September 27, 2010
A New High For Listed San Francisco Housing Supply
Inventory of listed single-family homes, condos, and TICs in San Francisco increased 8.2% over the past two weeks establishing a new five year high. On average, inventory has increased 5.1% during the same two weeks over the past four years.
Current listed inventory is up 30% on a year-over-year basis, up 20% versus the average of the past four years, and up 30% as compared to an average of 2006 and 2007. At the same time, listed sales in August (362) were down nearly 30% on a year-over-year basis, the slowest August in San Francisco in well over a decade and versus a 13% year-over-year drop in listed sales in July (385).
The inventory of single-family homes for sale in San Francisco is up 35% on a year-over-year basis to a five year high of 786 while listed condo inventory is up 26% to 1,159.
34% of all active listings in San Francisco have undergone at least one price reduction and the percentage of active listings that are either already bank owned (92) or seeking a short sale (179) is 14%, up 6% on an 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).
∙ San Francisco's Listed Inventory Spikes As Listed Sales Slide [SocketSite]
∙ San Francisco Listed Housing Supply Hits New High [SocketSite]
First Published: September 27, 2010 9:00 AM
Comments from "Plugged In" Readers
between now and 1 year from now we should see the 'upper third' of SF home prices finally begin to crack. supply and demand are ugly in 'high end' areas like SF.
figure 10-15% more on the downside, then flat line for about 5 years (nominal)
total of 20-30% drop from peak (nominal) will be the norm in the 'real sf.' certainly some outliers on both sides though
glad to see market clearing prices will be here sooner rather than later as it should help more people than it hurts.
Posted by: polip at September 27, 2010 9:26 AM
listings up 30% yoy.
sales down 30% yoy.
there are a third more homes on the market and a third fewer buyers.
those two numbers combined will certainly impact prices.
Posted by: mike at September 27, 2010 9:54 AM
although I almost always agree with Polip, and I clearly agree with their statements above, I do believe there are 2 important wild cards in play now.
As I've been saying for many months now, the Fed will re start Quantitative Easing at some point. As this recovery sputters we are hearing more and more pro-QE talk from the fed and everybody else. Bernanke gave a speech last month all but signalling he's ready, and now the economic data is coming in that will give him cover.
the question has never (in my mind) been if QE will happen, it is when and where. Thus far we have no details about where, but my guess is that the Fed will target the longer end of the Treasury curve and other long dated assets. This has the potential to drop interest rates yet again to lowest-in-a-generation levels.
the injection of liquidity in the economy may also set up an echo-rally similar to what happened in end 2009-early 2010.
thus: it is possible that short term we may see some bumps in RE valuation. (or at least a stall in the fall of RE valuation). obviously I'm talking nominal values here and not "real" values.
That said: I think that vast majority of the bump will go into commodities (especially oil and gold) and also equities. I also think the bump will be short lived.
however: I do think it will have significant impact at least in the short term once it starts happening.
The Fed and govt are doing everything in their power to blow a bubble somewhere. I learned long ago to not fight the Fed.
Things are getting scary again in my opinion... although all of this has been foreseeable (and was indeed foreseen by some of us).
the foreclosure mess. As some of you know, there seems to be a major issue with foreclosures. specifically, the banks have been counterfeiting their documents and pushing foreclosures through courts in an unacceptable and illegal way. this is now being noticed and challenged.
it has potentially major consequences for the ability of the banks to foreclose. California is not technically one of the affected states, however I do believe some lawmakers are looking into the foreclosure process and may make it more difficult in the State of California as well.
restricting foreclosures will reduce available supply and can in theory support prices.
the other side of that coin however is that this will make mortgage securitization more difficult going forward which may impact availability of funds for future home purchases (which may temper demand a bit).
Regardless, there is a poopstorm coming to the foreclosure process and nobody knows what can be done to avoid it.
Posted by: ex SF-er at September 27, 2010 10:56 AM
Sure, sure, the end is near. Collapse is right around the corner.... just like it has been right around the corner for the past 2 years.
I mean, in 2008, collapse really was around the corner. But that crisis has passed.
Rates are now at 3.875% for a 30-year fixed (with 1.26 points)... APR of 4.05%.
1-year LIBOR is at 0.79%, meaning anyone with an ARM will find their loan resetting to a devastating 3.1% interest rate ... (wish I had one of those now!). Let's think about that ... A hypothetical $1M IO ARM would have crushing monthly payments of ... $2580 a month. Tax deductible. You can't beat that by renting.
Yep, its a crisis alright.
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 10:58 AM
"1-year LIBOR is at 0.79%, meaning anyone with an ARM will find their loan resetting to a devastating 3.1% interest rate ... (wish I had one of those now!)"
