San Francisco Sales and Median: July 2010 (www.SocketSite.com)
Recorded home sales volume in San Francisco fell 16.8% on a year-over-year basis last month (452 recorded sales in July ’10 versus 543 sales in July ‘09) according to DataQuick, down 21.1% as compared to the month prior.
For context, July sales figures for San Francisco from 2004 to 2008 were 893 (2004), 706 (2005), 542 (2006), 564 (2007), and 609 (2008). And from 2004 to 2009 the average June to July sales volume decline was 7.9%.
San Francisco’s median sales price in July was $676,500, up 5.3% compared to July ’09 ($642,426) and up 2.0% compared to the month prior.
For the greater Bay Area, recorded sales volume in July was down 22.8% on a year-over-year basis, down 19.1% from the month prior (6,773 recorded sales in July ’10 versus 8,771 in July ’09 and 8,373 in June ’10) as the recorded median sales price rose 1.8% on a year-over-year basis, flat compared to the month prior.
We’ve said it before and we’ll say it again, think mix (and understand medians). Last month was the slowest July in terms of sales volume in 15 years.
At the extremes in July, Santa Clara recorded a 27.5% drop in sales volume (a loss of 604 transactions) on a 9.0% increase in median sales price while Alameda recorded a 23.1% decline in sales volume (a loss of 411 transactions) on a 12.1% increase in median.
As always, keep in mind that DataQuick reports recorded sales which not only includes activity in new developments, but contracts that were signed (“sold”) many months or even years prior and are just now closing escrow (or being recorded).
Bay Area July Home Sales Down Sharply; Median Price Slips [DQNews]
San Francisco Recorded Sales Activity In June: Up 2.1% YOY [SocketSite]
He’s It’s Back: California’s $10,000 Homebuyer Tax Credit Returns [SocketSite]
Medians Are Up, But Don’t Confuse That With Increasing “Prices” [SocketSite]

61 thoughts on “San Francisco Recorded Sales Activity In July Falls 16.8% YOY”
  1. I think the lows were hit in March/April 2009 and that we’ll not see those lows again. The graphs show weakness, but don’t seem to reflect how very nasty it was back then.

  2. It’s interesting that the month to month pricing peaks coincide somewhat with increased sales. Is there a version of this graph that includes supply/inventory against these figures as well?

  3. Right, Mr. Jones. We’ll not see THOSE lows, we’ll see even LOWER lows.
    Within two years, March/April 2009 will seem like “the good old days” for sellers.

  4. I would say that the graph shows us what many of us feel in our bones. The market peaked city-wide around 2007, 2008 showed a precipitous drop in sales and property valuations, 2009 showed a leveling off and a mild rebound, and 2010 seems to be slowing.
    more forward looking national (not SF specific) indicators showed that housing sales and prices plummeted (or insert less inflammatory adjective here) after the expiration of the FTHB, whether it was coincidental or causal, and that same data has not shown a rebound in sales or prices.
    thus, this fall should show some further weakness, again assuming that SF follows national trends (which it has in the past, although clearly not exactly).
    Case Shiller reports with a 3 month lag, so that data won’t cooberate what we see here until the end of October.
    Macroeconomic data continues to disappoint, even in the Bay Area. (for instance, the infamous GOOG indicator is down 20% since April). This obviously isn’t good for RE valuation. Macroeconomic data IMO will continue to disappoint for a while.
    There is still continued pressure on RE from distressed sales as well, although this is not a large factor in SF proper.
    the one shining light (depending on your perspective) is government. It continues massive support for housing, and who knows where QE2 will be focused. could be housing again. that may help nominal RE valuations, at least in the short to medium term.
    to know the future of RE, one must know the mind of our political leaders. Creating jobs would help too.
    as we’ve said countless times: it’ll be like watching the paint dry on a painting of grass growing.

  5. Increasing Inventory, falling sales volume, rising delinquency rates, weak employment, and, at best, a ‘sluggish’ economic recovery all despite record low interest rates.
    This is not a formula for rising prices.
    Of course, massive government intervention, like we are currently experiencing, can do a lot to hold up prices. It will be interesting to watch from here on out since so much of the government intervention is ending.

