2010 1730 411 4.21 months
* roughly calculated by Hangemhi’s 03/01-06/10 data
Does this show anything? Hell if I know.
Here is more detailed sales data, including breakdown by neighborhood:
http://www.rereport.com/sf/
The range of dates includes stimulus measures and foreclosure prevention measures.
Even if tax incentives don’t have a big effect on SF buyers, they may affect the buyers of the homes that SF buyers are selling to move here. We may have brought in a large part of the second half sales into the first half.
It will be interesting to see the second half data. In any event, the number of sellers continues to build faster than the number of buyers, and the only way out of that jam is lower prices.
And I suspect we haven’t begun to see the effect of the strategic defaulters from the latter part of 2008 and early part of 2009, but those could start showing up in the very late second half of this year.
This is my favorite Socketsite chart. Interesting to see whether housing prices will fall under their own weight as supplies are on the rise.
curmudgeon, my impression when I was out looking back in 2006/2007, which had a lot more TIC activity, was that most TIC’s on the market were ‘new’ TIC’s, not re-sales. So I do think the pool of available TIC’s is no longer increasing as fast as it did back before 2008.
redfin just came out with its May 2010 market report – among other things it says Single Family home listings are down month over month (-.2%) and year over year (-7.8%)
does the editor break out types of residential units?
if we can rely on SS’s numbers and redfin’s numbers – it would mean condo and/or TIC listings are up significantly to accomodate SFR listings being down nearly 8% yoy
also from redfin:
“inventory is tight”
“inventory isn’t that exciting right now”
“most deals are still competitive” (showing 72% of their transactions see multiple offers)
[Editor’s Note: We believe Redfin includes properties that are in contract in their inventory counts (which we don’t in ours and don’t think they should in theirs). As noted above, our active and available count puts single-family home inventory up 15 percent year-over-year versus up 1 percent for condos.
We were planning on publishing Redfin’s sales data this afternoon but unfortunately we’ve been having some difficulty getting the summary data in their press release to tie to their detailed reports. As soon as we can resolve the discrepancies we’ll share.]
[Editor’s Update: Also noted in Redfin’s press release which hangemhi seems to have missed, “Bay Area deals that Redfin negotiated over the past 30 days saw a big drop in competing offers” (that 72% is down from 88% in February/March). And in terms of inventory being “tight,” we’ll let the data speak for itself.]
multiple offers include low-ballers.
“properties that are in contract in their inventory counts (which we don’t and don’t think they should)”
Editor — will you give us the rationale behind this? It seems like there’s a donut hole of houses that aren’t counted at all, which makes it harder to gauge months of inventory (i.e. total inventory including pending sales divided by number of sales in a month). It seems like we’re sort of double-counting sales, e.g. as completed sales and as removed from inventory while pending, or alternatively we’re under-counting inventory, as is, again solely for purposes of months of inventory.
Would it be possible for you to give us both numbers going forward?
“Three clients have expanded their search from the City to include places like Burlingame or Marin because there are so few single-family homes for sale in San Francisco.”
This is a quote from the Redfin blog that must quite obviously and self-evidently be false because I’ve been told by experts who are plugged-in at SocketSite that people who want to live in San Francisco would never want to live in Burlingame or Marin county.
Always risky to mix and match data sources to draw any conclusions, but if there are 7% fewer total listings YOY (per redfin) and 7% more active listings (per the ed.) that would mean there are substantially fewer places in contract YOY, correct?
Note that this chart (look at the “Inventory” table — third graph) indicates both SFR and condo inventories are at or near 4-year highs:
http://www.altosresearch.com/paragon/latest/paragon_market_update_zip_based_cmid_55_zipd_none.html
“that would mean there are substantially fewer places in contract YOY, correct?”
Well, another valuable thing to compare would be number of sales in a given month vs. number of pending sales. That obviously doesn’t give the whole picture if a transaction closes in 10 days, but it tells us something.
As anyone might guess from my posts, I’m always for more data rather than less.
The opposite seems to be true with close to 900 properties in contract and around 400 pending.
Last week, I heard a talk by Andy Sirkin (TIC contract attorney in SF) in which he said that there are currently only 2 banks making fractional TIC loans (one of which is Sterling. The other I don’t remember). And furthermore, they are charging approximately 7% interest rates. I assume partially because they have no competition, and partially because these loans are riskier. I believe this more than any other factor explains the cooldown in the TIC market.
I don’t think there have ever been more than 2 banks making fractional loans, have there? And I think they’ve always carried a premium, but perhaps not this much (approximately 2%)?
Sounds like someone is just in denial. Trying to make the implication that TICs are being affected by something other than high unemployment/low demand/competition.
And as far as properties in contract, when I hear that, I think short sale offers that probably won’t even go through…
GT Financial does TIC fractional lending. What I saw last week is 6.2% APR for 25% down on around 500K for 3Y fixed. They’re a solid competitor to Sterling.
Still not the 4.7/4.8% for regular 30Y fixed I see around town.
anyone dare predict a November 2010 inventory figure?
“The opposite seems to be true with close to 900 properties in contract and around 400 pending.”
If true, this is precisely why contract/pending vs. actual sales is interesting. For example, does anyone think we’ll have 900 sales in July?
j: “Sounds like someone is just in denial. Trying to make the implication that TICs are being affected by something other than high unemployment/low demand/competition.”
How is discussing factors that influence the demand for TIC’s being in denial when you even say that low demand is one of the only 3 things affecting TIC’s?!?
Is your argument that the price of financing for TIC’s doesn’t impact the demand for TIC’s? Or changes to the ability to convert a TIC to a Condo doesn’t impact their demand? To say people are in denial is a bit harsh when really what is being discussed are things that impact the demand for TIC’s.
“Also noted in Redfin’s press release which hangemhi seems to have missed”
lol for being called out by the editor for something he does on a daily basis – ie “missing” positive stories where i “missed” the negative comments in redfin’s email. note there’s no story about the stock market being up nearly 6% in the past week or up 2% today alone. but when/if it drops i’m sure there will be another stock market post.
as for the 72% of offers being competitive being way down from 88% – i pointed the current number out because i would think most of the SS bears would still find that to be shockingly high.
[Editor’s Note: It’s not a matter of being positive or negative, but rather understanding the context. And be careful, that stat is 72% of the offers that Redfin handled in the Bay Area, not San Francisco nor the market as a whole. The direct quote from the Redfin release, “The Bay Area deals that Redfin negotiated over the past 30 days saw a big drop in competing offers.”]