S&P/Case-Shiller Index Change: January 2010 (www.SocketSite.com)
According to the January 2011 S&P/Case-Shiller Home Price Index, single-family home prices in the San Francisco MSA fell 1.8% from December ’10 to January ’11, down 38.9% from a peak in May 2006 and down 1.7% on a year-over-year (YOY) basis, a steady slide from the 18.3% gain reported this past May and the second consecutive YOY decline since October 2009.
For the broader 10-City composite (CSXR), home values fell 1.0% from December to January, down 31.7% from a June 2006 peak as values fell 2.0% year-over-year.

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.

“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.

For the sixth time in six months prices fell on a month-over-month basis across all three price tiers for San Francisco MSA single-family homes. And for the third time in three months, home values fell on a year-over-year basis for San Francisco’s top two price tiers.
S&P/Case-Shiller Index San Francisco Price Tiers: January 2011 (www.SocketSite.com)
The bottom third (under $327,921 at the time of acquisition) fell 0.8% from December to January (down 2.3% YOY); the middle third fell 2.3% from December to January (down 3.1% YOY); and the top third (over $602,297 at the time of acquisition) fell 1.2% from December to January, down 1.5% on a year-over-year basis.
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA have fallen back to June 2000 levels having fallen 58% from a peak in August 2006, the middle third has fallen to just above April 2002 levels having fallen 39% from a peak in May 2006, and the top third has retreated to just above January 2004 levels having fallen 26% from a peak in August 2007.
Condo values in the San Francisco MSA fell 1.9% from December ’10 to January ’11 for a 6.5% drop in value year-over-year (down 33.3% from December 2005).
S&P/Case-Shiller Condo Price Changes: January 2011 (www.SocketSite.com)
Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).
S&P/Case-Shiller: Home Prices Off to a Dismal Start in 2011 [Standard & Poor’s]
S&P/Case-Shiller: San Francisco Home Values Dropped In December [SocketSite]
May Case-Shiller: San Francisco Tiers Up But Gains Moderating Atop [SocketSite] 

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Comments from “Plugged-In” Readers

  1. Posted by A.T.

    Bottom! At least until next month.
    Let’s see how things move without the 2010 tax credits and other stimuli.

  2. Posted by Big Unit

    Good call, A.T…at least here in S.F. Inventory is very low while employment bounced in Feb.
    [Editor’s Note: San Francisco Listed Housing Inventory Update: March 28, 2011 and San Francisco County Unemployment Falls To 9.1% In February.]

  3. Posted by lol

    Interesting to see these graphs. They speak so much more than raw numbers.
    For instance, something that stands out is the fact that the overall SF numbers are back to the lowest or 2009 and 2010, but each tier is still higher than the “troughs” of 2009 and 2010.
    This means mix/volume effect. More (fire) sales in the lower tier would pull the median and distort the graph.
    Also, upper tier is still in 2003-2004 territory, when lower tier might soon cross the 2K line. I think this is the side effect of the tech boom of late that started right before the subprime crisis hit.
    As always, consistently precious data.

  4. Posted by unwarrantedinlaw

    Darn it, I wish these graphs had appeared earlier. As soon as I saw them this morning, I printed them out and ran over to Divisadero to show them to the owners of those two houses for sale. But they had already sold, for gazillions, to people who I assume are not in touch with what’s really going on in the market.

  5. Posted by lyqwyd

    You should have showed it to the buyers instead of the sellers

  6. Posted by lol

    unwarrantedinlaw, I am not following you. These graphs show some resilience in the upper tier. Furthermore, the uber tier you’re talking about is another market altogether.