  6. “how very nasty it was back then [Apr 2009]”
    you’re right – 8.6% unemployment was very nasty! And they hadn’t even fixed everything with the stimulus yet!
    sent from my ipad? 🙂

  7. Don’t forget that interest rates are much lower than they were in early ’09. Just think what will happen to prices if rates just start to move back up?

  8. Prices will go up before interest rates go up. Which is a long way off. Which makes the option ARM awwwwwwwwwwwesome!

  9. You cannot say that. That didn’t happen in Japan. Today RE is 60%+ lower than 1989 there and interest rates are rock bottom.
    Glad the taxpayer is keeping sparky-b on life support and then some. Section 8 for contractors.

  10. I agree with sparky-b that interest rates should stay low and that prices will continue to fall for a long time before interest rates start creeping up. However, interest rates can rise very quickly if the market loses confidence in the borrower, and given the low fixed rates now, I, for one, would not take the big risk of an ARM for the modest difference in rates. And if (when) rates do start rising, ARM borrowers will get the double-whollop of accelerating price/value declines along with their higher payments.

  11. Using Japan as a proxy for what will happen in the USA is fraught with many issues. sparky-b stated an opinion, which certainly is just as valid as your opinion that we are going to have Japanese style real estate deflation. Therefore, “you cannot say that”. Here is just one major difference on the demand side:
    Besides Japan’s stagnant population growth and our projected continued growth, there are many other significant differences between our countries, both economically and politically that in my opinion will drive a different outcome.

  12. option ARMs weren’t designed to be section 8, but you catch my drift. but our good ole USofA government is basically pushing the moment of truth on these loans, making is a de-facto subsidized system.
    Contractors/flippers massively used option ARMs to purchase places with artificially low monthly payments, betting the resale would cover the accumulating debt. Many bailed out on these loans when prices went south, pushing the debt to the USofA books (again the welfare effect)
    OK. Let me rephrase that “Section 8 for contractors”:
    How about Welfare Queen Flipper Loan?

  13. @lol, you make me LOL. Seriously, I tried to post some data to refute your Japan analogy, but the SS algorithm did not like my embedded HTML. Hopefully the Editor will repost.
    If you want to discuss politics, then I am in agreement that we need politicians that believe in smaller government and less involvement in the free market. However, until we are willing to elect such folks we will have to deal with the constant intervention of the current regime.
    Let’s get one fact straight, the bailout on these loans did not generally benefit any single borrower. The bailouts were mostly directed at the banks that carried this junk on their balance sheets. Any individual borrower still suffered the contractually committed losses including credit hits if they walked. Nothing wrong with that as that is how the system is supposed to work. I agree that bailing out the banks was generally wrong and also implemented poorly. I think you have your “blame” slightly misdirected.

  14. I have only gotten 1 option ARM ever, and it’s for my actual home. So no I don’t get your drift. Interest only with lots of money down was the norm for buying fixers.
    And as always, when I am on here I’m talking about SF. Therefore, no I don’t think that a bunch of contractors “bailed out on these loans”. Where has that happened? People buying finished houses they can’t afford with option ARMs, that has happened.

  15. A nit I have is folks still seem to believe that prices in SF have continued to fall over the last 18 months. I will quote from A.T.’s post above “…and that prices will continue to fall for a long time before interest rates start creeping up.”
    Every data point I have seen says other wise and that City wide prices for all housing units are up approx. 10% since the low at the beginning of 2009. This supporting data includes MLS median, average, and avg/sq. ft. data as published by Rosen Consulting Group and others as well as Case-Shiller index. Where is data that shows SF prices have continued to fall?
    If you believe prices will fall in the future that is one thing, but it would make for more accurate discussions if was generally acknowledged that prices are up 10% since the bottom. I would speculate that even this site’s “apples-apples methodology” would be hard pressed to show prices falling since start of 2009 with any relevant statistical sample.

  16. Skirunman,
    Yes ARMs are subsidized and the borrowers are currently benefiting immensely. Low low rates are a direct subsidy of the US government. There is virtually no real market for these loans, but how much is the ARM rate? Way less than 4%! With a real market system these loans would be priced accordingly to their high risk. 8%? 10%? Payments would double or triple.