Yeah, I certainly wish my ARM reset today rather then in 2012. Have to hope that interest rates stay low for another 17 months. :(
Posted by: Rillion at September 27, 2010 11:04 AM
Oh yeah, I can't wait for QE-2 to kick in. I am gonna re-fi my 30-year fixed at 3.5% just as soon as I can. (December? January?) This is gonna be great!!
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 11:08 AM
These record low interest rates have done nothing to stimulate activity. The only thing that will is either increased job creation, price declines (10+ %) or a sustained (more than 12 months) stock market boom.
Posted by: mikel at September 27, 2010 11:13 AM
Nothing to stimulate activity? BS!! Refi's are going gangbusters among people with equity (i.e. SF, the Peninsula). I personally refi'd one house in '09 and bought another this year. And I'm gonna refi one of those loans again, likely after less than a year, just as soon as rates make sense (3.5% fixed with ~1-1.25 points).
Banks make money off of fees. And refi's are stimulating the economy in two ways: generating immediate fees for the banks, and saving consumers interest costs, which can in turn be spent on consumption items, like M3s.
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 11:20 AM
Unless they are compelled to, banks will not allow significant numbers of foreclosed properties to go to market. They are committed to maintaining the precrash valuations. (Unless, of course, they convince the government-- us-- to subsidize their losses.) What price erosion we see is due to buyer/seller uncertainty about what the numbers should be. Transactions will take place if only because some folks need to sell or buy a house, but at a reduced volume.
Posted by: steve at September 27, 2010 11:21 AM
Are these listings increasing in all districts (proportionately)? Or is it disproportional, taking into account the normal patterns?
Hard to make any predictions here though. The federal government is thinking about more housing stimulus again, which is the wrong thing to do. And Barney Frank should stop his campaign to maintain the increased conforming limits in high-priced markets, but I suspect the limits will be extended.
Posted by: sfrenegade at September 27, 2010 11:24 AM
jimmy, i'm pretty sure mikel mean to say it's not stimulating sales activity and he's probably referring to the US.
as the national sales numbers for july and august were among the lowest on record.
Posted by: mike at September 27, 2010 11:25 AM
So... what you're saying is that stimulus won't work ... in other places. 'cause its working fine here.
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 11:36 AM
"And refi's are stimulating the economy in two ways: generating immediate fees for the banks, and saving consumers interest costs, which can in turn be spent on consumption items, like M3s."
I'll grant you the second but the first is not stimulative. The banks are sitting on their cash and using the fees to help repair their balance sheets as they are stuffing tons of money into their loan loss reserves. That is not stimulative. Perhaps it might benefit a loan officer or two but since their purcahse loan business has dried up, it is just sort of offsetting the lost revenue.
Posted by: Rillion at September 27, 2010 11:40 AM
"Banks make money off of fees. And refi's are stimulating the economy in two ways: generating immediate fees for the banks, and saving consumers interest costs, which can in turn be spent on consumption items, like M3s"
That might be true, however, it seems like these loans would be harder to securitize unless someone wants a risky bond that will surely drop in values when interest rates are back to normal.
Posted by: sfrenegade at September 27, 2010 12:38 PM
"So... what you're saying is that stimulus won't work ... in other places. 'cause its working fine here."
It is? 18-year low for BA sales last month:
Posted by: Michael at September 27, 2010 12:45 PM
Bah, just a temporary blip due to the end of the buyer-bait housing credit in April. People went nuts over that and it pulled demand forward.
It'll all normalize at a slow, steady pace by next March. Selling season's over for this year -- everyone can go home. Come back after the holidays.
There will be lots of refi activity as those who can take advantage of low rates do.
You heard it here first.
[Editor's Note: As of last week:
The [MBA's] Refinance Index decreased 0.9 percent from the previous week, which is the third straight weekly decrease. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier. The unadjusted Purchase Index increased 18.9 percent compared with the previous week and was 38.0 percent lower than the same week one year ago.
The Purchase Index was running 34.7 percent lower on a year-over-year basis in July.]
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 12:52 PM
As my Republican parents like to say 'never let the facts get in the way of a good argument.'
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 1:56 PM
there are a TON of buyers out right now - few feel rushed since interest rates keep dropping, and they see many price reductions. in other words, it pays to wait. but don't let lack of sales fool you into believing there are no buyers.... all this is doing is building up demand. if interest rates look like they will finally climb look for a rush of both re-fi's and purchases.
Posted by: hangemhi at September 27, 2010 2:20 PM
^Thanks hangemhi for the NAR slant on no one buying homes. LOL!
The reality is this: no jobs, no sales.
No downpayments, fewer sales. The entire crop of 2004-2010 buyers have been fleeced of their downpayments. They aren't going to be buying anything any time soon, except maybe "how to repair your credit after foreclosure" books.
Posted by: tipster at September 27, 2010 2:28 PM
High unemployment.. for those will college degrees it's crested 4%. Of course, all those high school dropouts that were buying houses in SF, their unemployment rate is 3 times that.
