S&P/Case-Shiller Index Change: September 2011 (www.SocketSite.com)
According to the September 2011 S&P/Case-Shiller Home Price Index, single-family home prices in the San Francisco MSA fell 1.5% from August ’11 to September ’11, down 5.9% year-over-year (versus a 5.3% YoY drop in August), the ninth consecutive month of year-over-year declines and down 39.0% from a peak in May 2006.
For the broader 10-City composite (CSXR), home values fell 0.4% from August to September, down 3.3% year-over-year and down 31.2% from a June 2006 peak.

“Three cities posted new index lows in September 2011 – Atlanta, Las Vegas and Phoenix. Seventeen of the 20 cities and both Composites were down for the month. Over the last year home prices in most cities drifted lower. The plunging collapse of prices seen in 2007-2009 seems to be behind us. Any chance for a sustained recovery will probably need a stronger economy.”

“Detroit and Washington DC posted positive annual rates of change and also saw an improvement in these rates compared to August. Only New York, Portland and Washington DC posted positive monthly returns versus August. It is a bit disturbing that we saw three cities post new crisis lows. For the prior three or four months, only Las Vegas was weakening each month. Now Atlanta and Phoenix have fallen to new lows too. On a monthly basis, Atlanta actually posted a record low rate of -5.9% in September over August. The markets are fairly thin, and the relative lack of closed transactions might be exacerbating the downside.”

On a month-over-month basis, prices fell across all three Francisco MSA price tiers which remain down on a year-over-year basis for the tenth month in a row.
S&P/Case-Shiller Index San Francisco Price Tiers: September 2011 (www.SocketSite.com)
The bottom third (under $320,010 at the time of acquisition) fell 2.2% from August to September (down 9.5% YOY); the middle third fell 1.1% from August to September (down 10.1% YOY); and the top third (over $603,426 at the time of acquisition) fell 0.9% from August to September, down 3.1% year-over-year (versus down 2.3% in August).
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA have dropped below May 2000 levels having fallen 60% from a peak in August 2006, the middle third has dropped below March 2002 levels having fallen 41% from a peak in May 2006, and the top third has dropped below February 2004 levels having fallen 25% from a peak in August 2007.
Condo values in the San Francisco MSA fell 1.3% from August ’11 to September ’11, down 8.7% year-over-year, down 33.9% from a December 2005 peak.
S&P/Case-Shiller Condo Price Changes: September 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 Weaken as the Third Quarter Ends [Standard & Poor’s]
S&P/Case-Shiller San Francisco: Prices Relatively Flat In August [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by badlydrawnbear

    20 city composite hit a new “post bubble” low.

  2. Posted by eddy

    It’s called going sideways: A little up, A little down, A little up, A little down, A little up, A little down, A little up, etc…
    That said, I’d have to say that over the short term the markets are going to take a beating and that is going to hurt housing nationally; and it will certainly impact SF negatively. I still contend that over the next 5 years we’ll be right around where we are now on the high tier +/- 2%.
    There is still a fair amount of deal flow which is a good sign for general housing liquidity.

  3. Posted by A.T.

    This decline has now gone on so long that inflation (not reflected in CSI) is becoming a significant multiplier. CPI is up 22% since February ’04, meaning the real decline in the top tier is getting close to 50% since that time period. Even the real YOY decline is about 4.7% for the top tier rather than the nominal 0.9%. Pretty astounding given the current record-low mortgage rates. We may not see another massive drop (or we may — see Europe) but the steady decline is likely to continue until the economy really picks up some steam and unemployment falls.
    Or I suppose Chinese nationals or LinkedIn-aires could swoop in.

  4. Posted by lol

    Great graph. Very valuable information as always, editor.
    Pretty lousy numbers, even with seasonality baked in.
    It’s still fascinating to watch the 3-tier curb and what it means on the ground.
    The bottom 1/3 of the SF Area was forced fed cheap debt (you’re offered “free” money when you have no money, you would have been silly to refuse). Valuations flew to the sky, people got addicted to the artificial cash flow from refis. Then the air was popped out and we’re now back to 2000 prices on that segment.
    The top 1/3 still participated in the bubble, but a bit less so. Partly because people in these areas are more financially savvy. For people familiar with money and real estate it’s not the monthly payment that matters most, but the total liability you’re signing for. Purchasing at 10X annual income in the subprime segment was crazy. Buying at roughly 6-7X income like in SF seemed like a better idea. We’re stabilizing slowly to a more reasonable ratio. 4-5X is what I see all around me for people who borrow to purchase.
    Of course, for people with lots of fresh cash, things are still different, but a bit less than before.
    Let’s all hope the worst will not happen with sovereign debt, because that will change everything.

  5. Posted by A.T.

    Whoops, messed up two inflation time periods in the above post. Real drop is 22% since Feb. ’04 for the top tier. Real drop from peak is 34%.

  6. Posted by Rillion

    “CPI is up 22% since February ’04”
    Why February ’04? What is the significance of Feb 04 to the housing market that makes you pick that date?
    Wouldn’t it be more useful to measure inflation since the peak (May 2006 for SF per the post above) in order to determine how far down in real dollars we are from peak rather then adjusting for inflation from some arbitrary Feb 04 date?

  7. Posted by A.T.

    Rillion, I used that date because the top tier CSI (what people often use as a proxy for “SF”) is currently below the Feb. ’04 level.

  8. Posted by Rillion

    Okay I see where you are pulling Feb 04 from as it is where top 1/3 values have now hit. As for inflation, I get a figure of 18.4% for the bay area since Feb ’04 and 12.2% since May 06 (peak). Since we are discussing Bay Area real estate I used the Bay Area CPI.
    http://www.abag.ca.gov/planning/research/cpi.html

  9. Posted by badlydrawnbear

    From calculated risk blog …
    “In real terms, the National index is back to Q1 1999 levels, the Composite 20 index is back to May 2000, and the CoreLogic index back to April 2000.
    In real terms, all appreciation in the ’00s is gone.”

