From Bloomberg with respect to the National Association of Realtors revised figures for existing homes sales over the past four years:

The number of existing homes sold in the U.S. was revised down by an average 14 percent since 2007, magnifying the depth of the slump that contributed to the last recession.

Purchases were revised to 4.19 million for 2010, down 15 percent from a prior estimate of 4.91 million, the National Association of Realtors said today in Washington. Sales climbed 4 percent in November to a 4.42 million annual pace, from a revised 4.25 million rate the prior month that reflected the benchmark updates.

Purchases were trimmed by 11 percent for 2007, by 16 percent in 2008 and by 16 percent in 2009.

Revisions to downward median price trends were little changed. And to quote NAR’s chief economist, “even before the revisions things were bad, now they are even worse.”
U.S. Existing Homes Sold Since ’07 Revised Down by 14% [Bloomberg]
Existing-Home Sales Continue to Climb in November [NAR]
Demand Up, Supply Down, And Yet The Median Falls? [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by polip

    By all means, the NAR is a joke.
    But…
    the real story is declining inventory and falling months of supply – not the previous depths of housing slump – that’s over
    shadow inventory will keep home prices from appreciatng, much, but the falling inventory/mos of supply is the real stroy in this NAR revision
    Permabears and Permabulls are always wrong more than they are right…
    [Editor’s Note: From NAR:

    Although rebenchmarking resulted in lower adjustments to several years of home sales data, the month-to-month characterization of market conditions did not change. There are no changes to home prices or month’s supply.

    Keep in mind that seasonal drops in “months of supply” are to be expected. And stay tuned for why declining inventory might not be as bullish an indicator as in years past.]

  2. Posted by polip

    From CR:
    http://www.calculatedriskblog.com/2011/12/existing-home-sales-in-november-442.html
    The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
    Inventory decreased 18.1% year-over-year in November from November 2010. This is the ninth consecutive month with a YoY decrease in inventory.
    Months of supply decreased to 7.0 months in November, down from 7.7 months in October.
    _____________________________________________
    Oh, and I agree that the declining YOY inventory might not be AS bullish as in years past.
    Nevertheless, can we agree that declining UE, declining YOY inventory, declining YOY months of supply are not Bearish?
    Shadow inventory which will dribble in is the main reason why prices will remain in check – with minimal nominal price appreciation, likely for years. I’d venture to guess though, that in most markets, the wooshing sound of the crash is all but over.
    [Editor’s Note: Be sure you’re looking at revised to revised months of inventory calculations and graphs as NAR revised their inventory figures as well. And the million dollar question to ask, what’s driving the drop in listed inventory?]

  3. Posted by polip

    CR is looking at the revised numbers on inventory/months of supply, so am I (again via CR): “According to the NAR, inventory decreased to 2.58 million in November from 2.74 million in October (revised). This is the lowest level of inventory since July 2005.”
    yes, it’s a trillion not milion dollar question, but again, this change in months of supply, and inventroy is not ocurring in a vacuum. Most high frequency economic indicators for the US are pointing up, modestly. Housing usually leads a recovery, but he bust made this a bit different.
    I would submit the answer to the question is rather straighforward.
    Home building is depressed, and will remain so for years. Hosehold formation is rising slowly as UE drops slowly. Housing units are being absorbed to rentals slowly. Foreclosures are being held back due to legal issues and banks trying to avoid marking losses to market (ie turning collateral to cash). Finally, ‘optional’ sellers are holding back on placng their units on the market until ‘things improve.’ It is these last 2 factors which are the big unknown, and will keep prices in check as they remain very signficant.
    But as far as numbers – pretend they don’t exist if you like, but they are far from bearish…
    [Editor’s Note: We’re not sure what numbers we’re pretending don’t exist, but let’s put this another way, would you characterize a market in which home values appear to be dropping despite a drop in listed inventory (supply) as being “far from bearish?”]

  4. Posted by badlydrawnbear

    I too am a big fan of CR, they did an excellent job of explaining the bubble prior to it’s bursting and have done a excellent job of explaining a number of key economic indicators.
    The inventory numbers are better, and housing does seem to be finding a floor (although it does appear to just be drifting sideways).
    As far as being ‘bullish’ on the inventory numbers CR is good to point out that “In an earlier release this morning, CoreLogic estimated the shadow inventory as 1.6 million units.
    CoreLogic … reported today that the current residential shadow inventory as of October 2011 remained at 1.6 million units, representing a supply of 5 months.”
    So while the official MoS stands at 7 months (and improving) there is still a huge shadow inventory that will continue to put downward pressure on prices for the foreseeable future.
    So while housing numbers are improving, we appear to still have a long way to go.