  17. @lol, OK, I misunderstood you. I thought you were talking about the bailout side of the equation. I agree, get rid of all US government subsidized loans. However, as sparky-b pointed out, and my personal experience backs up, Option ARMs were/are not generally used by developers (flippers in your lingo) in SF, at least by anyone that is still around today. Generally my experience is that you need 50% equity in a project today to get a reasonable construction loan. If you were really doing a cheap flip then maybe, but no one could likely make money off something like that today in SF.

  18. @sfrenegade, Yes, I had read that blog posting, but it still does not provide data showing prices continued to drop since beginning of 2009. Medians and averages are valid measures of a large data set over time. Heck, why did us mathematicians invent them if not otherwise, and yes, I understand their pitfalls as well. However, over time the data tends to normalize providing more insight. Since we have nothing statistically better, they are valid, but certainly not the only way to look at a market.

  19. “but it still does not provide data showing prices continued to drop since beginning of 2009”
    Yeah, I think what’s confusing here is that people are saying that many of the prices are down from 2004-2007 sales and they’ve seen these results since the beginning of 2009. I agree, the statements lack a little bit of precision.
    In any case, there probably aren’t that many 2009 sales that are being resold today, so it’s hard to have apple or non-apple data on this.

  20. Option ARMs were/are not generally used by developers (flippers in your lingo) in SF, at least by anyone that is still around today
    Well, option ARMs are history now. What I am talking about is past option ARMs still around and massively subsidized compared to their underlying risk. Also there’s the fact that the general subsidy system has allowed a portion of the loan holders to escape option ARMs into regular ARMs or plain vanilla full amortization mortgages.
    I reacted on Option ARMs mostly based on sparky-B’s hubris. He’s a contractor and he has an option-ARM. Now he says it’s for his own place.
    sparky,
    We know you played the system, just don’t rub our nose in it. After all, you are indirectly receiving a subsidy from all of us.

  21. “What I am talking about is past option ARMs still around and massively subsidized compared to their underlying risk.”
    Most home loans are massively subsidized compared to their underlying risk (anything conforming or super-conforming). What’s interesting, however, is that during the boom, it’s the private lender loans that went insane, not the massively subsidized ones.

  22. after years of option ARM tsunami discussions I meantion that I think because prices will come up before interest rates Option ARM are is in fact awesome, I am rubbing your collective noses in my hubris. Please.
    Also, I didn’t mention myself one way or another in regard to my original comment. I only told you about my option ARM for the sake of clarity on when I have gotten them after you were saying how it was a developers section 8. So spare me the pleading, if my option ARM was at 10% and not 2.8% you would be rubbing my nose in it.

  23. if my option ARM was at 10% and not 2.8%
    You’d be in strategic default already as the whole RE market, including SF, would be in the abyss.
    Let’s put back some capitalism into this Real Estate market financing and we’ll see what’s really worth what.

  24. Let’s put back some capitalism into this Real Estate market financing and we’ll see what’s really worth what
    Financing for developers locally is capitalism at its rawest these days.
    You are so out of your depth, but on you talk.
    This whole “Say something specific, get called out for being wrong, back up and out with macro + 2 years ago + rearranged CW words” playbook is pretty stale.

  25. Skirunman, you’re right that generally speaking medians and averages are useful tools for measuring large data sets. But they are not that useful for measuring SF real estate price trends over short periods. The mix of housing here is too disparate, with some places selling for less than $200,000, many others at over a million, and some at over 5 million. I.e. the standard deviation is too large. And the mix can vary tremendously month to month because the number of sales in any month is not that “large” (and it has been declining, which further skews things).
    As an example, in early 2009, sales of higher-end places totally froze — there were almost no non-GSE loans available. So the median and average plummeted far more than “real” price drops. Of course, medians and averages then rose from those artificial depths, and that would occur regardless of “real” price values because more expensive homes were now in the data set. You can’t compare apples and oranges.
    Medians and averages are useful to show very long-term trends in SF. But there is too much noise to garner anything of much use over any period of less than a few years.