Posted by: R at September 27, 2010 2:39 PM
"No downpayments, fewer sales. The entire crop of 2004-2010 buyers have been fleeced of their downpayments."
Tipster, are you talking about the move-up market? As I understand, that seems to be pretty dead compared to several years ago. However, I've seen very few good stats on this, if any.
Posted by: sfrenegade at September 27, 2010 2:58 PM
"all this is doing is building up demand"
That was some pretty good spin. Good thing there is so much supply to mop up that demand, no?
Posted by: sfrenegade at September 27, 2010 3:00 PM
Of course, all those high school dropouts that were buying houses in SF, their unemployment rate is 3 times that.
You jest, but in the days of No Documentation loans we saw exactly that. not sure how prevalent it was in the city itself, but it was seen a lot in the outlying communities. Rememember, an illegal immigrant strawberry picker got a $720k home loan making income of $300/week ($15k/year).
clearly most SFers weren't that dumb or leveraged... but I personally know of a lot of people in the city of SF who stretched to 8-10 times income. (people making $100k/year stretching into near million dollar homes).
High unemployment.. for those will college degrees it's crested 4%.
housing affordability/demand is affected by more than unemployment... it's also affected by aggregate income.
income is down for many college grads/professionals even though they are not unemployed. I can't tell you how many people I know who still have a secure job, but they've had to make concessions... either lower salary or lower benefits as example.
I'm one of them. My job is rock solid. And I make a little less than I did in 2006-7 and my benefits have been cut (higher insurance copays, smaller bonus etc).
Posted by: ex SF-er at September 27, 2010 3:05 PM
The only thing that matters is jobs here. A lot of companies relocated jobs out of the area. People left the area to keep those jobs.
Of the friends I have who are going through foreclosures/short sales, about half stopped paying the mortgage so they could move out of the area to get work. So, yes, they are all employed, but not here.
And SFR, it's not just the move up market. When you relocate out of an underwater home, you aren't buying anything soon. Credit is shot, downpayment is gone. A lot of people spend to their last dime trying to hold on to the home. The country has about 5 years to work through that.
I was speaking to one of my friends who is not facing foreclosure: he owns a condo bought in 2007. His savings: ZERO. Every cent is in the condo, and that condo is down way more than his downpayment, and the owner's premium is bleeding him dry every month. He's about 40 and has no retirement, no savings, no nothing. When he finally walks away, he isn't buying anything anytime soon. Not just because he can't, but because the condo wrecked his life: he isn't in any hurry to repeat the experience.
Posted by: tipster at September 27, 2010 3:12 PM
" Rememember, an illegal immigrant strawberry picker got a $720k home loan making income of $300/week ($15k/year"
Ha. Somehow in internet lore that has become the rule by which those loans can be viewed as opposed to the outlier it was.
Posted by: [anon.ed] at September 27, 2010 3:17 PM
"Ha. Somehow in internet lore that has become the rule by which those loans can be viewed as opposed to the outlier it was."
It's really not that hard to look at even just HAMP data and figure out that some of the people who got loans had no business having them. When the median person with permanent modifications from HAMP had a 45% front-end PITI to gross income ratio and an 80% back-end all debt to gross income ratio before modification, you know something went wrong:
Posted by: sfrenegade at September 27, 2010 3:25 PM
"some of the people who got loans had no business having them"
Nobody said otherwise.
Posted by: [anon.ed] at September 27, 2010 4:30 PM
Oh yeah, and a friend just send me a copy of a $1.2M loan he recently got at 2.55%. 2.55%. interest only. That's a little over $2500/mo for one point two million dollars. He's buying a 4-unit building with the loan ... with the intent of vacating all the tenants (with large cash bribes) and re-renting it at market rates.
Posted by: Jimmy (No Longer Bitter) at September 27, 2010 5:49 PM
what bank and how much downpayment?
Posted by: lyqwyd at September 27, 2010 6:27 PM
Ha. Somehow in internet lore that has become the rule by which those loans can be viewed as opposed to the outlier it was
the fact that it happened shows how terrible loan standards got. It would NEVER EVER have happened in 1990 as example, where the strawberry picker would have had to bring $144,000 to the table.
if standards were that low, what loans do you think they offered people making $75k/year? 100k/year? $200k/year?
The quality of SF homeowner has fallen the last 15 years. SF homeowners are far more leveraged than they were in the past, and the job market has become more uncertain for SF homeowners as well compared to the rah rah days of the late 1990's... even if they don't become unemployed.
in the distant past I used to quote for fluj et al all the LTV and CLTV statistics for mortgages in the bay area, as well as the explosion of Interest only and Option ARM loans in San Francisco.