  5. Posted by polip

    @bdb – I agree completely
    @ed. – the point is to look at the leading indicators. prices have fallen a ton. I don’t expect them to fall ‘much’ more nationally IF the MOS and inventory numbers are accurate
    MOS and inventory rose in 2005 – the crash followed.
    MOS and inventory are falling now (but will not fall much more if at all due to the shadow inventory out there) – I would not expect a second leg of the crash to follow this leading data. Sideways – yes, by all means.
    The leading data is not bearish for housing. That was my point.
    [Editor’s Note: We missed the part where we said crash, but keep in mind that at while listed months of inventory has fallen 37 percent year-over-year, the median sale price has fallen 3.5 percent even as the mix of distressed sales has declined from 33 to 29 percent.
    Now back to our point, which is that declines in listed inventories (both across the U.S. as well as locally) might be more misleading, rather than leading, indicators with respect to the strength of the housing market today.]

  6. Posted by A.T.

    polip’s got it right, I think. This is why I said in another thread that I thought the crashing and burning (in SF and more widely) was over and that were were now in slow steady decline mode. Inventory is a key factor, but it is hard to measure and prone to lots of subjective truing up or down. The other key indicator is sales volume, which is a firmer number (except when provided by the NAR!). I’m betting that when nationwide annual sales volume climbs back over 5 or 5.5 million, that’s when we will see home prices begin to rise at least as fast as inflation. It’s been stuck at 4-4.5 million. Same for SF when annual listed sales volume gets back over about 5500 or 6000.

  7. Posted by [anon.ed]

    “in slow steady decline mode.”
    But you’re alone there. Everybody else, bears, bulls, what have you, are saying scuttling along sideways with some ups and downs. Not you though. You need to fake like you’re in agreement but still insert polemic in the form of “steady decline.”

  8. Posted by eddy

    Some time ago I took a historical look at inventory and supply for Prime SF. The conclusion I came away with was that there was not much insight to be gained from the data. The thesis is that lower inventory / months supply leads to rising prices and the converse. This is generally true nationally. It seemed to me that the data was somewhat arbitrary with a relatively stable demand. The exception were the bubble (06-08) years where extremely high demand coupled with low inventory drew insane competition and overbids. We see that all the time here. So on some level I am highly interested in general inventory. These days I find the market to be pretty efficient and homes seem to be trading at fair values.
    Looking forward to seeing Adams thoughts on inventory. It would be nice to get some sort of explanation for why we lost the standard SS Inventory Update. July was the last I believe.
    http://www.socketsite.com/archives/2011/07/san_francisco_listed_housing_inventory_update_july_5_20.html
    [Editor’s Note: In terms of local listed inventory, it’s currently running 35 percent lower year over year. And stay tuned, our inventory report is returning in the new year.]

  9. Posted by A.T.

    flujie, oh ye of the “SF won’t ever take a hit” mentality, if even you are conceding that SF is “scuttling along sideways,” then we know we are still seeing further declines!

  10. Posted by lyqwyd

    @polip
    “Housing usually leads a recovery”
    Housing starts is considered a leading indicator, but I believe housing sales & prices are trailing indicators.

  11. Posted by anon.ed

    “Won’t ever take a hit mentality” — that has been talked/gloated/owned/debunked/decontextualized to death on here. But even at face value, it was 3+ years ago. God forbid someone changing his or her mind, or talking anew with a different mindset. For, like, years. Always always with the 2009-ish “gotcha” mindset. There is simply no end to your utter fakeness, is there ?

