The sales volume of listed single-family homes in San Francisco fell 11.4% on a year-over-year basis in May, down 27 sales from 236 in 2010 to 209 in 2011 as the median sales price fell 5 percent, from $750,000 in May 2010 to $715,000 in May 2011.
As we’ve written following year-over-year median price declines of up to 13 percent over the past four months, expect proponents of representing changes in median as changes in value to quickly find religion.
With respect to condos, listed sales volume fell 15.6 percent on a year-over-year basis in May, down 45 sales from 288 in 2010 to 243 in 2011 as the median sales price increased 8 percent from $646,000 to $695,000.
As plugged-in people know listed housing inventory ended May down 3 percent on a year-over-year basis, down 3 percent for single-family homes, down 9 percent for condos.
∙ Real Estate Market Trends Report [rereport.com]
∙ SF Listed Sales Volume Up 15% In January Driven By Low-Cost Areas [SocketSite]
∙ Medians Are Up, But Don’t Confuse That With Increasing “Prices” [SocketSite]
∙ San Francisco Listed Housing Inventory Update: June 6, 2011 [SocketSite]
What’s going on in jumbo land? Are the typical terms getting worse for borrowers now? And it looks like the conforming loan limit will drop on September 30, 2011 by about $100,000. Is that bringing the median down?
Here’s one view that it will send prices down, although he sees it as a reason to buy now:
Fannie Mae and Freddie Mac, the private mortgage lending entities under government conservatorship, are set to reduce their maximum conforming loan limit from the current $729,750 to $625,500 on October 1st. Bay Area mortgage broker Eric Leithliter of California Mortgage Advisors says this may adversely affect the Bay Area real estate market, making it harder for homebuyers to get loans and lowering home values. He recommends that people who have been waiting to buy act soon, before the loan ceiling is lowered.
href=”http://www.prweb.com/releases/prwebJumbo-Mortgage-Loan/Bay-Area/prweb8560737.htm”
[Editor’s Note: Super Conforming Limits In San Francisco Set To Expire September 30.]
That quote (and the absurdly faulty logic that drives it) is hilarious. Hurry up so you can get a big loan to buy house x, otherwise you might be stuck with a smaller loan later that will buy that same house x at a lower sale price!!!
“Hurry up so you can get a big loan to buy house x, otherwise you might be stuck with a smaller loan later that will buy that same house x at a lower sale price!!!”
AKA, buy now or get priced in forever!
The number of pendings is also down YOY so the sales picture looks to continue to be pretty slow for the next couple of months at least.
You’d think that regardless of the dubious logic, there should be some demand pulled forward as the deadline approaches.
Yeah tc_sf, I would have thought the same thing–that people would rush to buy higher priced homes now that they can get cheap financing. But instead we are seeing fewer sales than last year at this time. Maybe people are applying a different sort of logic and waiting another year. If I were in the market for a home in the $600,000 to $800,000 range I would think it would be smart to wait. This range will probably face the most pressure.
“You’d think that regardless of the dubious logic, there should be some demand pulled forward as the deadline approaches.”
There might be some demand pulled forward. It takes at least a little bit of time for prices to adjust, so in the very very short term, on October 1, your buying power decreases if you’re in the zone of the change. I could see people reacting to that if they feel they must buy in 2011.
“Yeah tc_sf, I would have thought the same thing–that people would rush to buy higher priced homes now that they can get cheap financing. But instead we are seeing fewer sales than last year at this time.”
I’d guess that any demand pull would be smaller then then previous tax credits. What probably matters in not the reality of the situation, but rather the perception. And I think that on average people react most strongly to a concrete immediate perception of savings. So I’d guess that people in the $729k to $625k loan range would exhibit the bulk of the pull since they could be shown that pre Oct 1 they have a monthly payment of $X with a agency loan but post Oct 1 it would increase to $Y with a super jumbo.
The mechanical impact of a lower jumbo ceiling would happen only if rates go up on the same tranche.
Say someone has 250K cash and is contemplating a 950K purchase.
With a 5% rate, mortgage = $3750
If rate go up 75 point, to get the same mortgage amount you’ll need to lower the price 50K.
Therefore, the choice boils down to borrowing 700K at 5% today or borrowing 650K at 5.75% tomorrow in a perfect math-savvy-well-adjusting world.
This market is everything but. Lower rates haven’t caused much increase in price. Supply and psychology are still pretty much at the top on what decides prices in SF.
There was an incentive to push April closings into may last year. I seem to remember lengthy discussion on here about how that distorted upwards May 2010’s figures.
It’s funny how that has been conveniently forgotten now though (happens all the time on here!). A simple concept that distortions to one years figures cause distortions to 2 YOY comparisons!!
“It’s funny how that has been conveniently forgotten now”
It hasn’t been forgotten. This was mentioned in the April thread and has been mentioned in others. This is despite the fact that some people believed that no one in the Real SF cared about the tax credit.
However imperfect, Zillow has city-wide metrics that show the 2-wave bounce we saw in 2009-2010.
http://www.zillow.com/local-info/CA-San-Francisco-home-value/r_20330/#metric=mt%3D34%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D20330%26el%3D0
The 2009 was a dead cat bounce pushed by QE1. It had a kick in the end thanks to the 8K Federal + 10K state credit.
Of course locally things are different. Some healthier areas haven’t even retraced the March 2009 low. But you can assume some of the bounce is Govt cheese induced but it was an exercise in futility for the housing market that only delayed the outcome.
So SFRs prices are down, but condos are up. Can we conclude that condo buyers tend to be more momentum buyers and less history conscious, say because of age? Less worried about anything, these .com kids, so they buy at any price? SFRs however are for families, hopefully with two heads to think prices over and two heads to come up with worries and fears and rationales, and sense?
“…hopefully with two heads to think prices over and two heads to come up with worries and fears and rationales, and sense?”
Sometimes the two heads scenario works against rationality. Some RE agents know this well and exploit it by identifying the less rational head and seeding the “buy now or be priced out forever”, “you’ll never find another place as good as this”, and other such FUD memes.
Well that certainly rang false.
The problem with FUD is that it works both ways. Today many buyers are scared of the market because of the pretty overwhelming case against the previous bubble and its aftermath. Who will be the next Lehman, Bear stern’s? Extend and pretend is switching to “no more room to pretend” and banks will have to realize the losses of dip #1 + the current dip #2. Remember 2006-2007 when foreclosure tours started to pop up? 40% discounts looked good. Now many of these buyers are underwater themselves…
SF has a lot of things going on for it, but drive 15 miles East from SF and you’ll find places where prices have collapsed by 70-75% from prices that didn’t look that far fetched in 2006.
Prices start to make sense in SF, in regards with rent vs buy, or what people are actually earning. But the overall environment is still everything but certain.
Location, Location, Location… find a decent (livable) SFR in a good non-foggy neighborhood for under 800k today and I guarantee that it sells in days. Metrics are messed up here, because most of what is listed in that range for a SFR is a complete fixer that only a contractor could love…