  10. Posted by tc_sf

    Re: Zillow’s predictions of CS
    “Also, they’ve recently taken to predicting upcoming case sheller releases and they actually follow up and compare their predictions to results. They’re predicting next month’s CS20 down 3.2% YoY, 0.2% MoM.”
    So Zillow was off by 0.4% on the low side!!
    Would be interesting to see if Zillow skeptics can beat their forecasts in the future!
    Zillow has the Sept ZHVI for SF (not MSA) as hitting a new low.
    “Pretty lousy numbers, even with seasonality baked in.”
    The seasonality factor for Sept is zero.
    “Since we are discussing Bay Area real estate I used the Bay Area CPI.”
    Probably does’t matter too much, but note that CR and others use CPI-less shelter for these types of things.

  11. Posted by sfrenegade

    Prestige Index is up slightly QOQ but down slightly more YOY:
    9/11 $2,531,042 437.48
    6/11 $2,505,696 433.10
    3/11 $2,491,950 430.72
    12/10 $2,604,044 450.10
    9/10 $2,565,954 443.52
    Mostly it’s a bit flat. Still down significantly from the 2007 peak:
    9/07 $3,084,670 533.17
    [Editor’s Note: San Francisco Prestige Index Up 1.0% In Third Quarter, Back To 2004.]

  12. Posted by spencer

    From calculated risk blog …
    “In real terms, the National index is back to Q1 1999 levels, the Composite 20 index is back to May 2000, and the CoreLogic index back to April 2000.
    In real terms, all appreciation in the ’00s is gone.”
    Basically, anyone who bought after 1999 would have been better off renting, especially since monthly mortgages were about double the price of renting an equivalent home during that time.
    glad i missed out on the bubble. For full disclosure, I am officially looking to buy now in the $850-$950K range. I think we are at least near bottom and mortgage rates are very low.

  13. Posted by A.T.

    “Basically, anyone who bought after 1999 would have been better off renting”
    That’s generally accurate for SF, but not universally so. Rents were pretty sky-high during the dot-com years, and then they fell pretty substantially. And, of course, anyone who bought and then sold before the crash did far better by buying. But it was around 1999 or 2000 that the truism that it was cheaper to own, which lasted for eons, got turned on its head. It is now working its way back to a truism as prices continue to fall.

  14. Posted by BernalDweller

    Hoo boy…here we go. Some fresh meat for the bears to chew on! Reuters headline: “IPOs stoke San Francisco housing market”
    http://www.reuters.com/article/2011/11/23/us-realestate-sanfrancisco-idUSTRE7AM2KH20111123
    Discuss.

  15. Posted by A.T.

    “Waiting for Godot” would have been a more appropriate title for that article. It features a laid-off architect taking in boarders and living in the basement, and this is an indicator of strength? But he’s certain, just certain, that one of these new dot-com guys will pay a ton and save him from his desperate financial situation. “San Francisco, where prices averaged $522 a square foot for the three months ended October 31, compared with $616 in 2007″ – another indicator of strength?

  16. Posted by [anon.ed]

    Your reading of that article is willful at best. Seizing upon that anecdote of the one guy’s situation and ignoring the Trulia data is so typical. You looooove Trulia when it suits you. Not to mention the 2007 peak months obsession. The market has moved on. Heck, the message board has moved on. Not you tho!

  17. Posted by tc_sf

    “”It seems foolish to put it on the market before when there are a thousand people down the street who are about to make a million dollars,” said Holm. His place is within walking distance of Zynga’s headquarters, and he expects prices in the neighborhood to rise significantly in the wake of the IPO.
    Holm, now working as a carpenter after being laid off as an architect, is taking in roommates, living in the basement and fixing the place up as he awaits what he expects will be his own IPO payday.”
    The above corresponds with a lot of my anecdotal experience with some of these tech boosters. No real experience or connection to tech, more driven to the IPOs due to desperation rather then any real analysis. Tech boosters on this blog that are blissfully unaware of recent news and unwilling or unable to look through SEC filing provide evidence that the lead of the article is not just an outlier!
    The guy above thinks the IPO will drop $1B to rank and file down his street alone!

  18. Posted by [anon.ed]

    You, like three or four posters, keep on trying to act as if certain areas aren’t doing different things than other areas. This guy is correct about Potrero Hill. It’s almost as if the City is unfairly targeting Potrero Hill for gentrification. Honestly, you three or four posters way of thinking is all very 2009. We’re now almost 4 years into a market shift. And 2004 to 2008 was just as long as this current market. Either start looking at the local market honestly, or buzz off.

  19. Posted by A.T.

    “We’re now almost 4 years into a market shift.”
    We sure are! Here is some evidence of that shift:
    Potrero place foreclosed in January and finally sold at $49k below its 2003 price:
    http://www.redfin.com/CA/San-Francisco/1625-18th-St-94107/home/1203190
    Sold a month ago for 31% less than its 2007 price:
    http://www.redfin.com/CA/San-Francisco/1601-18th-St-94107/home/1094100
    D*mn, if only that zynga IPO had happened earlier!

  20. Posted by tipster

    The worse the market gets, the testier anon.ed’s postings get. Contracts are falling apart right and left, so that probably has him on edge.
    Excellent posts, A.T.
    You’ll note the unemployed architect article doesn’t conside the fact that many, many other owners are likely also keeping properties off the market until the IPO, that Zynga’s earliest employees are mostly couldn’t-care-less-about housing twentysomething single males, and makes no mention of the other IPO’s that barely moved the needle. Likely a realtor-written piece.

  21. Posted by [anon.ed]

    Hardly, it’s just you and your two pals who are so incessantly dishonest that it’s actually annoying. That’s all there is to it. “The worse the market gets,” how silly. “Likely a realtor written piece,” from Reuters. And Zynga is indeed close to Potrero Hill. It’s not an unreasonable position.
    Also, if you don’t think twentysomethings and earlythirtysomethings are buying properties in the low 1Ms in the nicer southern parts of town or the Mission, it’s because you don’t know what’s going on. That’s because you go nowhere, see nothing and instead blather on the internet all day long. In short, every word you say is speaking out of your depth and/or lying. AT’s posts were typically risible cherrypicking exercises: a foreclosure, and a MOH BMR. But you knew that. (No, you didn’t, you just piled on incorrectly. Typical.) Listen, you guys are garbage and you write from 2009 perspectives too.