  12. Posted by polip

    @lyqwyd – correct
    housing starts can’t recover until excess inventory is absorbed, and until house prices recover so that new homes can be bulit and sold at a price that compares favorably with exisiting homes – darn enar impossible at current distressed prices in much of the country
    to be clear – my original point was that the NAR revisions were not actually bearish for housing (forward looking). rather they were bullish, with lots of caveats (shadow inventory being the biggest).
    housing starts are improving, but will remain depressed for years. likewise our economic recovery will remain muted for years.
    the issue is the trend. if inventory remains down/falling and MOS stays down/falling, then new home starts are likely to rise, which is a pro-cyclical feedback loop to economic recovery and home prices…

  13. Posted by lol

    ^^^ Yeah, the “Broken Clock Gang”. They were right 2 years ago, justifiably so. Now they’re just waiting to be proven right again, even if it takes a full 10 or 15-year cycle to do so. It’s nice to have that much time…

  14. Posted by eddy

    2010 ended with inventory running at 1069 so that -35% would be right around ~700 so that’s probably right around or below the lowest levels since 2006. Most people would assume that high inventory would equal lower prices; and low inventory would equal higher prices. I’m sure the data shows decreasing prices; but we’ve been seeing stable demand. Recently and purely anecdotally, I’ve noticed a big tick down in sales activity beyond normal seasonal adjustments. So that is something I keep an eye on and would like to see more real time data. But the one thing I’d like to find is my analysis on inventory. I had data going back to before 2006 and I seem to remember the inventory levels fluctuating wildly with low / high levels showing both price increases and decreases.
    PS: I liked my comment about line colors! :)

  15. Posted by futurist

    Noe Valley home prices were up 12% over last year.

  16. Posted by Brahma (incensed renter)

    eddy, why don’t you provide or post or point us to the official San Francisco Association of Realtors definition of “Prime SF” so that we can all be on the same page?
    From what I’ve seen over the last few years on socketsite, the permabulls define “Prime SF” or “The Real SF” or whatever in terms of which districts feature sales data that supports their permabullish thesis that month.

  17. Posted by anon.ed

    “The Real SF” is another thing that no bull has said in YEARS. (Or ever even said?)

  18. Posted by Brahma (incensed renter)

    anon.ed wrote:

    “The Real SF” is another thing that no bull has said in YEARS. (Or ever even said?)

    Okay. From the thread on 900 Bush Street Penthouse Number 5, seventy days ago:

    This is the EXACT kind of place that would fall 30% to 40% from the peak. And the Arguello flash back comment is the kind of thing that is probably down 10-15%.

    If you are a buyer, and see this kind of price decline and are now licking your chops that you can get a similar price decline in “real SF” you are in for a rude awakening.

    Emphasis added to the relevant part of the sentence. Or, from the thread about the most recent sale of the Pacific Heights mansion on Billionaire’s Row, one hundred ten days ago:

    I’m sorry, but this house is not in the Real SF

    And that’s just going off of what I remember reading. I’m sure there’s better examples out there.

  19. Posted by anon.ed

    Ha. OK, Brahma. Point.
    Now a count + comparison between derogatory mocking bear usage and earnest bull usage. If you please?
    J/k

  20. Posted by Delancey

    The “real SF” always seemed by implication to be north of California and above the bum line, with a varying number of exclusions based on the seller having overpaid.

  21. Posted by lol

    Overpaying does happen!
    A friend got caught up into a Johneses fight over a condo in primo-SF in 2007, paying 10% more than asking. He moved up not long ago, selling at a 10% loss including commission. The 10% overbid was solely due to a second buyer who kept counter-bidding. Hadn’t there been this second party, this friend would be breaking even today. It doesn’t take much to get an outlier. They were more common in 2007 than today.

  22. Posted by The Milkshake of Despair

    “Noe Valley home prices were up 12% over last year.”
    That’s the whole mix, not just apples, right? If so then 12% isn’t really a sign of strength in one of SF’s hotspots for development investment. Small dilapidated shacks are still being converted into 3000+sq.ft. “new homes” there.

  23. Posted by Brahma (incensed renter)

    I realize that it’s difficult to believe, but my comment at 1:22 PM wasn’t intended to be snarky or sarcastic, it was sincere. Again, just going off of what I recall offhand, I believe it was 45yo hipster who said The Real SF or SF Proper or SF prime or whatever we’re calling this was geographical S.F. minus District 10 and minus SOMA condos. Others have limited it to Noe Valley and some adjacent neighborhoods. A real estate agent that I’m acquainted with that I ran into at Peet’s the other week and doesn’t apparently read socketsite said that districts 3, 10 and 11 weren’t part of it. And so on.
    the geographical portion of Delancey’s version above sounds interesting but I’d need help identifying what “the bum line” refers to…Market Street as the border of The Tenderloin?
    Some specificity would allow us all to talk about what’s going on without one side or another moving the goalposts during the game.

  24. Posted by REpornaddict

    So editor, why was the bi-monthly inventory report pulled, and why the decision to re-instate it in the New Year…?