LTV and CLTV plummeted after the year 2000 and IO and Option ARMs went from a very small part of the market to over 70% of the market.
it wasn't because people suddently became so much "wiser" with their money. It's because it became the a way that people could stretch into a Bay Area home. Yes, even in the city this took place obviously.
Posted by: ex SF-er at September 28, 2010 4:38 AM
your story seems implausible.
Mortgage rates are very low right now, but 2.55% for an Interest Only ARM on an investment property stretches credibility. There is no way for a prospective investor to "fool" a bank into thinking a 4 unit building will be his primary home.
I agree with Lyqwyd. bank name and downpayment amounts as well as the appraisal on the home. I can see this maybe being true if the home appraised out at 2.5M bucks or something, or if he brought $700k to the table.
What I really want is the bank name so that I can short them into oblivion.
That said, as I posted above I would not necessarily be surprised if we have yet another major drop in mortgage rates. It has been the Fed's stated goal several times to get 30 year fixed rates below 4% They've failed to do so thus far, but if at first you don't succeed...
on a side note:
That's a little over $2500/mo for one point two million dollars.
of course, that's interest. not taxes or insurance and all that.
last but not least, how many of you truly think that the Govt can force rates down this low and keep them there for an extended period of time? what will happen in 5 years when his rate adjusts and he has to start paying back principal?
hmmm... sounds like someone failed the lesson of Payment Shock that we saw in 2008. dumb.
now isn't the time to be getting interest only IO loans... one should wait until QE2 and then refinance into a 30 year fixed rate forever. Let the lender eat the loss when rates go up again.
Posted by: ex SF-er at September 28, 2010 4:46 AM
First Republic Bank in San Francisco. I didn't believe it either until I saw the loan papers in black and white.
Don't know the downpayment amount but it must be sizeable. I'll post it when I find out.
And to answer the question "How long can the Fed keep interest rates this low?" -- the answer is "as long as it wants to!"
That's the simple truth. The Fed controls the money supply of the world's reserve currency. Unless the 'reserve currency' part of that statement changes meaningfully, interest rates can be near zero essentially forever.
Like I said, I am gonna refi at 3.5%, fixed for 30 years in a couple of months, perhaps early next year. You heard it here first.
Posted by: Jimmy (No Longer Bitter) at September 28, 2010 7:01 AM
Actually I think the strategy is to buy-out (or OMI-out) all the rent-controlled tenants paying below market rents, bump up the cashflows on the building and then re-sell it. (Or re-sell it as vacant). This is a short-term deal, 3-5 years.
And the interest-only period expires after 10 years, not 5. Unless of course you re-fi at which point the clock starts ticking all over again. But you smart guys already knew that.
Posted by: Jimmy (No Longer Bitter) at September 28, 2010 7:06 AM
That's the simple truth. The Fed controls the money supply of the world's reserve currency. Unless the 'reserve currency' part of that statement changes meaningfully, interest rates can be near zero essentially forever.
in theory but not in practice. The key is your last sentence... "unless the reserve currency part of that statement changes".
The Fed must walk a tightrope here. QE2 will drop the value of our currency (this is the goal by the way) and increase certain asset valuations in nominal terms, but it is constrained by the fact that if they do too much people will lose faith in the currency causing a currency crisis.
in addition: the Fed will be constrained by commodity prices, especially oil and gold. it'll be hard to hold rates at 0% if Oil hits $150/barrel again or if gold hits $2-3k/oz.
as long as the economy sucks big rotten eggs the Fed has cover to continue QE2. As soon as the economy picks up they will need to reverse some of that.
I anticipate that RE will be positively affected by QE2 (and I've said so for some time now). However, I think that most of the gains will be in the commodity sphere, especially oil and gold.
For some time I have foreseen price appreciation in the things that you typically use cash to buy (like food and gas), and continued price depreciation or minimal price appreciation in the things that you need debt to buy (like homes).
the essential problem right now is that the fed has a very blunt tool (interest rates). they can lower them but not direct where the increased money supply will be used. Thus, they drop rates and the banks are using that cash to speculate in commodities and derivatives or just buying Treasuries, and are not using the cash to lend to small businesses and RE.
that said: Ben Bernanke truly is extremely smart... thus he may focus his QE2 directly on those places that "need" help... such as perhaps rebuying more Mortgage Backed Securities... or perhaps buying ABS of pools of small business loans.
QE2 is not an if... it is a when and a where. The effects of QE2 cannot be known until it is implemented, although I've supplied my GUESSES on the matter above.
I agree with you: never fight the Fed. This doesn't mean they're omnipotent... they are not. but they are a force.
the biggest problem is that we are leaving to the Fed to do what should be done by our political leaders. We need more fiscal policy, not monetary policy.
