December 14, 2011

Recorded San Francisco Activity Up 2.9% In November, Median Falls

San Francisco Sales Volume And Median Price: November 2011 (www.SocketSite.com)

Recorded home sales volume in San Francisco was up 2.9% on a year-over-year basis last month (422 recorded sales in November 2011 versus 410 sales in November 2010), down 5.8% as compared to the month prior and versus an average October to November volume drop of 7.2% over the past seven years. An average of 520 San Francisco homes have sold in November since 2004 when recorded sales volume hit at 682.

San Francisco's median sales price in November was $644,500, down 5.2% on a year-over-year basis, up 1.5% as compared to October in which the median was down 2.6% YoY.

For the greater Bay Area, recorded sales volume in November was up 3.4% on a year-over-year basis, down 2.0% from the month prior (6,317 recorded sales in November '11 versus 6,111 in November ’10 and 6,444 in October '11) as the recorded median sales price was down 4.3% year-over-year, up 3.9% month-over-month.

At the extremes, Sonoma County recorded a 16.9% increase in sales volume (a gain of 70 transactions) on an 9.5% decline in median sales price, while Solano County recorded a 5.3% decrease in sales (a loss of 29 transactions) on an 8.2% decline in median price. The best performing Bay Area county in terms of median sales price was Napa which recorded a 1.2% decline while San Mateo recorded a 9.6% drop.

As always, keep in mind that DataQuick reports recorded sales which not only includes activity in new developments, but contracts that were signed ("sold") many months or even years prior and are just now closing escrow (or being recorded).

Bay Area Home Prices Low, Sales Creep Up [DQNews]
Recorded San Francisco Sales Activity Up 2.8% In October [SocketSite]

First Published: December 14, 2011 11:00 AM

Comments from "Plugged In" Readers

Looking backward on this chart I count new fewer than 6 points where the current data point crosses over the trend line for each measure. This would seem to indicate a fairly stable trading range that has shown some light volatility.

This is what I've been stating for quite some time and although certain people would have you believe we're headed back to 2001 (or 1996 in some instances) pricing across the board, the trends in the data do not support those theory becoming realities anytime soon.

I suspect we'll see a similar trend over the next few years. Buying now remains risky in the short term (and is just flat out a bad idea for a short term hold) but a good buy does seem possible if the right buyer finds the right buyer for a 7+ year investment. The stable flow of transactions is encouraging, if not down right surprising.

Posted by: eddy at December 14, 2011 12:25 PM

If it takes 3% to 4% mortgage rates to support existing prices, I would hate to see what happens to housing prices if mortgage rates goes to 6%. Mortgage rates are determined by the markets perception of risk. So all it takes is some debt downgrades and interest rates will pop. Just look at Italy and Greece.

Posted by: young_family_in_city at December 14, 2011 12:39 PM

Note that the median does not represent a trading range at all since what's being sold need not be constant.

If people in general keep maxing out the FHA/GSE limit it wouldn't be too surprising for the median to hover around there. The real question is if the $700k place you get now was $1M at peak will $700k next year get you a place that was $1.5M or $800k at peak. (Or really any other reference point).

Posted by: tc_sf at December 14, 2011 12:43 PM

Is that the real question? Are you 100%?

Posted by: eddy at December 14, 2011 2:02 PM

eddy,

inflation between 2001 and 2011 is at 25%. What used to cost $80 in 2001 now costs on average $100.

This means you have to peg the number 20% lower to be able to compare 2001 $$$s, or roughly $515K

Zillow "sale" prices are very similar to what our dead editor at SS has provided us. If you look at this chart you'll see late 2001 prices were in the upper 400s/lower 500s.

We're basically back to 2001 from an investment standpoint. I think this explains why we've stabilized. Prices make sense in a very dynamic city like SF.

Posted by: lol at December 14, 2011 2:32 PM

I meant dear editor. Darn.

Posted by: lol at December 14, 2011 2:34 PM

"Is that the real question? Are you 100%?"

Well, one could also look at the sales decline from 04 to 09 and see that the sales crossed the trend line 6 times and question if crossing the trend line 6 or more times really tells you anything regarding up, down or flat. And thus question whether any technical analysis like that had zero or negative utility.

Posted by: tc_sf at December 14, 2011 2:40 PM

@lol, I appreciate the inflation argument. Really, I do. But you are going to be hard pressed to find someone that paid $515k in 2001 for their homes that sells it today for +20% "gain" who feels like they broke even. And for the purposes of my statement about current data points crossing over their trend lines, you only have to go back 4 years to see the trend.

Posted by: eddy at December 14, 2011 2:43 PM

eddy,

Yeah, we all rationalize that way. Actually if the 2001 purchaser had done 80% financing he'd be ahead with a 25% appreciation, equity-wise (see disclosure at end of post).

Take that $515K buyer in late 2001.
He put 103K down, borrowed 412K.
At an 5% average mortgage rate he'd owe 335K today. If his home value is the current median $644K his equity would be 309K. 77K are pure mortgage repayment, 103K his original equity, 129K are inflation.

His original $103K became $232K.

In short, inflation by itself made him more than double his down-payment... in theory.

DISCLOSURE: these numbers have to be taken with a Texas-sized grain of salt. Property taxes, maintenance costs, resale costs, equivalent rent, opportunity cost (probably offset by inflation) will greatly affect these calculations. Drink responsibly ;)

Posted by: lol at December 14, 2011 3:25 PM

Again, I get the inflation argument. It is valid / real. But your argument seems to only lend credibility to the idea that real estate is a decent inflation hedge versus simply holding cash.

Posted by: eddy at December 14, 2011 3:32 PM

Data for San Francisco sales and median prices continues to be unreliable and inconsistent at best.

Compare to: http://www.socketsite.com/archives/2011/12/san_francisco_listed_sales_volume_up_median_sale_price.html#comments

That has 179+166 = 345 sales in Nov 10, and 225= 201 = 426 sales in Nov 11.

How could this possibly reconcile with 410 and 422 shown here..I can see how for 2010 could be correct, with 65 sales, but its LESS THAN listed sales this year.

This isn't the first month this has happened, in fact its pretty frequent, and always in the same direction i.e. total sales seems too low when compared to listed sales only.
This is the first time total [is less than] listed only though!

The data didn't even pass my 2 minute sniff test. *facepalm*

Posted by: REpornaddict at December 14, 2011 4:38 PM

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