  25. Posted by [anon.ed]

    “That’s the whole mix, not just apples, right? If so then 12% isn’t really a sign of strength in one of SF’s hotspots for development investment. Small dilapidated shacks are still being converted into 3000+sq.ft. “new homes” there”
    This sort of pretzel logic exists only on message boards.

  26. Posted by missiondweller

    “Permabears and Permabulls are always wrong more than they are right…”
    Yeah, tell that to someone in Japan who’s watched their real estate go down for 20 years.
    Our economy now is looking an awful lot like Japan’s.
    Its called deflation.

  27. Posted by futurist

    I’m just wondering where this entire “real SF” ideology comes from..and does it really matter?
    No.
    And, imo, regardless of the whole mix or “apples”, prices are up in Noe. And that is also good for Bernal, Mission/Valencia and other close ‘hoods.

  28. Posted by The Milkshake of Despair

    Kein Bretzellogik anon.ed. Its really quite simple. Consider market strength as appreciation. The sales price of a home is its basic purchase value plus appreciation plus improvements. I’m simplifying of course but hopefully you get the basic idea.
    So if average homes sold include about 15% improvements and the market is up by 12% then where did the other 3% go? Negative appreciation.
    If that example is too subtle consider this ridiculous extreme: Say every home sold was an apple and included a free stack of $500,000 moolah with the purchase and buyers knew they were receiving this rebate. Naturally sales would be up around $500K per home during that period. But does that mean that each home appreciated $500K?
    Buyers appreciate the difference between a run down home and a freshly renovated place and are willing to pay more for it. That renovation didn’t come free though. It isn’t appreciation and doesn’t reflect on the strength of the market.

  29. Posted by [anon.ed]

    I disagree because remodeling is a constant. That sort of building has been going on in Noe Valley year in, and year out, for some time now. Last year what once were shacks sold for 2M+. This year what once were shacks sold for 2M+ and apparently a bit more. (But I have not seen the report this supposed 12% gain came from, but it’s the third time I’ve heard it.) Anybody?

  30. Posted by [anon.ed]

    Also, what of the shacks themselves? The fixer that sold this year that somebody is going to pull a big permit on, and the fixer somebody bought last year that’s currently being worked on. Same thing. If you have to have the exact same house in order to gauge the market then guess what? You can’t gauge the market and you never will, because you’ll never get your head around any market at any given time. Sorry. Apples are perfect and all but you work with what you have.

  31. Posted by fancy rental

    scuttling along sideways *is* a slow steady decline, after inflation.

  32. Posted by Spencer

    can someone provide evidence that Noe Valley prices are up? i have been looking in the area. Most of the places are priced around 2004 levels. maybe that’s up from last year, but i doubt it.
    the real sf was coined by fluj. When someone countered his permabull response with an apple that went against his point, his response was “that’s not even the real SF”
    then the “real sf” got debated in earnest. then it turned into a joke, which was pretty funny IMHO

  33. Posted by [anon.ed]

    the real sf was coined by fluj. When someone countered his permabull response with an apple that went against his point, his response was “that’s not even the real SF”

    naaaah. Find it, or else relegate that one to the 3br 2 ba Pac Heights view house for two bits pile.

  34. Posted by tipster

    I can confirm fluj did not originate that term.
    See the first two posts in this thread:
    http://www.socketsite.com/archives/2008/07/lets_see_drop_the_k_and_carry_the_s.html

  35. Posted by The Milkshake of Despair

    anon.ed – External value is being injected into the market in the form of developer cost + developer premium/profit. That value in turn comes out every year, year after year, as increased sales prices. There’s a reverse trend of physical decay that counteracts improvement though decay isn’t as large as improvement in the last couple of decades. My impression is that Noe has been getting on the whole larger and higher quality every year so it makes sense that the average sales price also increases. Compare 1980 Noe to 1990, 2000, and now. Is there a difference in the material value (size, construction quality, newness, etc.) over time? That would affect average price wouldn’t it?
    I’m sorry if I’m not explaining clearly. I’ll follow up if I can come up with a better way to illuminate this phenomenon of how injecting external value affects prices. And that is the key: the value is coming out of the pockets of developers and into neighborhoods. Obviously the developer gets compensated for their investment and then some by their buyer who’s the real source of neighborhood investment.