Posted by: ex SF-er at September 28, 2010 7:35 AM
For the record, the downpayment amount was approx. $400k, or ~35%
Posted by: Jimmy (No Longer Bitter) at September 28, 2010 8:49 AM
Current Inventory Breakdown:
Dist 1 SFR = 69 Condo/TIC = 73 Total = 142
Dist 2 SFR = 129 Condo/TIC = 34 Total = 163
Dist 3 SFR = 59 Condo/TIC = 11 Total = 70
Dist 4 SFR = 76 Condo/TIC = 27 Total = 103
Dist 5 SFR = 95 Condo/TIC = 148 Total = 243
Dist 6 SFR = 12 Condo/TIC = 108 Total = 120
Dist 7 SFR = 33 Condo/TIC = 135 Total = 168
Dist 8 SFR = 16 Condo/TIC = 259 Total = 275
Dist 9 SFR = 72 Condo/TIC = 306 Total = 378
Dist 10SFR = 211 Condo/TIC = 39 Total = 250
Total SFR = 772 Total Condo/TIC = 1140
Grand Total = 1912
Posted by: Your SF Realtor at September 28, 2010 9:56 AM
Active Inventory Price breakdown:
460 (24%)properties priced under $500k
1006 (53%)properties priced in $500k - $1m
446 (23%)properties priced above $1m
Posted by: Your SF Realtor at September 28, 2010 10:04 AM
"Dist 9Condo/TIC = 306
Dist 10SFR = 211"
517 out of 1912 = D10 SFRs and D9 condos. Now add the Sunset's 129 SFRs. It's clearly not a balanced inventory/market. This is how SF has looked for some time now, and this is where "The Real SF" as a mocking term sprang from. But at any time along the way people actually in the market would come on here and qualify what's actually out there as inventory. They continue to do so.
That said, D8 condo/TICs at 259? There must be some deals there.
Posted by: [anon.ed] at September 28, 2010 10:12 AM
It looks as though the foreclosure elves continue to work their magic; just don't call it pent up supply. Currently, 1422 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is compared to 1412 homes two weeks ago. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.
Posted by: EBGuy at September 28, 2010 10:28 AM
What does a "balanced inventory/market" look like? As far as I know, there is always more cheaper housing than expensive housing. And all you're saying is that 1/3 of the inventory is a category you don't like.
Posted by: sfrenegade at September 28, 2010 11:24 AM
"And all you're saying is that 1/3 of the inventory is a category you don't like."
No, not what I think or said. I've noticed that not only are you never capable of distilling what anybody who has a seasoned view that differs from yours thinks, but you're rude about it every time too, non peer.
A balanced inventory/market? I don't know. For one, what about the Richmond, a huge geographic area chock full of SFRs. Shouldn't it have more houses for sale? It's probably on balance squarely in the middle of SF-only affordability too.
Posted by: [anon.ed] at September 28, 2010 11:33 AM
Once again, please describe a balanced inventory/market if you are saying this isn't one. You haven't done an adequate job of providing your well-seasoned view.
Posted by: sfrenegade at September 28, 2010 11:38 AM
One idea of a well balanced market would be a market that has properties for sale in proportion to the amount of properties within each area. The Richmond example was too vague to deduce that that is what I was getting at?
Posted by: [anon.ed] at September 28, 2010 11:53 AM
By that definition, we never have had a "well balanced market" in SF and we never will. So, as Jesse Jackson used to proclaim, "The question is moot!" This lack of "well balance" means nothing.
Posted by: A.T. at September 28, 2010 12:17 PM
In your highly seasoned opinion, what are those proportions for each district? Do you think District 5 is out of whack?
Posted by: sfrenegade at September 28, 2010 12:36 PM
D5 doesn't look particularly inventory heavy, no. Especially not SFRs. 95, only? Not when you look at it like buyers do these days, examining the specific amenities closely. "Oh but they didn't do that during the peak." yeah, that's right. They didn't. So what? Times done changed and it's boring talking about the past on here all the time.
Whether or not SF has ever seen a balanced market is not something anybody who reads the words you type onto Socketsite would think you're capable of knowing or understanding, AT. You can't even admit the Mission has changed hugely in 10 years because that would be a bullish thing to say, in your view. But frankly that's sort of the point and I'm glad you agree with me. You guys always want to talk about the market as if it is balanced, and as if certain areas are directly effecting others. It's not, they're not, and it's been that way for years. SF is super micro even within its own city limits. That's why CS sucks when it's down and it sucks when it's up. It's not applicable.
Posted by: [anon.ed] at September 28, 2010 1:48 PM
You didn't answer my questions. Instead we see multiple "it's all micro, bro" comments. This "balanced market" thing sounds like a distraction and not a substantive argument if you can't describe a balanced market. That necessarily includes a comparison to historical norms as well.
Posted by: sfrenegade at September 28, 2010 1:59 PM
I answered your questions in plain english. "One idea of a well balanced market would be a market that has properties for sale in proportion to the amount of properties within each area" and "D5 doesn't look particularly inventory heavy, no."