  7. Posted by hangemhi

    these graphs show LAST YEAR. Jan sales are Nov/Dec contracts.
    this report completely misses what is happening in the City right now. Heck, even soma/southbeach is hot right now.
    Jan contracts which will be Feb/March sales, should be up

  8. Posted by ex SF-er

    But they had already sold, for gazillions, to people who I assume are not in touch with what’s really going on in the market.
    actually you bring up an excellent point, although I doubt it was your intention.
    The super rich-mega elite are indeed completely out of touch with what is really going on in the general RE market. the uber wealthy buying gazillion dollar homes have no idea (or don’t care) about the general status of the market. And why should they?
    The uber elite are not affected the same way as the poor, middle class, upper middle class. Their home buying is based on forward projections of their income based on capital gains, equities, asset holdings, and other investments. access to credit matters little.
    the poor/middle class/upper middle class base much of their home buying on access to credit.
    in the great early recession of 2008-9, all classes including the uber wealthy were hesitant to buy, but for different reasons. The lower classes lost access to credit. The uber wealthy had changed perceptions about their future income of their assets (stock market fell way down, bonds collapsed, etc).
    however, the government has put a lot of time and energy into reflating the assets of the wealthy, while leaving the lower classes to struggle.
    thus, the wealthy can return to a buying spree, while the rest of the market stagnates.
    It reminds me of John McCain who couldn’t remember how many houses he owned, or a recent speech by Robert Dudley who didn’t understand that recent food and energy price inflation was impacting working and middle class Americans. when asked how middle class people would afford food he stated that the iPad2 was cheaper and more powerful than the iPad1. as though working class Americans are buying a bunch of iPad2.
    this is the great Brazilification of America. Crush the middle class into poverty and allow the disaster capitalists to profit handsomely.

  9. Posted by Anonymous

    “Bottom! At least until next month.”
    Actually, no. As of right now, the bottom was March 2009 when we came in at 117.71, versus the 133.37 we posted today. It remains to be seen whether we break those March 2009 values or not…

  10. Posted by unwarrantedinlaw

    ex-SFer, what’s hard on the class warfare thing is the variation of wealth within families. If we were truly constrained by the class we are born into then each person within a family would have the same wealth and it would never vary.
    But most of us have relatives who are poor and relatives who are rich. I have cousins who are rich and cousins who are broke. Most statistical variation in wealth happens within an extended family itself. This fact is terrifying to you class warfare guys.
    Also, people go from poor to rich and from rich to poor all the time. Champagne to shirtsleeves in three generations, as the saying goes.

  11. Posted by Brahma (incensed renter)

    Who cares how a person’s cousins are doing; the wealth transfer that’s relevant is from parents to children or grandchildren. And the saying is “Shirtsleeves to shirtsleeves in three generations”, to denote American preference for meritocracy over aristocracy as an explicit rebellion against the social order in England, not because there is some natural force at work that somehow makes that happen. The much-beloved “free market” certainly doesn’t.
    But along came George W. Bush and his contention that taxes on inherited wealth should be in the low-to-zero range, and from now on all bets are off.

  12. Posted by FormerAptBroker

    unwarrantedinlaw wrote:
    > ex-SFer, what’s hard on the class warfare
    > thing is the variation of wealth within
    > families. If we were truly constrained by
    > the class we are born into then each person
    > within a family would have the same wealth
    > and it would never vary.
    I am seeing a lot of this… There are quite a few people that grew up rich on the Peninsula had a fun time smoking pot at UCSC getting a degree in Poetry and are now 45 and wonder why they can’t buy a home in the area where they grew up working at a non profit while their brother that went to GSB after getting a BS in Biology at UCI lives in Atherton and is looking at upgrading from a 1/4 share to a half share with NetJets.
    P.S. I was always told that “a man will be happy if he makes more money than all his brothers and brothers in law”…

  13. Posted by lyqwyd

    unwarrantedinlaw:
    “Most statistical variation in wealth happens within an extended family itself.”
    do you have references to support this statement?
    ex SF-er’s post is not about class warfare, it’s just stating fact. Wealthy & non-wealthy buy things differently. The wealthy do no need credit in the same way as the poor/ middle class, and they have entirely different access to credit when they want it. It’s irrelevant whether it’s within an extended family or not.
    Wealth is actively and extensively being transferred from the middle to the wealthy right now, and it’s being executed by our elected leaders. ex SF-er’s statement “the government has put a lot of time and energy into reflating the assets of the wealthy, while leaving the lower classes to struggle” is very true.
    TARP, the QE’s, Too big to fail companies being bailed out and subsequently allowed to grow even larger through mergers while small companies are allowed to fail left and right, these are all transferring wealth from the middle class to the rich.