  36. Posted by [anon.ed]

    My impression is that Noe has been getting on the whole larger and higher quality every year so it makes sense that the average sales price also
    That’s incorrect. You can only do so much with these shells, these lots, and city planning. It’s a constant, the building that’s going on, and that’s where you’re wrong. It’s not about me not understanding you. I understand your point. It is a simple one. But you’re wrong, and I’ve told you why twice now.

  37. Posted by fancy rental

    “prices up 12% this year in noe”, now is that mean or median? is it even true? we need to drill down on this data. if it’s mean obviously the sale of one or two outlier $5MM homes would result in a increase like this.
    but I don’t doubt the strenght of the noe r.e. market. it fits with the anecdotal data. noe is the only microbubble left in sf.

  38. Posted by SomaResident

    I know that prices of Soma condos like the one I own are up 10-20% this year. I think it is all the tech money pouring in.

  39. Posted by A.T.

    Noe valley up 12% in the last year? What’s that from, the Noe Valley Voice, citing averages for one month? SomaResident’s post above is a more reliable source. No need to get into remodels vs. fixers vs. “apples.” That number is just utter B.S.

  40. Posted by tipster

    No, A.T. Prices are up 10-15% in every neighboorhood in which every socketsite poster owns.
    Prices must therefore be down by 800% in Tenderloin Heights or some other neighborhood in which nobody owns so that Redfin’s citywide average can still work out to being down.

  41. Posted by [anon.ed]

    I think I see where they maybe got that 12% stat. For Noe the MLS averages read 113 sales so far this year for $1.446M. Last year was 117 for $1.326M. Looks like about 11 percent, but that’s using average. Median looks similar, 1.35M this year versus 1.218M last year for about 10 percent. So I’m thinking they probably took condos and SFRs, lumped them together, and used either median or average.

  42. Posted by The Milkshake of Despair

    “That’s incorrect. You can only do so much with these shells, these lots, and city planning.”
    Oh c’mon don’t be coy. I know that you know that small original homes are frequently expanded. Some to 2X or greater their original footage.
    Let me ask another queastion: compare the average footage in 1990 to today. Has it increased? Do you think that might have an impact in the rise in average price?

  43. Posted by [anon.ed]

    Of course I know that, and I went there pretty clearly. Let me ask you something. Why do you keep on going back in time so far? The whole point of this conversation is a supposed 2010 versus 2011 gain. Yet you’re on about decades of trends. You’re not even talking past me. You’re talking in another auditorium. The amount of remodeling and redevelopment in Noe has been high for some time now. Not only that, but your other point is offbase. The point is not about being able to assess an individual property’s appreciation or lack thereof. The point is the neigbhorhood’s market as a whole, and what people pay. Not what one house used to be and what it is now minus construction and plus inflation. It’s a constant that remodeling and redeveloping occurs.

  44. Posted by sparky-b

    Milkshake,
    I believe what anon.ed is saying is that about the same amount of shacks are converted every year and the sizes of the conversions are about the same. So the difference between ’10 and ’11 will include those equally.

  45. Posted by tipster

    Sparky, if that were true (i.e. the same amount of remodeling occurs from year to year) then prices could still rise solely from the remodeling, when apples were still flat.
    If that didn’t happen last year, it could be because apples were declining and the remodels balanced them out, but MoD’s point is still valid.
    Nevertheless, Anon.ed has questioned the 12% and no one has cited a source for it, other than an architect living in that neighborhood who makes more money when people remodel their homes in that neighborhood, and people remodel more homes when they think prices are rising.

  46. Posted by Brahma (incensed renter)

    futurist wrote:

    I’m just wondering where this entire “real SF” ideology comes from…and does it really matter?
    No.

    I’m sure we’ll get around to identifying the provenance of the phrase “real SF” later, although my first reaction is that Spencer at 7:36 PM is right.
    As far as it “really mattering”, if the implication that its advocates rely on is correct (and I personally am dubious), of course it matters.
    The Case–Shiller Home Price Index is a moving average. If, for example, substantial and pervasive price declines are overwhelmingly taking place in D10 and prices are flat in other areas of The City and slightly rising in the so-called “real SF”, then it seems to me that you’d get an overall negatively sloped CS index curve (assuming, on top of all the other assumptions, that the common top third tier of the MSA-wide index is a reasonable proxy for the San Francisco as a whole convention is correct), while prices might be rising in what some folks call the “real SF”. So I think the idea is that the index would be misleading you into thinking that prices were generally declining City-wide when those declines were limited geographically.
    tc_sf likes to say that S.F. isn’t some kind of a real estate Lake Wobegon where all properties are above average, but what I think “real SF” advocates hang their hat on is that the below-average and falling sales prices/levels aren’t randomly distributed throughout the city.