Please remember you just are a guy with a search engine who has bought bearish CW hook, line, and sinker. Don't confuse bugging me with critical thinking.
Posted by: [anon.ed] at September 28, 2010 2:02 PM
Let's see what the months-of-inventory numbers look like soon. Just a couple more days in the month and it looks like we're only at 127 SFR sales and 121 condo/TIC sales in September. There will be a few more in the last couple of days and as late entries are posted. But we're pretty clearly going to see the usual autumn drop-off (from already low levels) rather than the sustained sales we saw last year through year end because of all the incentives.
Posted by: A.T. at September 28, 2010 2:07 PM
I should add for comparison -- for September 2009 I see 189 SFR sales and 227 condo/TIC sales.
Posted by: A.T. at September 28, 2010 2:24 PM
fluj, it seems that you're just a guy with MLS access who has bought the NAR/CAR conventional wisdom hook, line, and sinker. You know nothing about critical thinking, and every single response to my overly polite questions about your perfectly spiced, impeccably seasoned wisdom has been non-responsive.
Once again, what data do you have that shows that we are in an unbalanced market?
It is nice and good to crap on people who look at data, but your hunches are worthless without evidence.
Posted by: sfrenegade at September 28, 2010 2:32 PM
"You guys always want to talk about the market as if it is balanced, and as if certain areas are directly effecting others. It's not, they're not, and it's been that way for years. SF is super micro even within its own city limits."
In your well-seasoned opinion (including grandma's secret ingredient), are you saying that a balanced market would act as if certain areas are directly affecting others? If so, why? And what evidence do you have that certain areas don't affect others?
Posted by: sfrenegade at September 28, 2010 2:36 PM
Wow, it's gone from "micro" to "super micro."
Puh-leeze. I'm sure fluj and many others sincerely believe this rot because it is a way to ignore the widespread price declines by looking at any particular example and saying THAT super-micro-market may have fallen but not the home in THIS super-micro-market that I'm trying to get you to buy. Are there more desirable and less desirable neighborhoods and even blocks? Sure there are. Are they all subject to the same law of supply and demand? Sure they are.
Posted by: A.T. at September 28, 2010 3:08 PM
I'll pass. You want my opinion? Then don't lie any more (AT) and please be polite (SFrenegade).
Posted by: [anon.ed] at September 28, 2010 3:23 PM
One measure of balance would be share of sales versus share of inventory:
District – % of August sales/% of current inventory
D1 – 6%/7%
D2 – 10%/9%
D3 – 3%/4%
D4 – 7%/5%
D5 – 16%/13%
D6 – 5%/6%
D7 – 10%/9%
D8 – 8%/14%
D9 – 19%/20%
D10 – 15%/13%
Looks pretty 'balanced' with the exception of D8. Note the share of sales in D9+D10 is 34% versus 33% of inventory. Don't let the numbers get in the way of a 'seasoned view'.
Agree with sfrenegade that the best measure of balance would be versus historic norms.
Posted by: Michael at September 28, 2010 4:52 PM
"Looks pretty 'balanced' with the exception of D8. Note the share of sales in D9+D10 is 34% versus 33% of inventory. Don't let the numbers get in the way of a 'seasoned view'."
So because certain areas have more for sale, certain areas see more sales. Got it. Said it. What that has to do with balance I don't know. More like the opposite, one would think.
Posted by: [anon.ed] at September 28, 2010 5:25 PM
Fluj, make your point. This lack of "balance" that you are harping on -- what is the point? It distorts what is really happening? How? Where? Commit to a position already rather than making incomprehensible points that beat around the bush.
Posted by: A.T. at September 28, 2010 6:30 PM
"it looks like we're only at 127 SFR sales and 121 condo/TIC sales in September"
That can't be true. According to redfin, in the last *7 days* there were 210 new listings. So in addition to record high inventory numbers, we're adding inventory three times faster than it's getting sold.
A similar spike occurred in September of 2008, just before the last big price drop in early 2009. Except this time there is more inventory to start with, the inventory increases/sales is even more out of whack, the foreclosure moratoria have disappeared and the tax credits are nowhere on the horizon.
It's not very hard to see what's going to happen next...
Posted by: tipster at September 28, 2010 9:48 PM
Hate to say it as I'm an owner in South Beach tipster could be right, I bought in the last big dip in late 2008, and OMG I see it coming again damn it.
Posted by: south_beach123 at September 29, 2010 3:02 AM
FYI, was quoted these rates from First Republic today for 2 unit building with 30% down, mid $2M loan amount:
Costs - 1 point + $1000 (includes all closing costs, etc)
1. 3 year fixed at 4.45%
2. 5 year fixed at 4.65%
3. 7 year fixed at 4.95%
4. COFI + 1.15% = 2.95% (floating)
5. 1-month LIBOR + 2% = 2.2% (floating)
Posted by: Skirunman at September 29, 2010 6:09 PM
Thanks for the data, Skirunman.
