August 16, 2010
SocketSite's San Francisco Listed Housing Inventory: 8/16/10
Inventory of Active listed single-family homes, condos, and TICs in San Francisco dropped 3.6% over the past two weeks on new sales, a slowdown in new listings and a seasonal culling of listings that haven’t moved. On average, inventory has dropped 3.6% during the same two weeks over the past four years.
Current inventory levels are now up 18% on a year-over-year basis and up 18% versus the average of the past four years, up 19% if you exclude 2009, up 28% as compared to an average of 2006 and 2007.
The inventory of single-family homes for sale in San Francisco is up 26% on a year-over-year basis versus a 13% increase for condos.
40% of active listings in San Francisco have undergone at least one price reduction and the percentage of active listings that are either already bank owned (89) or seeking a short sale (179) is up to 17% but with no change on absolute basis over the past two weeks.
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: 8/02/10 [SocketSite]
∙ A New High For Distressed Listings In San Francisco [Socketsite]
First Published: August 16, 2010 8:00 AM
Comments from "Plugged In" Readers
" the percentage of active listings that are either already bank owned (89) or seeking a short sale (179) is up to 17% but with no change on absolute basis over the past three weeks."
How does the bank owned listings compare with the previous years?
Posted by: anon at August 16, 2010 8:58 AM
Inventory at an all time high, yet sales off 25% YOY. Not too hard to see the future here.
Posted by: tipster at August 16, 2010 9:00 AM
Tipster, from the graph it is a five year high for this time period. We don't know if it is an all-time high. (not that I disagree with your view of the future, just sayin').
Fall will be interesting. It may even get me off the fence.
Posted by: curmudgeon at August 16, 2010 9:14 AM
How does the bank owned listings compare with the previous years?
Bank-owned listings are up
46 85 percent year-over-year, short sale listings are up 36 57 percent year-over-year.
Posted by: SocketSite at August 16, 2010 9:54 AM
Sales did not drop off that significantly but remained pretty steady right through the end of 2009 and the first few months of 2010. That was unusual -- sure looks like demand was pushed forward by all the incentives. Listings have not dropped off that steeply from the peak, which was at least a 5-year record, so it will be interesting to see if new listings continue to mount and/or sales continue to lag, which has been the pattern the last couple of months. My bet is that we will see exactly that as distressed listings continue, those who have been "holding out for the good times to return" capitulate, and sales remain sluggish due to a continuing unwillingness or inability to buy.
Posted by: A.T. at August 16, 2010 10:15 AM
In case any of you weren't aware of what's happening in the real world, we're in a depression, one that will make the '30s look like easy street.
Posted by: two beers at August 16, 2010 11:30 AM
A.T., what about "sales remain sluggish due to a continuing unwillingness or inability of sellers to lower prices" for the near future (i.e., the next quarter or two)?
Tipster is (possibly) implying that prices will fall due to sales dropping off and inventory increasing, but in this alternate scenario, inventory levels would just keep increasing while sellers wait for "something to happen".
Posted by: Brahma (incensed renter) at August 16, 2010 11:37 AM
^The increasing number of bank owned properties will ensure that scenario will never happen.
Posted by: tipster at August 16, 2010 11:46 AM
Brahma (incensed renter), you're absolutely correct that a reason -- the primary reason -- for slow sales is that sellers are not lowering prices to a point where they will "clear" (i.e. sell). So there is a big gap between the supply and demand curves, or, alternatively phrased, the intersection has shifted far left. The flip side (really, the same thing) is that buyers are not bidding as high as sellers are asking. I was just throwing in my 2 cents as to which way these two flip-sides will move. Buyers are not going to bid up prices in this environment. For a number of reasons, sellers can and will lower their asking prices, continuing the current 3-year trend.
Posted by: A.T. at August 16, 2010 11:46 AM
"In case any of you weren't aware of what's happening in the real world, we're in a depression, one that will make the '30s look like easy street." - two beers
Every now and then, it really would be nice to have an actual person who lived through the depression on the board, so they could effectively squash the occassional doomer hyperbole. Get back to us when we have:
32% decrease in wholesale prices
70% decrease in all foreign trade
46% decrease in industrial production
607% increase in unemployment
No question it's bad out there. It's terible. But to say this will make the Great Depression look like "easy street" is just all kinds of stupid.
Posted by: Longtime-Lurker at August 16, 2010 11:52 AM
The increasing number of bank owned properties will ensure that scenario will never happen.I considered that. But the people at banks and other financial institutions that are holding these properties are also the ones that have access to the best market information, no? That is to say, they'd know more about the state of inventory levels that Joe Blow individual seller who's listing a home he only purchased four years ago now because he's been transferred to Chicago.
If you're Jane Bankster, won't you know better than to "flood the carburetor" of the local real estate market by listing properties you'd taken back when you know that inventory levels are increasing? Or at least better than Joe?
Posted by: Brahma (incensed renter) at August 16, 2010 12:43 PM
Here is some more data I thought may be of interest. Make your own conclusions, if any, how this will effect ongoing supply.
Just got this from my bank. Jumbo conforming 30-year fixed loan (up to $729.5k) at under 4.5%. Jumbo 30-year fixed (> $729.5k) at 5.5%. Buyers have about ten percent more buying power compared to a few months ago.
Also, I have been told that inventory is at about 2.5 months of supply for the northside of the City (D7/8). I don't have raw data or trends for just D7/8, but I will try to get and post.
Posted by: Skirunman at August 16, 2010 12:50 PM
Meanwhile, new FHA restrictions make loans harder to get and more costly for the 30% of the market that uses their loans.