  47. Posted by eddy

    @Bhrama, thanks for pointing that out (Real vs. Prime) as there is a difference. And I actually did mean to state “Real”.
    In terms of pointing you towards it: http://www.sfarmls.com/docs/areamaps.htm
    Obviously, there is no SFARMLS definition, but here is my personal definitions (and highly subjective)
    Real = 1,2,5,6,7,8,9 and reluctantly 4
    Prime = 1(C,D,F), 4G, 5(A,B,C,D,E,F), 6C, 7(All), 8(-J/F), 9(A,C,E,F,G)
    There is also a Super Prime subset of Prime. But sometimes that gets down to specific streets / houses. It all micro bro :)
    Actually, the exercise of listing out all of those areas was helpful (to me) as I’ve never really attempted to lay it out like that; and I found myself more inclusive than not. Not sure I would have kept Bernal or Potrero on the list 5 years ago. LPH I was tempted to leave off but there are enough homes in there that qualify as Prime that I felt it fair to include it.
    I think there could be a healthy debate about what is in/out for the purposes of these discussions. Maybe worthy of a holiday thread unto itself just to pass the time.

  48. Posted by [anon.ed]

    “Nevertheless, Anon.ed has questioned the 12% and no one has cited a source for it”
    I submitted what I think might be the answer, at 9:27.

  49. Posted by Rillion

    More tired attempts at flamy snark from Tipster. Many posters will admit their neighborhoods are down, just go look at the property tax assessment threads and you will see lots of posters talking about how their neighborhoods and their properties are down.

  50. Posted by [anon.ed]

    Eddy, no 5K? Liberty Heights is 5K.

  51. Posted by The Milkshake of Despair

    “Why do you keep on going back in time so far?”
    Because the subtle effect of a single year doesn’t seem to be obvious enough. But take two decades, or even one and it becomes really obvious that the housing stock is materially improving due to external investment which is distinct from appreciation.
    If you can see that the housing stock is materially improving over a decade or two time span then it is a rather simple step to see that the same effect is occurring on shorter time spans and at smaller increments.
    It is obvious that the average home sold today contains more floorspace, more garage parking, more bedrooms, more baths, killerer decks, better electrical, plumbing, and network infrastructure, better appliances, newer and higher quality finishes compared to the average home in 1990. This effect still occurs but is less obvious when comparing the average from 2010 to 2011 especially when you’re viewing from the trenches.
    This is why apples are so useful for measuring trends and why basic averages and medians are not so useful in markets like SF that receive large amounts of external investment.

  52. Posted by A.T.

    If D9 is “real” or “prime” then those terms either mean nothing or the decline is now officially throughout SF. Along with D10, D9 has been ground zero for devastating price declines in SF – approaching -50% in cases. We’ve seen nothing like that in D1, 5 or 7 even though there have been some bigger losses in those areas in terms of real dollars gone since prices were higher to begin with.

  53. Posted by sparky-b

    This reminds me of the old: Plan A,B,C,D nieghborhood discussions.

  54. Posted by [anon.ed]

    Why do you keep on going back in time so far?”
    Because the subtle effect of a single year doesn’t seem to be obvious enough. But take two decades, or even one and it becomes really obvious that the housing stock is materially improving due to external investment which is distinct from appreciation.
    Noe Valley was a different animal entirely two decades ago. So was SF. So was tech. So was the notion of commuting southward. ‘Nuff said.
    If you can see that the housing stock is materially improving over a decade or two time span then it is a rather simple step to see that the same effect is occurring on shorter time spans and at smaller increments.
    That’s opinion, from the sidelines.
    It is obvious that the average home sold today contains more floorspace, more garage parking, more bedrooms, more baths, killerer decks, better electrical, plumbing, and network infrastructure, better appliances, newer and higher quality finishes compared to the average home in 1990. This effect still occurs but is less obvious when comparing the average from 2010 to 2011 especially when you’re viewing from the trenches.
    Than 1990? Obviously. 2010 to 2011? You truly think you can call that? That’s comical. I’m in the trenches, and I can’t. Get real man.
    This is why apples are so useful for measuring trends and why basic averages and medians are not so useful in markets like SF that receive large amounts of external investment.
    Yes, apples can be ideal. No argument there.