  26. Sorry fluj, you’re wrong there. sparky’s comment was on his home loan. And we’re talking about past option ARMs that failed to be priced to “real” market.
    You left SS 7 times in 3 years. But yet you post. After all it’s only salesman words. Believe at your own risk.

  27. “You’d be in strategic default already as the whole RE market, including SF, would be in the abyss.”
    Your commenting as if my 10% was some crazy number I picked out of the air and didn’t come from your “8%?,10%?” comment that I was responding to.

  28. AT, you have faulted median derived from well populated datasets and narrowly tailored price ranges too. You simply want to say what you want to say, daily. If the data suits you, you’ll cite it. If not, you’ll fault it. There’s nothing more to it than that.

  29. lol for real. I’m not flujanonn, and you are pretty comical in this thread now acting as if the section 8 for developers comment never happened

  30. Ahh, anon(n), you bring out your old buddy the strawman again. Lol commented “Let’s put back some capitalism into this Real Estate market financing” and you retort about “Financing for developers locally.” Two different things.
    Obviously, developers benefit from the subsidized mortgage lending system because that is what they sell their products into — regardless of what they used to buy the raw materials.

  31. This site is about San Francisco real estate, so talking about San Francisco real estate is somehow now a strawman tactic? I don’t think so. Look at the title of the thread, guy! LOL

  32. “you have faulted median derived from well populated datasets and narrowly tailored price ranges too.”
    Sure, fluj, because the games you play — trying to compare medians of small slices of price ranges to each other — magnify the problems with medians generally. Welcome back, again, flujie!

  33. I see we have the full family present. Lazy Fridays I guess.
    Yes I stand by the section 8 developers statement. I’ll use your favorite play: Prove me there are no developers currently holding Option ARMs from the bubble years. Nothing? Crickets I hear? That’s what I thought.

  34. Wait, fluj and skirunman had managed to put the worm in my apple.
    I originally did not say “developer”, but “flipper/contractor”, a sometimes very different animal.
    There. Worm extracted and killed. Much better.

  35. You riffed on it like you knew something, pal. You didn’t. The onus is on you, not me.
    And AT I said what I want to say to you already. You pointed out that local recent mix is too disparate. I pointed out that you fault precisely tailored and well populated price ranges and areas too. I’ve nothing more to add to that.

  36. lol,
    “Nothing?Crickets I hear?That’s what I thought.” All by you in a row as if magically I could slide a comment in there, WTF. I already said I have never gotten one for a spec. house that’s more info than you provided yet you claim some victory.

  37. Thought you were talking to me, I mean the section 8 stuff was between me and you. But whatever, have a nice weekend.

  38. Using Japan as a proxy for what will happen in the USA is fraught with many issues. sparky-b stated an opinion, which certainly is just as valid as your opinion that we are going to have Japanese style real estate deflation. One major issue on the demand side is that Japan’s population has been flat for the last 20 years while ours has gone up by 50+M (20%).
    Besides Japan’s stagnant population growth, actually projected to decline in the future, and our projected continued growth, there are many other significant differences between our countries, both economically and politically, that in my opinion will drive a different outcome.

  39. Median and average price are a valid measures of a market assuming statistically significant sample sizes, especially if trying to understand trends, which is what I think most of us want to try to understand anyway. There is really no such thing as a “real” SF housing market price, only what the statistics show or what the price was for a single specific transaction. The single apples-apples transaction unfortunately provides no true insight into the trends as it is a single data point. Until you take all of these data points and wrap them up in an analysis, which is what Case-Schiller attempts to do, you just have speculation on what the market is actually doing.
    I’m sure this has been discussed on this site in the past, but does anyone know if anyone publishes standard deviation (and also skew) along with mean pricing? I could not find it in a quick search. If not, and if I have time, I may try to get the raw data and do such an analysis.
    Also, the issues is not that the standard deviation may be large, but that the standard deviation (and skew) may change significantly over the data sets when trying to plot trends. I also believe a quarters worth of data is more than enough for a City wide analysis as it seems we typically have at least 1k data points per quarter. Finally, I believe the data generally to be good with a low noise to signal ratio. There may be some non-arms length transactions and other funny business, but not something that will significantly effect the outcomes.