  22. Posted by A.T.

    flujie, flujie, my apologies – I did not mean to insult you by presenting facts and evidence instead of irrefutable truisms such as “you don’t know what’s going on” and “you guys are garbage.”
    Touché.

  23. Posted by [anon.ed]

    “facts” — a foreclosure and a MOH, as some sort of counter argument?
    What a joke you are.

  24. Posted by lol

    you’ll admit that the 2 samples you pulled do not reflect the broader market. I can pick my examples too. Say 412 Noe, which was rebuilt anew after a 2007 fire. The 3 units were on the market for a few short weeks and then gone. They seemed a bit pricey to me (800-ish a square foot) but they were sold just like that.
    Sure enough, it’s new construction. That’s one aspect of the market and it’s very healthy and pretty close to the 2007 top.

  25. Posted by A.T.

    Sorry, just can’t refute such unassailable logic.
    But I’ll try:
    Potrero – down 31% since 2008 after another foreclosure, which is apparently now deemed an indicator of market strength (Merced is going gangbusters by that logic):
    http://www.redfin.com/CA/San-Francisco/Undisclosed-address-94107/home/39822977
    Potrero – just sold at 22% below the 2005 price:
    http://www.redfin.com/CA/San-Francisco/1919-20th-St-94107/unit-2/home/1565618
    “Waiting for Zynga” by Flujie Beckett

  26. Posted by [anon.ed]

    There’s a word for people who go to the “Waiting for Godot” card in their writing. And it is, hack. That’s very fitting especially for you in more ways than one.
    The “undisclosed address” property was certainly a foreclosure, having sold in August for 235K, and again in September for 341.5K.
    The 20th street property is a 1 br condo. Yes, it took a hit well below its 2005 price. I will concede that 1 br condos are getting murdered in this market by and large. But your argument springs from a SFR owned by somebody you and your pal have deemed a hapless fool. So once again you’re going to the condo card, when the conversation badgain with SFR. Once again, that’s both typical and risible. And once again patently dishonest AT. Enough.

  27. Posted by A.T.

    Flujie, flujie, just calm down. The guy in the article bought his place a block from the projects and a block from the highway in September 2007. He’d need 50 zynga IPOs to unwind that huge mistake.
    Here is a nearby place — yes, one of your beloved SFRs that is somehow in a totally different world — recently sold for $370,000 after having sold for $625,000 in 2005:
    http://www.redfin.com/CA/San-Francisco/838-Kansas-St-94107/home/1828398
    D’oh — should have waited for Godot/zynga a little longer (whoops, played your hack card again with those inconvenient facts and evidence). Feel free to provide contrary evidence instead of “hack,” “not you tho” and “blather on the internet.”

  28. Posted by R

    Not sure why I’m wading into fluj and AT pissing contest here…
    ..but A.T. your most recent example is a joke.. a 800sf shack that doesn’t appear to have been marketed (or maybe not even sold as Property Shark, Trulia, and Zillow don’t list it as having sold)… That’s your great example?

  29. Posted by [anon.ed]

    It’s not a p***ing contest. The guy never even had a stake in any sort of game. He has joke content, so does Tipster, and they post on the site more than anbody else. AT scans Redfin for hours, bypassing dozens and dozens of results that don’t suit his garbage takes, and submits the cherrypicked ridiculous ones on this site. Look, I’ve said all I need to say about this for the time being. Thanks R. Some others, including the editor, heck, especially the editor, should step in and call BS on occasion. It’s boring for one person.

  30. Posted by tipster

    R, did it get smaller from 2005, when it sold for $625K?

  31. Posted by A.T.

    R, I never said a word about this being any “great example.” I presented concrete evidence of large declines in Potrero to contradict flujie’s claims. He disregarded these because they were just condos (i.e. 50% of the market) and not SFRs. So I found the most recent “apple” SFR sale I could find and posted it — voila, a massive 40%+ hit. So what if it was not on the MLS or a purported shack? Same in 2005!
    That’s just a variation of the old on a busy street, no a short hold, no a foreclosure. If the vast majority of sales are “exceptions” then they become the rule.
    I’m always willing to consider contrary evidence. But I don’t expect any from flujie, which is fine. Seeing him spout bluster is amusing enough for me. Plus ça change . . .

  32. Posted by [anon.ed]

    “R, did it get smaller from 2005, when it sold for $625K?”
    It was either a foreclosure or a non-arm’s length transaction. And it was a fixer back in ’05 so who knows what the state of it is now. So for those keeping score at home that’s four condos, of which two were foreclosures and one MOH, and some sort of non-open market deal. Great spot to pick there, Tipster. Good grief.

  33. Posted by R

    So what if the sale is really fishy, not reported by most real estate sites? I’d say in order to have an example of the market, the subject house needs to have been in the market.
    And as for the size, I mentioned that up because I presume Fluj was talking about a single family house that had a few bedrooms and enough room for a family.
    The problem with the three of you is none of you can see beyond your own biases. It’s not all black and white people, there are shades of gray.
    And pulling questionable examples of questionable houses just to back up your own bias is the same exact value as bringing up anecdotal evidence. Useless.

  34. Posted by [anon.ed]

    In fact, yes, “fact,” the Kansas property was transferred intra-family. What a joke you are, AT. Hope you had a splendid morning sifting through dozens of Potrero Hill transactions that you’ll never utilize for a single thing.

  35. Posted by sparky-b

    AT,
    “apples” is part of the problem with finding appreciation examples. Lots of people like to buy fixed up/ redone places. If the argument is Lots of people with money are looking at potrero hil vs. can’t find any apple to support that, those 2 will always be separated by the money going into rebuilt places.
    Maybe some of the places are being built by the guy in the article who lost his architecture firm job and is working as a carpenter.

  36. Posted by EBGuy

    I hate to say it, but 838 Kansas doesn’t show up on the SF Recorders site either. Could be a backlog from the holidays, but does make me wonder if there is an error on Redfin. Fluj, does this transaction show up on any of your databases?

  37. Posted by R

    Point to Fluj.