  55. Posted by sparky-b

    Eddy,
    Very subjective list there.
    Prime: Bernal and Inner Mission.
    Not Prime: Forset Hill, Monterey Heights, West Portal, F. Hill Extension.
    Plus I would have Inner Richmond, Anza Vista, Inner Sunset and Inner Parkside on at least the same level as Bernal and Inner Mission.

  56. Posted by [anon.ed]

    “D9 has been ground zero for devastating price declines in SF – approaching -50% in cases. We’ve seen nothing like that in D1, 5 or 7 even though there have been some bigger losses in those areas in terms of real dollars gone since prices were higher to begin with”
    D9 is a mixed bag as it’s both SOMA and South Beach condos as well as the Mission, Potrero and Bernal. I submitted the 826 Capp apple last week and nobody said a word about it. I assume because it’s a given that a nice house in the Mission can see a gain over a peak year buy in this market. I’d tend to agree with that.

  57. Posted by The Milkshake of Despair

    anon.ed : Deducing characteristics of smaller intervals from larger isn’t an opinion. Its called interpolation. Houses were improved and expanded in 1990, 2011, and every year in between.

  58. Posted by futurist

    I would say things are good in Noe, otherwise I would not have as much work as I’ve had in 3 years remodeling shacks, adding floors, and upgrading properties.
    Money is flowing in.

  59. Posted by [anon.ed]

    ” Deducing characteristics of smaller intervals from larger isn’t an opinion. Its called interpolation”
    In the abstract, sure. Here? Where you’re actually saying 2011 has displayed bigger and finer than 2010? That’s opinion.

  60. Posted by sparky-b

    Is it flowing in at 12% more? That is the real question.

  61. Posted by futurist

    12% more than what??
    It’s flowing in more than 3 years ago, that I can say.

  62. Posted by eddy

    Regarding my list, I would put 5k in there. The list does change as the city continues to gentrify.
    RE: the discussion regarding ongoing improvements I have 1000% agree with anon.ed. To the casual, or even the more formal observer, these remodel jobs looks like onesy/twosy jobs. But these homes in the city are all 80-100+ years old and we’re at a point in the economic cycle where these homes needs to be updates and it makes financial sense to do so. And it is also highly profitable for developers. Too much so, IMO. Slowly but surely every single home is turning and flipping. Prop 13 is dramatically slowing this process and the has created a cottage industry of fast flipping these properties. The average buyer who might buy a fixer can’t move fast enough to win a deal; or will pay a premium AND not get the ‘builders cost’ that makes economic sense. The whole thing creates an odd dynamic here in the city where there continues to be the right level of demand for top end homes in the right neighborhood. And the right neighborhoods are expanding (e.g., Bernal / Mission). So it creates an interesting situation for Apples on the vine. Honestly, I’m a little surprised we’re not seeing more competition for unfinished Apples. It seems there is no end in sight for top end finished homes and every one seems to be selling for crazy premiums and seemingly easy profits.

  63. Posted by The Milkshake of Despair

    Holy JHVH-1 Batman! An ObviousLight is shined on the situation and anon.ed doesn’t look at what it reveals but instead nitpicks on the light. “Is it UL approved? That bulb’s been burning since 1990 and the color has shifted, invalid!”
    Let me try another approach. Developers often buy small outdated houses and then expand them for sale much higher than their original purchase. Why do they sell higher? Could the larger size account for a higher price? (neo-noe-futurist: here’s where you come in to explain that they’re valued higher due to the better design).
    Go for it, nitpick away and feel free to pull the wool over your own eyes. And for what it is worth I’m not making a specific comment on 2011. Just a general statement that applies in 2011, 2009, 1990, and perhaps from the dawn of humankind when the first caveman carved a little more space out of their cave. It applies to 2011 as well unless there’s some 2011-only phenomenon that prevents it.

  64. Posted by futurist

    Good grief, MOD.
    Of course homes that are remodeled and upgraded are valued HIGHER due to “better design”. And let’s be clear; “better design” is hardly just visual.
    It includes all new foundations, mechanical and electrical systems, insulated walls, insulated glazing, far more functional kitchens, baths and other spaces. The list goes on and on. Of course, larger size also results in higher prices. That’s pretty obvious.
    It’s all so obvious, I’m not really sure what your (slight) sarcasm was all about. Not that it bothers me.
    We all make a living from this home remodeling business; contractor, suppliers, architects, interior designers. Why shouldn’t we?
    That’s just good business sense and being able to offer a skill that people will pay for.