  40. One major issue on the demand side is that Japan’s population has been flat for the last 20 years while ours has gone up by 50+M (20%).
    Point taken. But Japan has very limited land supply which was one of the 2 tenets of the 80s bubble. We don’t. We can “create” land very easily by the stroke of a pen. And we did, overbuilding in the boonies and still expecting 3X 2000 prices.
    On the Japan side, the demand popped the bubble.
    One the US side, the supply popped the bubble.
    Our bubble was as much about unrealistic expectations as Japan’s forever growth.
    2 different bubbles. 2 similar policies to keep them inflated. One failed. Why would ours succeed?

  41. If we are talking SF real estate then supply is limited. 49 sq. miles already, for all intents and purposes, built out. The hoops one must jump through to attempt to create or expand housing in SF are further governors on the supply side of the equation. Gone to Tahoe!

  42. “If we are talking SF real estate then supply is limited.”
    But SF is not an island like Japan is, literally or figuratively. If SF prices get out of hand, people buy somewhere outside of that 49 sq. miles, and vice-versa. Far more people in the Bay Area live — and want to live — outside of SF than in it. SF prices are kept in check by neighboring area prices — simple economics (sure, some only want to live in SF, but others would never live in SF, and some only want to live in Concord — it doesn’t matter to the economics).

  43. Skirunman wrote:
    > Japan’s population has been flat for the last 20 years
    > while ours has gone up by 50+M (20%).
    The population of SF was 775,000 in 1950. In 2000 the population of SF was up to 776,000. The most recent census data I found was for July 2008 at 809,000. That is an increase of less than 600 people per year on average for the past 58 year, or 4% over 58 years.
    The Wikipedia says: “The city of San Francisco, California, due to its mild climate and its social programs that have provided cash payments for homeless individuals, is often considered the homelessness capital of the United States. The city’s homeless population has been estimated at 7,000-10,000 people.”
    San Francisco probably had a couple thousand homeless in 1950and most were not counted in the census. Today thanks to “homeless advocates” the homeless are probably over counted. If you back out the increase in the SF homeless population the overall population of the city has been flat just like Japan.
    P.S. Welcome back fluj…

  44. In 2000 the population of SF was up to 776,000. The most recent census data I found was for July 2008 at 809,000. That is an increase of less than 600 people per year on average for the past 58 year, or 4% over 58 years
    No way. Why would you average out back to ’50? And not look at 2000 – 2008? Or even ’92 – 2008 or something? You realize that a huge exodus outward occurred during 2001 – 2002, right? So what you’re actually showing is 33K more in a relatively short span in a constrained area, despite enormous economic tech-focused upheaval felt locally harder than most other places. And according to all reports 2010’s census will show quite a bit more than 2008.

  45. If you have a better source then share it with us anonanon. There are whole neighborhoods full of high rises that didn’t even exist in 2000, so it is not surprising that San Francisco’s population has been growing at a pretty healthy clip. Also, people are doubling up due to the recession.

  46. It will be interesting to see where SF’s population stands when we get the 2010 census results. Lots of different shorter-term surveys with a lot of noise in all of them. The decennial census may have flaws, but at least its methodology is consistent.
    EDD data indicate that the SF labor force currently is about 20,000 lower than in 2000. It dropped further in the mid-00s before climbing, and then dropping a little again in the last couple years (while the unemployed ranks grew by about 30,000 since mid-07). While there are lots of new SOMA condos now, people tend to leave high-cost areas like this during downturns, and rental vacancies climb — the latter certainly appears to be occurring but I don’t know of decent statistics.
    I think the verdict is still out on SF population growth, or loss, over the last decade.