  38. Posted by A.T.

    sparky-b, you are exactly right. However, if a place is new or totally remodeled, we have no idea what it would have gone for 1, 2, 5, or 10 years ago – maybe more, maybe less. “Apples” at least give us a pretty objective standard. Not perfect, but the best we have. Otherwise, one person can say “the market is on fire!” and another can say “the market is in the dumps!” And we are left with medians, avg/sf, etc., all which have their own flaws, to see who is right. If we can see “apples” selling at, above, or below prior, it’s a pretty hard argument to claim that does not indicate the market direction.

  39. Posted by R

    Well said AT. No go find some apple SFH…

  40. Posted by A.T.

    Well, there were only 7 Potrero SFRs sold at all in the last 3 months (hardly a sign of a market on fire per the article that started all this!). Compared to 17 condos. SFRs does not equal “the market.” But assuming SFRs are holding up better (a big “if”), if one excludes the lower performing 70% of the market, then I accept that the remaining result will look better than the market as a whole.

  41. Posted by sparky-b

    For you maybe, for me I only care what the redone places are selling for. That is what tells me what I can expect on a fixer purchase. I know CS and the Prestige Index discount or ignore the exact type of property I am looking to evaluate.

  42. Posted by A.T.

    Fair enough. I’m considering moving up, and am thus more interested in the direction of the market as a whole (I don’t want to buy a place in a declining market, particularly a fast-declining one) and the cost of buying vs. other options such as staying put (and renovating) or selling and renting.

  43. Posted by tc_sf

    ” there were only 7 Potrero SFRs sold at all in the last 3 months ”
    If this is true then the YoY $psf Trulia numbers from the original article wouldn’t seem to be a good indicator of much.

  44. Posted by [anon.ed]

    There have been 32 SFR sales in 2011, likely with more to come, and that’s a decent enough sampleset.

  45. Posted by tc_sf

    “There have been 32 SFR sales in 2011, likely with more to come, and that’s a decent enough sample set.”
    The article compared the three months ending in oct compared to the year prior period.
    AT’s “fishy” home sale would comprise 1/7th of the SFR data in that period.
    That is not meaningful one way or the other.

  46. Posted by [anon.ed]

    There has never been, nor will there ever be a singular quarter that sees Potrero Hill yield a useable sampleset. I’m not standing in principle on the article to begin with. I’m questioning others need to ridicule things that they obviously don’t understand, your parsing here and obscuring via minuatiae being a typical case in point. Nor am I interested in your parsing, or your understanding of what constitures meaning.

  47. Posted by R

    “Well, there were only 7 Potrero SFRs sold at all in the last 3 months (hardly a sign of a market on fire per the article that started all this!).”
    So did they show big declines as you claim?

  48. Posted by A.T.

    I noted the only apparent “apple.” And was roundly ridiculed for “cherry-picking”!

  49. Posted by sparky-b

    Redfin says 8 sales in the last 3 months, averaging over $1M.

  50. Posted by tc_sf

    “”Well, there were only 7 Potrero SFRs sold at all in the last 3 months (hardly a sign of a market on fire per the article that started all this!).”
    So did they show big declines as you claim?”

    This entire thread would have been better spent analyzing and arguing over the actual seven data points.
    When the revised S-1 comes out it will be interesting to ball park the payout to rank and file, but an article pairing a basement-dwelling unemployed architect’s guess at payouts with a statistic that even the august Fluj concedes will never be useable is hardly worth arguing about.

  51. Posted by [anon.ed]

    That guy is probably making more money as a carpenter than he ever did as a junior architect. Grow up already.

  52. Posted by R

    “And was roundly ridiculed for “cherry-picking”!”
    No. You weren’t ridiculed for cherry picking. You were called out on the validity of a house with a very questionable sale, showing only on Redfin and nowhere else.

  53. Posted by [anon.ed]

    I ridiculed him. He deserved it. His links are always useless. Not only that, but knowing how Redfin works, the guy’s searches are going to yield a lot of results. So he obviously spends a lot more time discarding sales that discredit the points he tries to make, in lieu of the anomolies he post on here. Fake from the start.

  54. Posted by A.T.

    Nope, R, I posted two others showing big drops that were also ridiculed. Apparently everything is an anomaly with you and flujie!

  55. Posted by R

    No AT, you posted some condos and a family transfer regarding a discussion about SFH. Everything’s not an anomaly (at least for me, don’t lump me on with fluj) but you got to at least come close.
    I’m happy to see data on open market SFH transactions that support your hypothesis.

  56. Posted by [anon.ed]

    “The problem with the three of you is none of you can see beyond your own biases. It’s not all black and white people, there are shades of gray”
    That’s my line, one, and don’t lump me in with the likes of these polemicists, two. Funny how people still think I’m the guy who was hollering about appreciation and all that. Hardly. I pretty loudly challenged a bunch of people talking in 2007 as if it was already late 2008. That was my sin on here. Nowadays it’s “Gotcha gotcha gotcha! this house didn’t get peak level money! haha” — and I object to that mentality too. And no, I don’t ask for forgiveness on that one.

  57. Posted by tc_sf

    ” some condos and a family transfer regarding a discussion about SFH. ”
    On a serious note, there seems to be an article of faith that condos and SFHs are apples and oranges.
    Note that for this CS SFH’s are 39% down from peak, -1.5% MoM, -5.9% YoY.
    Condos, 33.9% down from peak, -1.3% MoM, -8.7% YoY
    Different, but not wildly so.
    Prior booms around the country due to condo overbuilding or a few builders bulidng the wrong product mix may have produced a condo specific decline. But since this current boom/bust is credit related, its not clear that condos will follow a wildly divergent path from SFHs.

  58. Posted by sparky-b

    And as per my previous post remodeled houses or houses that just show too much appreciation are thown out and not used. That occurs much more often in SFHs than it does in condos, making the numbers less comparable.
    If you are looking at a condo you are either buying new (not in CS) or an apple. When you are buying a house you might by new (not in CS), you might buy remodeled and expanded (not in CS), or you might by and apple.