  65. Posted by The Milkshake of Despair

    neo-noe futurist – Thanks for the confirmation that better design adds value. We agree. Some on this thread however seem to think that magical forces are behind the YoY price increases.

  66. Posted by futurist

    Ok, cool. thanks for clarify that. Yea, we both agree. Many others don’t get it.

  67. Posted by [anon.ed]

    “Developers often buy small outdated houses and then expand them for sale much higher than their original purchase.”
    Why you would possibly think you need to wax pedantic with me on the subject of redevelopment in Noe, of all subjects, is beyond me. Of course they do. They did in 2010. And they’re doing it in 2011. Come on, already. The topic I have stayed talking about is 2010 versus 2011.

  68. Posted by futurist

    Are you annoyed, AGAIN, anon.ed?
    what a control freak.
    May 2012 bring you calm.

  69. Posted by nanon

    It’s surprising to see people dissent with MoD. So many people cite appreciation whether YoY or over a decade as proof that real estate is always this wonderful investment. It’s common sense that if a house is renovated, you can’t call that appreciation for the owner.
    But housing is emotional. A lot of people can dismiss inflation, improvements, cost of ownership, etc to try to justify how they did well or didn’t do too badly etc . . .
    [Snarky response coming in 3 . . .2 . . 1. . . ]

  70. Posted by [anon.ed]

    Naah. Bemused. Merry Christmas to you too.

  71. Posted by nanon

    Yes– on this we agree [anon.ed]: merry christmas and happy holidays to all!

  72. Posted by [anon.ed]

    “you can’t call that appreciation for the owner.”
    Nobody did except MOD and I guess, you. Price and appreciation aren’t synonymous.
    You guys act like because it’s not an apple it can’t be evaluated, or something.

  73. Posted by futurist

    Yes, you CAN call renovation of a house “appreciation for the owner”.
    The actual dollar increases that may benefit the owner are not just on a 1:1 ratio.
    Full renovation of a kitchen may cost $75k. The added “value” when selling can be anywhere from 125% to 200% or more.
    Same logic applies to foundation/seismic upgrades, additions, decks and general overall improvements.
    Keep in mind: I do qualify all the above improvements as well-designed, architect designed, permitted and with quality materials. I’m not talking HomeDepot diy here.

  74. Posted by Rillion

    How come no one ever talks about depreciation when an apple sells for roughly the same price years later? All the systems mentioned above are now X years older and closer to needing to be replaced. Is it because people only consider depreciation in a macro-economic sense or if they can deduct it for business purposes.

  75. Posted by BillyBalls

    I’m 75 posts late to this one.
    @Eddy – totally dig your analysis and generally agree.
    @ editor – I second eddy’s request for a thread – what is real sf, prime sf, and why?
    bernal heights and the mission over forest hill???? only if you work in bernal heights or the mission!
    prices going down citywide on an average basis, in my opinion. Small pockets or blocks that are still in demand command higher prices, but otherwise…

  76. Posted by The Milkshake of Despair

    Rillion – I believe that the CS methodology (as well as here on SS) throws out apples older than something like five years. So depreciation is negligible. This also minimizes the opposing effect of inflation. But in general I agree that depreciation does have some effect on prices though not quite the magnitude that redevelopment has in SF these days.

  77. Posted by gettin' silly here

    “Full renovation of a kitchen may cost $75k. The added “value” when selling can be anywhere from 125% to 200% or more.”
    Yes, a dollar of renovation is guaranteed to make between 1.25 and 2.00. That is the easiest guaranteed return in the world! (sarcasm).

  78. Posted by Rillion

    gettin’ silly – You forgot the caveat that added value will only materialize if they are “architect designed”. I think this is clearly a case of someone talking his book.

  79. Posted by futurist

    NO, boys (or girls): not really “talking my book”.
    Ask around. You don’t have to believe it. Doesn’t matter.
    Home-made DIY renovations generally LOOK it and function as such. I have had to “fix” a number of handyman kitchen renos, as an example, that were just disasters. They often bring in fewer dollars when selling because they are seen by the buyer as a negative. Ask around. You’ll see.:)
    And, of course, I realize you’re being sarcastic, which is cool. But..ah..I never said the word guaranteed.
    Not that I can see.

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