  14. Posted by tipster

    Nice graph. Pretty colors.
    It looks like we may have the first half off sale. Who said south beach was hot right now? Because that’s where this is: bought for $550K, just dropped $20K to $280K. Here’s hoping for a nice, even $275K sale. Doesn’t look like REO, and even if it is, everything looks to be intact.
    http://www.redfin.com/CA/San-Francisco/250-King-St-94107/unit-432/home/22889139
    I think the highest discount we’ve seen at this building so far has been around 40%, in spite of all the “bottoms” called here, so this should mark a new low. Good times.

  15. Posted by tc_sf

    “The super rich-mega elite are indeed completely out of touch with what is really going on in the general RE market.”
    Changing focus slightly from the super rich to super priced houses.
    While this is just conjecture at this point, my general impression is that were you to extend the CS tiers upwards you’d see the same general pattern continue with higher tiers exhibiting a smaller rise during the boom and a corresponding smaller fall during the bust.
    What’s unclear to me is how super high end houses would compare from a ROI perspective compared to more average priced houses.
    Since the rental stock in SF may not be the same as the stock available for sale it can be error prone to look aggregate rents vs sale priced. Even for individual data points, for higher end homes it can be difficult to establish an accurate rental equivalent price.
    But some anecdotal evidence of attempts to rent higher end houses seems to indicate a very unfavorable price to rent ratio.
    The crown example of this on SS would have to be:
    Rent Belvedere’s “Organ House” For $12,450 (Or Buy For $19.995M)
    http://www.socketsite.com/archives/2011/01/belvederes_organ_house_hits_craigslist_asking_12450_a_m.html
    Noting again that this is conjecture and speculation, the above makes me wonder about the aggregate ROI performance of average priced vs super high end homes. What led me to this line of thought is the fact that there is no cap on the cumulative ROI loss due to negative monthly cash flow. Perhaps not in SF, but some areas have seen 70% drops in home values. But due to the practical non-recourse nature of most loans this large drop in value does not contribute to a similarly large ROI loss.
    If you put 5% down on a $600k house which just sold for $180k, you have the same percent capital loss as someone who put 5% down on a $3M house and sold for $3M with 5% selling costs.

  16. Posted by nanon

    The funny thing about Case Shiller is that there has never been a single month where the data has swayed the bulls from being bulls and the bears from being bears. Everyone sees what they want from it.

  17. Posted by ex SF-er

    This fact is terrifying to you class warfare guys
    huh?
    My last post had nothing to do with that. it was to do with the disconnect in purchasing decisions made by the uber wealthy in relation to the general market.
    as for not understanding class mobility, clearly you don’t know my story.
    long story short:
    grew up super poor in the worst part of Tenderloin. Went to top schools around nation
    now am now a high income earner. (household income around $450k/year, likely to go much higher in next few years).
    my in-laws are affluent, all Ivy league types, several were the so called “google-aires” with millions of dollars. (now moved on to greener pastures)
    my current social class is composed of some of the richest people in the country. yet my family is some of the poorest people in the country. as many of you may recall, I paid ALL of my mother’s bills the last several years of her life. I also support every one of my siblings economically.
    so yeah, I understand class mobility and income differences within a family.
    but me coming from poverty doesn’t make me understand the current general market in used cars or the general prices of things on layaway. my economic decisions are made for different reasons than those of the middle and working classes.
    ===
    as for me being a “class warfare” guy. I do not apologize for that. There has been very clear class warfare with the financial elite attacking the middle classes for generations and they are winning admirably. (that is undisputed… simply look at the assets held by top 1% compared to the rest of the country over the last 20-30 years).
    I am happy to scream it from the rooftops hoping that one day people will understand that the class warfare isn’t AGAINST the affluent, it is COMING FROM the affluent.
    I have no beef with people taking risks or coming up with amazing innovations that lead to tremendous wealth (like Steve Job or Judy Faulkner or whoever it was that invented post it notes). I have a beef with financial parasites that take our govt hostage with bribes and threats in order to profit off of the destruction of our economy, and the crooked political hacks who enable this. i have a problem with Too Big To Fail Banks that have a Govt guarantee imploding our world economy and threatening to do it again.
    but no matter how much I detest what is happening, I certainly don’t confuse the elite’s purchasing decisions with the mindset of the average middle class family!