  59. Posted by dontgetit

    “Funny how people still think I’m the guy who was hollering about appreciation and all that.”
    to me, you’re the guy who ruins every thread with his snark but doesn’t ever say anything useful. But I haven’t been around here that long

  60. Posted by [anon.ed]

    “to me, you’re the guy who ruins every thread with his snark but doesn’t ever say anything useful. But I haven’t been around here that long”
    If you were around long enough, you’d know precisely when and where the three tools I talk down to are pre-emptively trolling. Everybody else is cool with me nowadays.

  61. Posted by tc_sf

    “And as per my previous post remodeled houses or houses that just show too much appreciation are thown out and not used. ”
    I believe that numerical outliers in both directions, not just appreciation, get thrown out or down weighted. They don’t release the exact details, but some, presumably small, detected remodels are down weighted rather then discarded.
    For new construction or large remodels since they’re basically new there isn’t really a price history to measure. From your above post it seems you’re looking from a marketing perspective at what people are currently paying for homes. That is basically what the median and $psf are good at. If you’re selling luxury goods to millionaires you basically care about how many millionaires there currently are not how they got there. But there is also great value in seeing if people are net coming into the millionaire range from above or from below.
    The buyer of a new or remodeled home probably does care about the future price trajectory of their home. What’s interesting to postulate about is if on average these trajectories will be higher or lower then the general market. If there really is a premium just for “newness” then you’d expect worse then average performance since the place will no longer be new on the next sale. If the premium is because new construction is actually better (lower maintenance, more energy efficiency, other intangibles,…) then you’d expect better then average performance.
    I don’t believe the indices release data that would shed light on the above though they probably have the data required to do so. (Release an index of sale pairs where the first sale was new or largely remodeled)
    “That occurs much more often in SFHs than it does in condos, making the numbers less comparable.””
    Seems reasonable. But I think that credit has played so large a role that we’ll see tighter correlation between SFR & condo’s then in previous localized busts.

  62. Posted by sfrenegade

    The one thing I’ve learned is that fluj/anonn tends to push back hardest when he might have a financial interest (see older threads on Miraloma and Bernal, for example). Congratulations on 746 Kansas, sir.
    “to me, you’re the guy who ruins every thread with his snark but doesn’t ever say anything useful.”
    Yeah, exactly, if fluj/anonn spent more time actually providing useful posts instead of trolling others, the quality of threads like this would be far better. You have to remember this whole thing started when someone ridiculed the basement-dwelling architect (and rightfully so) and then fluj trolled them about it. It would be better to disagree and give a substantive reason, rather than reply with all snark.
    To get back to the point, some of these discussions like the one about Potrero Hill would work a lot better if we had more open data sources. Some specialized bloggers have been open in providing lots of data, but they typically work over smaller areas/populations than the city of SF, as you might guess. I guess it’s hard to monetize this market.
    By the way, since we’re talking about Potrero Hill, was 1151 De Haro an apple? It doesn’t look like it. It sold $50K above the prior 2004 sale, and it has been on the market and sold way too many times in the last 11 years.

  63. Posted by tc_sf

    “You have to remember this whole thing started when someone ridiculed the basement-dwelling architect (and rightfully so) and then fluj trolled them about it.”
    And specially called out the Trulia data which turned out to be useless! Of the 7 SFR data points how many even had accurate/listed sqft??
    “and ignoring the Trulia data is so typical. You looooove Trulia when it suits you. ”

  64. Posted by dB

    “Everybody else is cool with me nowadays.”
    I assume that’s being said in good humor, but speak for yourself. I haven’t tuned in here for 4 or 5 months and see that nothing has changed on the comment boards -and that’s going back several years (and several incarnations of fluj’s moniker).
    You both (tip/fluj) could stand to tone it down a bit and work on your ability to see in “greyscale”, but I’m likely going continue to give less cred to the hyper-defensive cheerleader whose stake is in the overall biz.
    -Not that the “mawkish” bear comes off as all that credible either.

  65. Posted by [anon.ed]

    “when he might have a financial interest (see older threads on Miraloma and Bernal, for example). Congratulations on …., sir”
    Thanks. But heh. Not really, sfrenegade. That was just a comical little ironic background, if you examine the timing.

  66. Posted by [anon.ed]

    “someone ridiculed the basement-dwelling architect (and rightfully so) ”
    What did you find so righteous about that behavior?
    And as for the limited data points, so what? That’s the way it is. You work with the recent comps. They don’t have to be apples. They just have to be fairly current. That’s the way the actual real estate market works, and I’m sorry but that’s obvious. You cannot always slap a perfect dataset analysis onto the market.

  67. Posted by [anon.ed]

    “I assume that’s being said in good humor, but speak for yourself. I haven’t tuned in here for 4 or 5 months and see that nothing has changed on the comment boards -and that’s going back several years (and several incarnations”
    Plenty has changed. But to each his own. I can’t say I particularly remember you, but it’s all good.

  68. Posted by [anon.ed]

    “On a serious note, there seems to be an article of faith that condos and SFHs are apples and oranges.

    Are you being serious?

  69. Posted by sfrenegade

    “And as for the limited data points, so what?”
    I have no problem with limited data points. It just be nice for the data points to be more easily available. It helps isolate things like mix and gives a much better feeling for the data than useless figures like median.

  70. Posted by [anon.ed]

    I totally agree. But in a market like Potrero Hill there simply isn’t enough stock for there to ever be the amount of turnover necessary for a proper dataset in any given quarter.

  71. Posted by tc_sf

    “You work with the recent comps. ”
    How do you know that whatever fraction of the 7 sales had accurate sqft data are actually comparable to whatever sales occurred in the year ago period? For that matter, the article isn’t even specific as to the Trulia data referring to SFRs.
    This thread was previously somewhat pointless, but now that you’ve been exposed as just being a salesman boosting an area this does show people the way the actual real estate market works. Although probably not in the way that you intended.
    Just as a good take home from the story of the basement dwelling architect would be that if you’re basing your life plan on some IPO it would behoove you to do some digging into the S-1. Prospective home buyers should read this as a cautionary tale about the “information” fed to them by an agent vs just doing some legwork on redfin/propertyshark. Consider that even if you make errors, you’d expect them to be unbiased errors.
    There are real bulls who actually believe in and know about areas & companies and there are boosters who’ll say anything for a commission. Caveat emptor!