Or I should say, used to use their loans...
Posted by: tipster at August 16, 2010 12:59 PM
I considered that. But the people at banks and other financial institutions that are holding these properties are also the ones that have access to the best market information, no?
even better yet, the banks that hold these assets have a direct line to our political leaders and the federal reserve. Thus, they can get overt bailouts, favorable accounting treatment, stealth bailouts, etc which allow them to keep these toxic assets on their books valued at nearly 100 cents on the dollar, keeping the bank in zombie state and the bank CEO rolling in record bonuses.
in a normally functioning market perhaps we'd see the deluge of REO's. in our era of crony capitalism and corporatism? who knows. this situation certainly can't continue indefinitely... but who knows where our leaders will focus QE2? perhaps it will be another outright MBS purchase program, hiding more toxic assets on the public's balance sheet. perhaps it'll be more credits/tax breaks for housing? perhaps it will be principal reductions for homedebtors?
who can say these days?
Posted by: ex SF-er at August 16, 2010 1:05 PM
Skirunman, I think these unprecedented low nominal rates are helping to keep prices from falling as far/quickly in the conforming market (under about $900,000). It's amazing that sales are falling despite these rates. Of course, unless you go the FHA route you still need a down payment that dwarfs what most people looking at homes in the upper part of that range would be able to save. That is a likely contributor to the low sales.
And it may take 1, 2, 5 or more years for rates to climb back up, but once they do home values will decline (even further) accordingly.
Ex SF-er's right that covert aid to the banks will continue. I do not believe that will include direct assistance to people who paid $1 million-plus for a home. Too politically unpalatable. I doubt that bit about 2.5 mos. inventory in D7/8 unless someone is using some twisted measure.
Posted by: A.T. at August 16, 2010 1:18 PM
I do not believe that will include direct assistance to people who paid $1 million-plus for a home. Too politically unpalatable.
I agree fully here. but all that said, almost nothing will be done for the little people ($1M under OR over). instead, the covert assistance will go right to the banks to allow them to continue to hide their losses.
completely made up example:
BofA is sitting on 100 mortgages on properties that average $1.5M each, and all are severely nonperforming (let's pretend 90+ plus).
initial value of these would be $150,000,000
Let's pretend that today's theoretical "true value" might be 1,250,000 each or $125,000,000 total. Bank has $25M in losses on this. Bank can't afford these losses though (their money is tied up in executive bonuses... gotta retain the top talent you know!)
in a "normal" market the bank would foreclose and sell these. so 100 mortgages would soon go into foreclosure. 100 REO's would come to market, as some have stated above.
But not today. Instead, they take those mortgages and value them as 100c on the dollar through mark-model accounting, and bundle them into a Mortgage Backed Security.
the Fed buys that Mortgage Backed Security for $150,000,000m or 100 cents on the dollar. or heck, maybe even for 110cents on the dollar ($165,000,000) allowing the bank to make a profit!
Bank is bailed out.
Fed (and public) now ownes the "assets". booked at 100c on the dollar.
The Fed doesn't foreclose.
this will keep the flood of REO's down.
much later these all fall apart and the Fed writes the balance down to whatever they're really worth, and then the public eats the loss.
public has no idea where the loss came from, because they heard that they made a profit on all these "deals".
bankers laugh all the way to the bank, all the while criticizing the government for its "waste" and criticizing people on Unemployment as Welfare Queens.
that's just an example.
there are lots of ways to do this.
for the last year the pig-stuffing occurred through Fannie and Freddie and FHA (hence the "need" to liberalize them and increase loan maximums to $729k... and to allow Fannie/Freddie's ceiling on losses to go from $500B to unlimited!)
untold amount of dreck was pumped into these entities. now that they're exploding the "free marketeers" are trumpeting how awful F/F/F are, of course conveniently forgetting where most of that came from (private banks).
The Fed also took a bunch of dreck on it's balance sheet with the $1.25T of MBS it bought last/this year.
more of the same will continue.
We just have to watch very closely, especially now that QE2 is on deck for 2011!!!
unless we see some sort of unexpected regime change, expect to see many more covert bank bailouts and housing support.
it is for this type of reason that I have been unwilling to discuss the future nominal trajectory of housing, although I am quite confident that housing will continue to experience severe headwinds for at least another 1-2 years.
the housing "market" is not a functioning market. It is a market where 90%+ of the transactions are directly related to government. thus, the trajectory must include political considerations. there is obviously only so much Govt can do, but underestimate the power of the US Govt at your peril.
Posted by: ex SF-er at August 16, 2010 2:47 PM
"Just got this from my bank. Jumbo conforming 30-year fixed loan (up to $729.5k) at under 4.5%. Jumbo 30-year fixed (> $729.5k) at 5.5%. Buyers have about ten percent more buying power compared to a few months ago. "
While Having more buying power (lending power) does get some people off the fence, it is really a shortsided reason to buy. In almost every scenario, it is better to pay 10% less (or even 5% less) than to gain 10% more buying power through lower interst rates
Posted by: spencer at August 16, 2010 2:50 PM
Here's some more pent up supply numbers. Currently, 1397 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is compared to 1437 homes two weeks ago. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.
Posted by: EBGuy at August 17, 2010 11:35 AM
Thanks, EBGuy. This seems somewhat consistent with what the editor has noticed for actual short-sales and REOs.
1437/1653 = 0.87 pent-up per listed inventory
1397/1594 = 0.88 pent-up per listed inventory
Posted by: sfrenegade at August 17, 2010 12:19 PM