What's interesting to note here is that their margins on the 3/1, 5/1, and 7/1 are pricing in quite a bit more risk than during the boom, but less than 2008 and 2009.
Posted by: sfrenegade at September 29, 2010 7:11 PM
Getting worse: last week: 216 listings, 56 sales.
Source: redfin. Note, the stats will change over time. These were current as of a few minutes ago, for SFRs, Condos and Townhouses (excluding mutifamily)
Posted by: tipster at September 30, 2010 1:37 PM
And yet there are virtually no new single family home listings in district 4 or 5 this week.
Posted by: 94114 at September 30, 2010 2:23 PM
10 sales in all of SF last week, 200 weeks (4 years) of inventory of SFRs, condos and townhomes, according to redfin.
Posted by: tipster at October 7, 2010 11:41 AM
Correction, 37 sales. About 1 year of inventory.
Posted by: tipster at October 7, 2010 11:47 AM
Yes, let's count by week, that's certainly the best way to count inventory in the real estate market.
Of course, if you used some crazy method like a month of sales, you get a little over 5 months inventory. But that would be a silly way to count, and I only use it to try and prove my personal opinion.
Posted by: R at October 7, 2010 12:02 PM
Wow, so the trend is down that quickly?! Sales have dropped like a rock in only a month's time?!
Posted by: tipster at October 7, 2010 12:09 PM
Oh, I see FHA got more expensive and harder to get 6 days ago, so that must have impacted some sales.
That had a bigger impact than I would have expected.
Posted by: tipster at October 7, 2010 12:27 PM
Really? You think the FHA change on Monday affected the last 7 days of closings? Note that the changes only affect cases opened this week.
Are you intentionally obtuse?
Posted by: R at October 7, 2010 1:00 PM
Oh I guess you're right. So you are saying it will get even worse later?
Posted by: tipster at October 7, 2010 1:09 PM
So far that's low count, sales wise. Let's see what tomorrow's second Friday brings and the 10-1 to 10/8 count. As far as people in the market/ writing offers goes, that seems to have picked up a bit. Since the beginning of the month 80 properties have gotten into contract so far.
Posted by: [anon.ed] at October 7, 2010 1:13 PM
"Oh I guess you're right. So you are saying it will get even worse later?"
No, since these changes apparently lower the upfront cost of FHA, I think the changes will help if anything, although my bet is it will be totally insignificant.
Posted by: R at October 7, 2010 1:43 PM
80 properties in contract in 7 days is pretty good.
Until you realize that there were 179 new listings in the same time period.
Posted by: tipster at October 7, 2010 1:48 PM
During the same time period another 61 went pending. Doesn't look too scary.
I think you're trying to say that now is the time, Tipster. We're finally at critical mass. What with the zippidy do dah songs and the repeat banger exclamation marks and all. Is that what your'e saying?
Posted by: [anon.ed] at October 7, 2010 1:57 PM
No, what i'm saying is 141 is less than 179. So inventory continues to grow at a time it usually levels off.
I'm expecting to break out into song again just as soon as the total listed inventory update gets posted. Should be another record for this time of year.
Posted by: tipster at October 7, 2010 3:22 PM
Why? Why so happy? What does it mean to you, really? We've already seen that even a super low (albeit fake) price on a Marina Blvd property, an area you've said you used to househunt in, doesn't mean anything to you.
Anyway, MLS is showing 126 new listings since 10/1 and 150 pending or contingent since 10/1.
Posted by: [anon.ed] at October 7, 2010 4:18 PM
In my casual and inexpert review of my own neighborhood (on redfin) it does seem like a lot is going pending recently. I don't want to get into this amusing little fight between Tipster and Fluj, but, in both your defenses...
wouldn't it make sense that closing would be low in September (because there is little activity in the summer) and
wouldn't it also make sense that by October pending/contingents should be outnumbering new listings (because there is a bump of new listing at the beginning of september that tail off each week until the end of the year...)
Posted by: curmudgeon at October 7, 2010 4:25 PM
o get into this amusing little fight
nobody's fighting, bud
Posted by: [anon.ed] at October 7, 2010 4:43 PM
Posted by: curmudgeon at October 7, 2010 5:39 PM
So here we are at the end of the week.
234 new listings this week.
Posted by: tipster at October 8, 2010 3:53 PM
Yes, the new listings have not slowed much yet. 138 new ones just today (per redfin). And 26 reductions. I don't think we're going to see these record-high inventory levels start to materially dip soon, although sellers will start pulling some listings in the next month or so, I imagine, to re-list in the Spring. Again, the recent flood of listings is one side of it, but the slowing pace of sales (from already slow levels) on the other side is even more important.