  72. Posted by sparky-b

    tc_sf,
    What in the world are you talking about? Salesman boosting an area? The listing he had closed already, do you think that he was really boosting a place on SS and got an offer which closed the next day. NO, it was a done deal already.

  73. Posted by tc_sf

    “The listing he had closed already,”
    What’s the chance that he has no other listings or prospective listings in the area?

  74. Posted by [anon.ed]

    “There are real bulls who actually believe in and know about areas & companies and there are boosters who’ll say anything for a commission. Caveat emptor!”
    Uh huh. There are also internet posters who only know how to write one way, negatively, using cliche after cliche such as you did just there, and there are people who have loads of real experience.
    TC_SF, you are in need of remedial instruction daily. Yet you are also smug. What a strange combination. Today with the “people take condos and SFRs as apples and oranges, why?” Using Case Shiller’s non-San Francisco measuring data as example. So there we see that you do not grasp that condos in outlying areas are very much taking imbalanced hits. But it doesn’t matter that you showcase your lack of knowledge daily. Because what you want to do on here is you want to talk about big losses in SFRE. Period. Well, you like to weigh in on economics in other threads. But when it comes to SFRE, you only want to talk loss. You’re actually asking if condos and SFRs are apples and oranges based upon loss percentages, as if there aren’t myriad real life factors in play, such as being reliant upon other human beings, or not.
    I know what the square footage of properties I need to know about are like because I visit the properties. I study local markets, closely, and in person. I’m boosting nothing, the property was already sold when you and your pals were waxing incorrect, as usual. I knew that any number of posters would notice that one. There’s no exposing happening. It is what it is. I’ve made the point about what’s going on in Potrero Hill many times in this forum over the past few years. The City has decided to surround Potrero’s north and eastern reaches with gentrifying conditions. The south part, too. The Rebuild Potrero Potrero Annex project has hit a delay, but lots of time, effort and money have been poured into it, including an ongoing environmental review, so it’s far from dead in the water. Once it goes into place, it would make for a complete encircling of gentrification. It’s not any sort of secret, what’s going on over there.
    And you must think your fellow Socketsite posters are simple. Because it’s so telling when you don’t object to blatantly incorrect data points being inserted such as the 800 block Kansas property yesterday, an intra-family estate sort of deal. You’d rip me, for example, apart for such a thing. Basically, you are not interested in balanced discussion. You want to say what you want to say, only.

  75. Posted by [anon.ed]

    Do you really think that somebody can boost an area on a blog, to any sort of effect? A part of town?
    Again, it’s not a secret what the City has chosen to do regarding Potrero Hill, the Design district, Dogpatch, the Central Waterfront, or the Rebuild Potrero project. (Nor are the ease of getting onto 280 or Caltrain nonfactors.) These news items have all been featured on Socketsite, and you can see my posts in those threads usually. Now, do I think that Potrero Hill will continue to gentrify? And that now might be a good time to get in, for the reasons I’ve mentioned? Yes, I do think that. It’s my opinion, and I’m far from alone in having it.

  76. Posted by tc_sf

    “But when it comes to SFRE, you only want to talk loss. ”
    There are two narratives at work here. There’s a largely credit driven bubble and bust which is now producing losses, but will eventually end. There’s also an exposure of the practices and character of the RE industry (DOM, price/list, photoshopping, boosting, “creative” stats,…) The key takeaway about the losses featured here is not that real estate will forever decline (which it won’t), but the extent to which boosters will go to deny the losses.
    As Buffett says, “Only when the tide is out can you tell who is swimming naked”. People will undoubtably be more prone to overlook boosterism and deception when money is being made, but that is a bug not a feature. All the Ponzi schemers who got caught after the market downturn were no more honest when times were flush. Madeoff won’t be let out of jail when the dow hits 15k!
    If you feel that your words are representative of retail RE industry “knowledge” then we are in agreement on that point. People are free to read them and draw their own conclusions.

  77. Posted by [anon.ed]

    “There’s also an exposure of the practices and character of the RE industry (DOM, price/list, photoshopping, boosting, “creative” stats,…) The key takeaway about the losses featured here is not that real estate will forever decline (which it won’t), but the extent to which boosters will go to deny the losses.”
    Straw man city. Hate to use that cliche’d term, but really now. None of that has nothing to do with anything I’ve said. The only languabe that might be construed as “booster” language I employed was today, and in the last 20 minutes or so. Look, what’s going on with better (and I should say ONLY North Slope) properties is quite real. Half of the 2M sales in Potrero Hill since 2004 have happened post-crash. That’s not at all in keeping with how the Prestige Index curve looks. Small dataset, again, 5 of 10, but counterintuitive to say the least. Why? Because of the factors I’ve previously mentioned IMO.

  78. Posted by [anon.ed]

    none … anything

  79. Posted by sfrenegade

    Can I ask an honest question, fluj? You constantly make statements like this:

    Half of the 2M sales in Potrero Hill since 2004 have happened post-crash. That’s not at all in keeping with how the Prestige Index curve looks. Small dataset, again, 5 of 10, but counterintuitive to say the least. Why?

    The form of the argument you often make is: “A of the B sales for $CM have been made since D year.” Sometimes it’s something more like “there have only been E sales for $FM since G year.”
    Will you explain why that’s counterintuitive? Inflation plus massive amounts of remodeling mean that shitbox Victorians that previously sold for much cheaper can sometimes become $2M houses (or whatever arbitrary threshold you pick). This is not counterintuitive in a city where people are constantly rebuilding old housing stock and occasionally making old piddly housing stock into massive 4 story houses. That’s why we talk about apples.
    The reason it doesn’t match the Prestige Index curve is probably because those houses weren’t Prestige Index eligible before.
    Anyway, timing notwithstanding, just pointed out 746 Kansas because this is at least the third time you have been boosting a neighborhood where you or your partners are currently spec-ing a place. I’m not surprised, and no one else should be either because it has happened several times now. You’ve been involved in some good projects that were smart, and this stuff should be below you. I get it, everyone talks their book.