  18. Posted by joh

    It looks like we may have the first half off sale. Who said south beach was hot right now? Because that’s where this is: bought for $550K, just dropped $20K to $280K. Here’s hoping for a nice, even $275K sale. Doesn’t look like REO, and even if it is, everything looks to be intact.
    First of all, that listing is a short sale, which doesn’t mean it’ll sell for $280K. It doesn’t even mean it’ll sell for $300K.
    Secondly, the Beacon has problems of its own (which it didn’t in 05). Just because problem properties like the Beacon or Palms has dropped by a certain percentage doesn’t mean all of South Beach has.

  19. Posted by A.T.

    Pendings are flat YOY, so don’t look for any leaps in sales volume for at least the next few months. More drifting lower w/r/t prices.

  20. Posted by lyqwyd

    joh, could you expand on this statement:
    “the Beacon has problems of its own (which it didn’t in 05)”
    I’m curious what has changed.

  21. Posted by EBGuy

    I’m curious what has changed [at the Beacon since 05].
    The square footage… ba dump bump…

  22. Posted by Samuel

    lyqwyd, I believe joh is referring to the Beacon’s pending litigations, which was not present in 2005. Which supposedly scared lenders and limit Beacon sales to cash only, according to one listing agent. Although another listing agent told me Wells Fargo still finances Beacon sales.

  23. Posted by Mole Man

    Interest rates can’t stay this low forever. When access to credit is constrained by even modest interest raises the market will be under great pressure.

  24. Posted by lyqwyd

    Thanks for the tip Samuel… I did a quick search and it appears that litigation started in 2008.
    [Editor’s Note: Unable To Fund Loan(s) At The Beacon? Hmm…]

  25. Posted by Misha Weidman

    Always, always worth remembering that the Case Shiller Index for the San Francisco MSA includes five of the nine Bay Area Counties. In addition to SF, there’s Marin, Contra Costa, San Mateo, and Alameda counties. Contra Costa alone, which I’ve referred to as “ground zero” of the bursting of the real estate bubble in the Bay Area, has a population of over a million people — more than San Francisco’s measly 800,000.
    While I do not maintain that SF is completely isolated from broader Bay Area trends, it is certainly not suffering from the same over-building and foreclosure pressures as cities such as Pittsburgh and Antioch etc.
    Ken Rosen, uber-guru to the real estate industry, paints a somewhat rosier picture for San Francisco based on recently declining inventory levels. You can get it at the end of this post: http://www.pegasusventures.net/wordpressblog/2011/04/03/who-to-believe-case-shiller-or-ken-rosen/

  26. Posted by tipster

    ^not many top tier priced properties in Antioch. Nice try.

  27. Posted by lol

    Yes, SF is doing much better than its neighbors, both in RE and in general.
    Just look at this article:
    http://www.forbes.com/2011/03/16/cities-where-the-economies-are-getting-worse_slide_7.html
    A worthless piece of data typical of the junk Forbes currently produces. There’s a shortage of tech workers in SF and the SV. How do you reconcile the 2?
    Simple enough: SF and some cities of the SV attract the best of the best talent, which in turn produce some of the most innovative companies on the planet, which in turn attract the best of the best.
    Cross the Bay and it’s another economy altogether.

  28. Posted by A.T.

    As far as unemployment goes, SF’s rate is worse than Marin and San Mateo, and better than Alameda and Contra Costa. I.e., it is right in the middle. Unemployment does not tell the whole story with respect to economic health, but it is one pretty important measure, and SF is no standout there. If any conclusion can be drawn (and I don’t think any can), it is that Marin and San Mateo Counties seem to be drawing the best talent, at least as far as where that talent chooses to live.
    I like living in SF and have chosen to live here. But far more people in the area choose to live somewhere else. SF is no island. Some areas and types of homes have done better than the overall price trend charted by CSI, and some have done worse. Same could be said for SF’s neighboring communities as well.