Most fundamental rule of economics: more supply + less demand = lower prices. Normally, that would cause buyers to come in and sellers to hold off. But now we have a much-reduced pool of buyers who are even able to qualify for the necessary loans much less are willing to do so, and a growing pool of owners who have no choice but to sell (voluntarily or not) because they cannot afford their place and it makes no sense to hold on to underwater places.
Posted by: A.T. at October 8, 2010 4:06 PM
I don't think the market is behaving the way you're trying to portray, actually. The MLS 10/1 - 10/8 shows 53 sales and 185 contingent or pending versus 215 new listings. That would be a net reduction in active listings.
Posted by: [anon.ed] at October 8, 2010 4:15 PM
We had this same discussion 2 years ago, you can't add the number of sales and contingent to get a net reduction in listings.
Sigh. Here goes again:
Assume every week you have two new listings and only one contingency. Assume sales take 4 weeks to complete from contingent to sold. Obviously the inventory is going to go up by 1 every week and does so forever.
In weeks 1-3 you'd have two new listings and one new contingency. We'd both agree that inventory is going up and we'd both be right.
But then in weeks 4 on, you'd have one contingency, one sale, and two new listings. If you added them, you'd mistakenly believe inventory is no longer rising. However, this is incorrect: because it double counts every sale: once when it goes contingent and once when it is sold.
You can't really even count the contingent sales because some of them drop out.
So no, you can't make the conclusion that every realtor wants the buyer they pretend to represent to make (they mostly really represent themselves, not their so called clients). It is, however, good information when a realtor gives you such information: it is confirmation that your realtor is trying to mislead you to do the very thing your seller-paid, commission-oriented business arrangement with him motivates him to do: get you to pay too much. (Your realtor is paid by the seller, not you, and the buyer is the one who agrees to pay more than the other buyers, so what the hell did you think was going to happen with that business relationship?) At that point, it is time to switch realtors. One in a hundred really does look out for their clients and so you need to sift through them.
Thanks for bringing this up from time to time to allow me to make that point.
Now the one thing you CAN deduce from the fact that the number of contingencies is 3x higher than the number of sales in an environment of rising inventory: sellers are giving up and reducing prices. That means the fool who goes contingent today will pay more than someone who buys tomorrow.
I did not count multi-unit sales, so our numbers may differ, but whether the number of listings is 4x the number of sales or 5x the number of sales is immaterial: the fact is there are more sellers than buyers.
The sellers who want to sell may withdraw listings to switch realtors and reset DOM and other misleading tactics, and some will pull their listings off for holidays, only to list much lower in the next year like we saw previously, so seasonally, the inventory will start to drop soon, but it's pretty clear where the trend is. There are far more sellers than buyers.
Posted by: tipster at October 8, 2010 6:29 PM
so that translates to what $/sq.ft. in real sf?
and by when?
Posted by: anonee at October 8, 2010 9:04 PM
We had this same discussion 2 years ago, you can't add the number of sales and contingent to get a net reduction in listings
No, not the same context.
Now we're talking a singular week and things going off the market and on the market.
Posted by: [anon.ed] at October 8, 2010 11:50 PM
In any context, it's double counting and wrong.
As for how low, who knows. I'm sure we'll all be shocked. Everywhere is headed down further and further. South beach is essentially all underwater. Here's a place that sold in 2005 for $929K that got listed yesterday for $684K. Fairly high floor with a filtered bay view and yet it's listed at 27% off.
Here's a completely redone flat with a first floor addition with it's own private elevator and seismic upgrades that is listed for what falling-down shell space that hadn't been updated since the Taft administration was selling for in 2006. Waiting 4 years meant you went from buying a dump and doing (and paying for) all the work yourself, to buying the nicest thing you can imagine, with an elevator, all for the same price.
So who knows how low it will go. Lower than it is today. Waiting 6 months will likely save a lot of $$.
Posted by: tipster at October 9, 2010 3:28 PM
"that is listed for what falling-down shell space that hadn't been updated since the Taft administration was selling for in 2006. "
i believe you b/c you are always so credible, but perhaps you could post a link of an example or two of these 2006 listings that you say were the norm...
Posted by: anonee at October 9, 2010 4:51 PM
Btw, 100 Mallorca has three listings. You can either buy the whole building at $3.748M:
And the units are listed separately, the lower unit at the link tipster sent for $1.249M, and the upper unit at $2.499M:
The 2007 sale price of the building appears to be $1.598M. The prior records suggest it was 3000 sqft with 2 bathrooms total, but the lower unit is now a 3/3 at 1801 sqft and the upper unit is a 3/3.5 at 2631 sqft. Looks like the owner is the CEO of Green Horizon.
Posted by: sfrenegade at October 11, 2010 10:09 AM