  80. Posted by anon.ed

    I didn’t steer the conversation toward Potrero Hill, sfrenegade. It went there because of the article that I didn’t bring up. Inflation? That’s your response? Just slapping the CPI onto local RE? Fine. That’s one way of looking at things, I guess. Even though we could pick apart millions of things that probably actually cost less nowadays due to internet commerce. Not to mention that the notion of 2M potrero re is still not widely accepted, most folks feeling as if it would have been boom behavior solely, probably. You want to read positive comment from someone you know to be a realtor as boosting, because you are cynical. That’s OK. A degree of cynicism is healthy. But that’s how I feel about the trends in Potrero Hill, honestly. And trust that if the project you reference was speculative + yours truly, we would have gone bigger. Don’t assume.

  81. Posted by The Milkshake of Despair

    Inflation/CPI is the smaller of the factors that sfrenegade mentions. Massive investment in teardowns/remodels are what produce $2M sales. Rarely does a hundred year old house that hasn’t been upgraded get that price. Has that ever happened on Potrero?

  82. Posted by [anon.ed]

    You guys discount massive remodels for some reason not based in reality. Entertain the notion that a part of town that wasn’t worthy of such maneuvers, now is. Yes, apples are an ideal way to evaluate real estate. Yes, Shiller was onto something there. Whoop dee FREAKIN doo.

  83. Posted by sfrenegade

    “Inflation/CPI is the smaller of the factors that sfrenegade mentions.”
    Yeah, exactly. Weird for fluj to ignore the majority what I said in favor of what he wanted to get on a soapbox about. On second thought, not that weird. Inflation makes $1.6-1.8M houses into $2M houses. Remodeling makes Victorian shacks into $2M houses. The latter is quite obviously the bigger factor.
    The issue is not discounting massive rebuilds, but that they do distort traditional metrics. It’s not even that Potrero Hill wasn’t worthy of such maneuvers before — we did all see the late opera singer’s house, right? That was completed before the arbitrary 2004 mark, even if it sold last year. There are probably several more that were not quite $2M houses in the past, but now might very well be.

  84. Posted by [anon.ed]

    “Inflation makes $1.6-1.8M houses into $2M houses.”
    The late opera singer’s house was a fixer! A fixer with good bones, but a fixer. You kinda just made my point for me unwittingly. Did you see it in person? I did. Some of my best pals live on that block. We laughed about it. Would you be interested in seeing the percentage of 1.5M and higher sales since the market’s shift? I didn’t ignore either thing you said. I addressed them both, in separate posts.

  85. Posted by sfrenegade

    “The late opera singer’s house was a fixer! A fixer with good bones, but a fixer. You kinda just made my point for me unwittingly. Did you see it in person? I did. Some of my best pals live on that block. We laughed about it. Would you be interested in seeing the percentage of 1.5M and higher sales since the market’s shift?”
    That doesn’t really make your point, and it doesn’t matter that you laughed at it. Yes, I did see it. Anyway, I’m not really sure what you’re arguing any more. The remodel issue makes your point largely irrelevant as I said, and you haven’t said anything to refute that.
    Sure, I’d love to see any relevant stats you’re willing to give.

  86. Posted by EBGuy

    Fluj, no wonder you are so giddy (I somehow managed to miss the listing). Congrats to sparky-b on another job well done. For once, I’m not going to bet against you on your next list (although kamikaze pricing makes it difficult to tell if you’ve hit the ‘target’). Starting to the the Day light (everyone else should take this as a bearish sign. Help, I’ve been seduced by the dark side…)

  87. Posted by [anon.ed]

    Dude, it’s understood that remodels distort metrics. But that doesn’t bear upon the actual marketplace, only a statistical understanding of the marketplace. What happens daily, what might sell for what, who is in a marketplace at any given time, these are things that apples to apples often won’t speak to. Heck, for many, many reasons, remodels make up the marketplace in SF. That’s another reason of what’s fundamentally flawed about using Shiller to evaluate SF.

  88. Posted by [anon.ed]

    “(although kamikaze pricing makes it difficult to tell if you’ve hit the ‘target’). ”
    You’ve never displayed an ability to gauge the marketplace, bud. And you can knock off the wink wink innuendo at any given moment, non-peer + non-pal that you are. I’ve invited you numerous times to ask me questions offline. You haven’t done it because you’d rather show off for other internet-only types. So be it.

  89. Posted by [anon.ed]

    That said^, certainly
    I appreciate a good
    V.U. reference

  90. Posted by EBGuy

    I admit “kamikaze pricing” is a bit snarky, but I’m assuming there is a strategy backing it up. It produced an impressive result in the Valley and made enough of an impression on me that if I were to list tomorrow, I would do something similar. (Although I admit I might have a hard time not pulling up on the joystick when getting really near the target. Probably much easier for an investor to do than a homeowner who is emotionally wedded to their property.) We’ll disagree on many things, but believe me, I’ve learned a lot seeing how you guys operate.

  91. Posted by Sparky-b

    Ebguy, I will gladly accept your congratulations. Thanks

  92. Posted by NoeValleyJim

    This is most of the Noe apples from the last six months. I try to keep track of all of them as they come on the market, but I have been busy lately so I might have missed a few.
    350 Valley – $1,460k in 2011
    $1,234k in 2003
    1406 Sanchez – $1,000k in 2011
    $1,110k in 2006
    16 28th St – $1,076k in 2011
    $1,003k in 2009
    $1,000k in 2005
    444 30th St – $1,280k in 2011
    $1,376k in 2008
    $855k in 2003
    4027 Cesar Chavez St – $1,650k in 2011
    $1,650k in 2007
    780 Elizabeth St – $1,500k in 2011
    $1,550k in 2007
    $1,525k in 2005
    1844 Church – $825k in 2011
    $702k in 2003
    I removed a few where a records check showed that remodeling had been done, so these are good “apples” at least according to the online DBI records. A few had new windows or a roof or other minor repairs.
    16 28th Street has a permit issued for an extensive remodel, but the listing states that it has “approved plans for expansion and modifications available” and the photos appear to be of an unremodeled home.
    444 30th Street had a sewer line repaired after a neighbor complained about a sewer leak.
    4027 Cesar Chavez had some work done by the new owner, after the sale.
    I pulled 111 Hoffman from the apples list because it had a major remodel. Ironically it has the largest drop of any of the group.
    How anyone can look at this collection of data and make the straight faced claim that Noe prices are under 2003 prices is beyond me.