  29. Posted by tc_sf

    CoreLogic data released today shows an accelerating decline for the SF MSA with distressed providing a large contribution.
    SFH’s from Feb 2011 to six months prior shows a -9.55% decline ( -3.08 ex-distressed) compared to the Jan six mo change of -6.53% (-3.18 ex-distressed)
    http://www.corelogic.com/uploadedFiles/Pages/About_Us/ResearchTrends/CoreLogic_HPI_Monthly_Marketing_Data_February_2011WEB.xls

  30. Posted by Skirunman

    Here is some more data that is SF specific:
    http://www.helenazaludova.com/home/?p=1269&ref=nf
    – March was highest sales absorption month in last 24 and about 50% above the 24 month average.
    – Months Supply of Inventory (MSI) down to 2.6 months, lowest in last 24 months.
    – Median prices up in March approx. up 20% over average of Jan/Feb and flat YoY. Looks like another basically flat quarter to go along with the previous 7 quarters.
    – Non-distressed median pricing up over last 3 months while distressed is flat to down slightly.
    – Number of all home sales about flat quarter YOY, distressed up slightly.
    My summary, pricing still basically flat, but market holding well in good areas and with good product, nothing really new.

  31. Posted by curmudgeon

    ^skirunman…that analysis is one of the best written I’ve seen. The writer is very careful not to over-interpret a month’s worth of data, but points out what the data COULD mean if conditions persist. I really respect and appreciate the approach.
    I’m also surprised at some of the results from March, but I’m not actively in the market….this spring is surprising me, and it will be interesting to see the next few months. With everything going on in the country and world, I think market sentiment is boomeranging around.

  32. Posted by tc_sf

    “The writer is very careful not to over-interpret a month’s worth of data”
    Note that I believe the CoreLogic data is a weighted average of the trailing three months.
    So the Feb 2011 release is composed of data from Feb 2011, Jan 2011 and Dec 2010. The Jan 2011 release which also showed a significant drop adds in data from Nov 2010. Making this a four month trend.
    The nearly -20% slope of the Feb 2011 release is fairly large, but you are correct to note that there is no guarantee that the slope will persist. Also the contribution from distressed is significant.
    Regarding median, in addition to the information that you could glean from reading archives of SS the Visualizing Economics blog just produced the following graph which illustrates the issue well:
    http://visualizingeconomics.com/2011/03/31/increase-in-housing-quality-and-its-effect-on-home-values-1940-2010/

  33. Posted by A.T.

    Thanks, Skirunman. Always good to see local data. However, she posts some pretty odd statistics – lots of them are based on the number of “units.” Does this include multi-unit buildings? Why not just post the # of sales and listings for SFRs and condos so the data are comprehensible?
    From what I can glean, March SFR sales were down a bit from 2010 (201 in 2010 vs. 218 in 2011) while condo/TIC sales were up (247 in 2011 vs. 216 in 2010). And SS reported at the end of March that active SFR listings were up YOY by 15% while condos were down 5%. So it looks like the condo market is a bit better than last year while the SFR market is a bit worse.
    The charts on distressed sales in your link are interesting — way up over last year. That looks like the area that is thriving currently, about 20% of all sales and 25% of listings going into contract.

  34. Posted by EBGuy

    I think market sentiment is boomeranging around.
    I don’t disagree, but I would call it ‘standard downturn seasonality’. The past couple of months have most resembled 1995 (though the percentage swings are greater). In ‘standard downturn seasonality’ the C/S Index doesn’t veer into positive territory until April (which usually translates into a down February, flat/slightly up March, and a positive April). Again, this is what it looked like during the nineties downturn. After our seasonal rise, we’ll see new relative lows (compared to this year) in Jan. 2012.

  35. Posted by tc_sf

    “What’s unclear to me is how super high end houses would compare from a ROI perspective compared to more average priced houses.”
    It would appear that CR and the LA Times have also taken up this theme.
    “[A] five-bedroom house in the Sunset Strip area priced at $3.5 million for sale … the owner recently accepted a short-term lease [for] $10,000 a month to rent.
    Why buy when you can’t rent for about half the cost? And the renter is not taking the risk of further price declines.
    And if we look at this from an investor perspective, no one would pay $3.5 million for $10,000 per month in gross rent. After taxes, maintenance and a high vacancy factor, this is a cap rate under 2%. Ouch (note: high end homes for lease have very high vacancy factors).

    http://www.calculatedriskblog.com/2011/04/renting-vs-buying-at-high-end.html
    http://www.latimes.com/business/la-fi-luxury-lease-20110414,0,6883536.story

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