  47. NVJ, don’t be naive. Nobody knows what the actual population is. The US Census Bureau says it was 808976 in 2008. The California Dept. of Finance says it was 835364 on Jan 1, 2008 and 845559 on Jan 1, 2009.
    http://www.dof.ca.gov/research/demographic/reports/estimates/e-1/2008-09/documents/E-1_2009%20Press%20Release.pdf
    Quite a bit of difference, no? The reality is that population numbers are too much of a political issue for there to be numbers that can be trusted. Federal funding based on population, seats in the House of Representatives, and Congressional District gerrymandering all depend on them. And the Census Bureau is known to be influenced by political pressure, like when they added 34000 people to San Francisco’s population out of the blue:
    “Last year the city challenged the Census Bureau’s numbers, and in December it won an adjustment that added 34,000 people to the July 2007 estimate.
    “I want to ensure that San Francisco receives every dollar of federal and state funding that we are entitled to,” Mayor Gavin Newsom said at the time.”
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/03/19/MN2U16IBT9.DTL
    Interestingly, part of the City’s argument was a study that claimed that the 2000 Census number of 764976 undercounted the population by 100000.
    http://socialcompact.org/index.php/site/news-detail/san_franciscos_challenge_to_us_census_a_success/
    So who knows what the actual population was in 2000 and what is it today?

  48. @FormerAptBroker, enough with the silly name calling. I am not, never have been, nor ever will be the person you referred to as Fluj. In previous posts I made it pretty clear that I am a tech guy turned developer.
    In any case, it has always been my assumption that the limiting factor on population growth in SF is more supply related than demand. Yes, lots of dotcom folks left the City after 2000 because of job loss, but I believe the City could easily grow to more than 1M in a ten year span if we had more housing, assuming the right feature/price mix. The same issue exists to an even greater extent in NYC. Of course, this not the only factor that effects housing pricing in SF, but I will still stand by my belief that we won’t have a ten year housing deflationary period in SF ala Japan.

  49. Skiruman, you’re half-right, but supply and demand are two sides of the same coin. If you built 100,000 new housing units in SF and charged $100K for each, you sure would have a lot of demand. If you charged $1.5 million, not so much. Of course, in either extreme, prices would rise/fall to meet the demand curve.
    This is why those god-awful “exurbs” have grown so much — housing was so cheap it spurred demand. Not many people would choose to live there if they had unlimited resources. Prices are still a lot higher in SF than, say, Modesto. but sales volume and prices are declining in SF. Those two facts say quite a bit about the level of demand here (and in Modesto) at prevailing prices.

  50. fluj, go take a look at a high school economics textbook. Then come back when you have something to add. There are lots of nuances to this, but you are plainly not cognizant of any of them.

  51. I’m not fluj and I wonder how many different people you’ve called fluj already! Supply and demand in real estate are linked but they’re opposing. Besides, there are all sorts of externalities in real estate. It’s not so cut and dry as you make out, and that’s what I objected to.

  52. If we are talking SF real estate then supply is limited. 49 sq. miles already, for all intents and purposes, built out. The hoops one must jump through to attempt to create or expand housing in SF are further governors on the supply side of the equation. Gone to Tahoe!
    Sure. But that doesn’t mean you can send prices to the moon. If there are 1000 houses for sale and 5000 people needing them, this doesn’t mean these houses will sky all the way to 10M. This depends on the buyer’s capacity (and the capacity of their financers).
    Also, another forgotten supply: prop 13 grannies. The prop 13 scam has maintained many in their homes much longer than with previous generations. Too many square feet for too long. Things will rebalance in the next 10-15 years, bringing much needed square footage online. This steady square footage supply might be absorbed before it affects prices. Then again, it might not.

  53. “supply and demand in real estate are linked but they’re opposing”.
    kinda like two sides of the same coin, perhaps?

  54. I don’t think fluj even posts any more, but his name will forever be remembered in SocketSite lore.
    To fluj!

  55. “Is there a version of this graph that includes supply/inventory against these figures as well?”
    SocketSite gave inventory on July 12, 2010 as 1799. With 452 sales in July, we had just shy 4 months of inventory.
    To compare to 2009, inventory on July 12, 2009 was 1569 with 543 sales for July 2009, giving 2.9 months of inventory.
    At least YOY, SF inventory in increasing just like national inventory.

Leave a Reply

Your email address will not be published. Required fields are marked *