  93. Posted by [anon.ed]

    OK EB. We’re cool. I’d call it more izakaya pricing than kamakaze, so that’s indeed where you threw me.

  94. Posted by EBGuy

    Now back to our regularly scheduled programming. The August-September (percentage) drop in the SF Bay Area CS Index is the largest on record save for the freefall in 2008. We should be hitting new relative lows come January.

  95. Posted by tipster

    Some of these back and forth discussions are way over my head. Starting with this one. What is kamakaze/izakaya pricing?

  96. Posted by [anon.ed]

    It’s all karate, Tipster.

  97. Posted by tc_sf

    LPS Data shows 1.2% MoM decline in national Sept data, early prediction of 1.1% MoM decline in October.
    Most interesting though is how they shed some light on the geographic distribution of price changes:
    “Price changes were consistent across the country during September, declining in all ZIP codes in the LPS HPI (Figure 2). Higher-priced homes had somewhat smaller declines: -1.2% percent for the top 20 percent of homes (prices above $317,000), compared to -1.4 percent for the bottom 20 percent (below $102,000).

    Basically in their histogram price changes by zip were clustered from -2% to just below flat.
    Zips aren’t neighborhoods and as NVJ’s data above shows there can be wide variances within a region. (i.e. No Zip showing appreciation is not the same as saying no house saw appreciation)
    Pittsburg seems to really win the “it’s different here” prize!
    http://www.lpsvcs.com/LPSCorporateInformation/NewsRoom/Pages/20111205.aspx

  98. Posted by The Milkshake of Despair

    Hey, nice usage of Tufte’s sparklines on that link you provided tc_sf.
    Yeah, Pittsburgh is really different. Initially depressed by the low environmental quality created by the smoke belching steel industry it suffered a second hit when the mills closed down in the 80s. Half the city lost their jobs, further depressing home prices. Now that the city is finding new industries (medical, tech) it really has no-where to go but up. A friend of mine bought a grand three story home for a pittance in 09 and it was even in a good neighborhood near transportation and amenities. Its a weird city though. You can buy wine only in a few grocery stores and even then via a vending machine that will loudly announce that you need to take a breathalyzer test before dispensing your bottle of Chardonnay.
    Detroit’s leadership should look towards Pittsburgh for ideas on how to bootstrap themselves out of the abyss.

  99. Posted by tc_sf

    “Hey, nice usage of Tufte’s sparklines on that link you provided tc_sf.”
    Exactly. I was first skimming the numbers in the table and saw that Pittsburg was only down 1.6% from Peak. Seemed odd, but had the sparklines not been there I would have completely missed the fact that the peak for Pittsburg was only months ago!!
    I follow data for a few markets, but had never really looked at Pittsburg much before. This does make me want to take a closer look.

  100. Posted by tc_sf

    CoreLogic reports a national -1.3% MoM for October.
    Noteable that now there are a number of repeat sales indices and they seem not to diverge that much from each other.
    SF MSA Oct vs 6mo prior -2.63%, ex-distressed -0.33%
    YoY -3.7%, ex-distressed +1.36%

  101. Posted by A.T.

    I see Zynga is at a new post-IPO low. That unemployed architect better just take on another boarder.

  102. Posted by sparky-b

    ^^^^
    Carpenter is a pay raise from junior architect.

  103. Posted by sparky-b

    tipster is the guy to worry about. He has his whole nest egg in Zynga.

  104. Posted by A.T.

    And a carpenter should earn more than a junior architect.
    But if by working as a carpenter this guy still has to live in his basement and take on boarders to make ends meet, then he was really stretching on an architect income. Ahh, the good times of 2007 when anyone could get a million dollar loan and prices only went up.

  105. Posted by [anon.ed]

    As if you had considered that fact when you made your snide remark. Following it up with more rote snideness doesn’t squirm you off that hook.

  106. Posted by A.T.

    Ah, li’l flujie, let me explain to you how sarcasm works.
    See, the fact that the guy was an architect, but is now a carpenter but forced to live in the basement and take on boarders, is pretty decent evidence that he is not, in fact, earning more money as a carpenter than he did as an architect.
    But let’s assume he does! Well if he is forced to live in the basement and take on boarders to make ends meet on his higher carpenter salary, then ipso facto he was in even worse shape on his lower architect salary.
    See how much pithier that point can be made with a bit of sarcasm? You get one unit of English credit for that lesson – gratis. Congratulations!

  107. Posted by [anon.ed]

    Let me explain something to you about sarcasm, bud. It’s the lowest form of wit and it’s best utilized in person so that inflection can come into play. But that said, of course I knew you were being sarcastic. That doesn’t change the fact that you were stretching.
    In fact, it doesn’t mask the fact that you don’t know anything about the guy. You’re sitting there going “basement this, basement that.” Like it sucks. But the guy’s got skills. You don’t know that he didn’t hook up the basement apartment really nicely in the first place. And you certainly didn’t consider that as a carpenter he makes more than he would have as a junior architect. I mean, there you are trying to rationalize your initial statement, which was countered, and which you agreed to after the counter. So yeah, squirm + hook was fitting.

  108. Posted by A.T.

    Ahh, I should have realized that taking in roommates and living in the basement after being laid off is what he prefers! And he must be earning more money now because, you know, now he gets to live his preferred basement-dwelling lifestyle while his new boarders live above-ground. By assuming otherwise I was “stretching.”
    By the way, that’s more sarcasm. And I’m taking away your credit as you did not grasp the lesson.

  109. Posted by [anon.ed]

    Sarcastically punch your way out of whatever paper bag you put over your own head, bro. Sarcasm remains what it is. And that’s an easy little thing.

  110. Posted by [anon.ed]

    Seems like ZYNGA is going to climb after all. We’ll see. Wonder whether the CW at Zynga HQ was, “Just wait until the Facebook filing.”

  111. Posted by lol

    I hope tipster didn’t sell all his ZNGA stock at the bottom. It wouldn’t be the first time he throws in the towel at the beginning of the first round.

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