September 13, 2013
Having Spiked In July, San Francisco Home Sales Slide In August
Having hit a nine-year high in July with sales volume up over 31 percent on a year-over-year basis and interest rates ticking up, last month sales activity for San Francisco homes fell 10.0 percent from the month before, down 12.6 percent on a year-over-year basis to 646 recorded sales in August. Sales volume in San Francisco typically ticks up from July to August, up an average of 6.9 percent since 2004.
At the same time, the median price paid for a home in San Francisco ticked down 1.8 percent in August to $825,000 but remains up 17.9 percent year-over-year. Keep in mind that while movements in median sales price are a great measure of what's in demand and selling, they're not a great measure of actual appreciation despite what the headlines might say.
For the greater Bay Area, recorded sales volume in August fell 7.7% from July, down a nominal 0.6 percent on a year-over-year basis. The median sales price fell 3.9 percent to $540,000 but remains 31.7% higher on a year-over-year basis. Foreclosure resales and short sales made up about 15 percent of the Bay Area market last month, even with July but down from 37.8 percent at the same time last year.
As always, keep in mind that DataQuick reports recorded sales which not only includes activity in new developments, but contracts that were signed ("sold") months prior but are just now closing escrow (or being recorded) and any properties that were sold "off market."
∙ Bay Area August Home Sales Dip; Median Price Eases Back From July [DQNews]
∙ Home Sales Spike In San Francisco To Nine Year High In July [SocketSite]
∙ Spike In Sales Due To, Rather Than Despite, A Spike In Rates [SocketSite]
First Published: September 13, 2013 10:15 AM
Comments from "Plugged In" Readers
-3.9% median sales price drop in one month! Looks like the market is crashing. Those bears were right all along!!
Posted by: Jimmy (No Longer Bitter) at September 13, 2013 11:07 AM
Jimmy, what bears are you referring to? Because I haven't read a bearish statement on this website in years. Not since before the market crashed.
Posted by: Legacy Dude at September 13, 2013 12:18 PM
I also haven't noticed many/any bears, but I'm not on here as often as I used to be. With that said, I believe tha the 4% drop is very normal going into August (i.e. - nothing except possibly volume has changed).
Posted by: Lance at September 13, 2013 1:14 PM
Yup, the small median price drop is to be expected and in line with seasonal norms.
What defines a hot, hot, hot market though - the absoloute level its at or rate of change? If the former, things are still as crazy as ever, if the latter then there's been some plateauing, certainly...
Posted by: REpornaddict at September 13, 2013 2:45 PM
Speaking of bears I want to see Johnny, Tipster, and anon come back and own their things about how terrible FB's outlook was and all that jazz.
Posted by: Mon at September 13, 2013 3:13 PM
I think your timing is a little out of whack there Legacy Dude. Tipster didn't abandon us until 2011 and he was bearish to the bitter end.
I don't know when you time the market crash, but I have it as occurring in 2009. Does that sound right to you?
But there are pretty much no bears currently. Which makes me nervous, especially since we just bought another home.
Posted by: NoeValleyJim at September 13, 2013 6:01 PM
what did you get? are you moving? selling or keeping the old place?
and the bottom of the market was early 2009, you are right about that.
Posted by: sparky*b at September 13, 2013 6:20 PM
A single family home in Glen Park. We had to frightfully overbid to get it, but my wife really wanted it.
I think the plan is a work in progress right now, but it involves fixing up house #2 while we are getting house #1 through planning and then living in house #2 while we work on house #1. After that it is a bit hazy but I really would prefer to end up in house #1, since I know all my neighbors and all that.
My wife would like to keep both, but the start-up has to keep doing well for that to make sense. We can always sell something if we need to.
Posted by: NoeValleyJim at September 13, 2013 6:56 PM
And yes, it has a parking space :)
Posted by: NoeValleyJim at September 13, 2013 7:20 PM
You can always use the glen park as a vacation home :)
Posted by: 49yo hipster at September 13, 2013 8:10 PM
By the numbers I look at, the bottom of the market was late 2011 to early 2012. Particularly when factoring inflation.
Posted by: lyqwyd at September 16, 2013 4:26 PM
Congrats NoeValleyJim! I know what its like to buy after a long stretch of following things very closely.
My 2 cents on your two places is that my time, and I suspect yours from what I know, could be spent way more valuably doing anything other than being a landlord, and the cash you can get from selling right now far outweighs the value of the tenant income stream. I ran the numbers very carefully. We sold our old place (1999 purchase) in March after sitting on two homes for a little over a year. Way better off with all the cash. College for the two kids is covered. And the peace of mind and income from the high broker account balance is a much better option than landlord headaches as the landlord income would be a tiny percentage of my regular income anyway.
This made me laugh: "My wife would like to keep both" -- sounded an awful lot like my own wife . . .
Posted by: anon at September 16, 2013 4:46 PM
Condo convert and move through them sequentially (and end up in the Glen Park place). You'll get up to $1 million (2*$500k) tax free.
Posted by: EBGuy at September 17, 2013 11:48 AM
@EBGuy: under the new rules that would take about 5 years. You have to live in a place for 5 years before you can claim the entire $500k homeowner's exemption.
And then, having sold both... no place to live.
Posted by: Jimmy (No Longer Bitter) at September 17, 2013 12:07 PM
JNLB, Thanks for the correction. You're partially right. Unless NVJ went on a buying spree (which I missed), his current pad is a duplex (or has an inlaw). The gain on the unit he lives in would be tax free up to $500k. The gain on the unit that he rented out (non qualifying use) would have to be prorated (qualifying use/ total time as rental + primary residence). IANATA.
PS - Has your short sale pipeline dried up yet?
Posted by: EBGuy at September 17, 2013 2:18 PM
The short sale pipeline is not as flush as it once was, but there are still a few floating around. The typical scenario now is a home buyer makes an offer on a short sale but for whatever reason can't wait for the bank (eg rising prices, rising interest rates, needs a place to live, impatient, whatever). So they still crop up from time to time ... but the screaming bargains from last year are largely gone since appraisals are way up too.
Posted by: Jimmy (No Longer Bitter) at September 17, 2013 3:01 PM
I understood the rule was 2 out of 5 trailing years the seller must use the home in question as his/her primary residence to qualify for exclusion:
As long as you have lived in it for 2 of the past 5 years, you get the exclusion... No?
Posted by: pablo at September 17, 2013 3:20 PM
Sort of. It is prorated thus if you live in it for 2 years, you get 40% of the exemption. etc. That's the new rule, which is not as good as the old rule.
Posted by: Jimmy (No Longer Bitter) at September 17, 2013 3:24 PM
I think that interpretation is excessively stringent:
I think if you own a home and live in it (qualfied use) for 2/5 years you get the exclusion.
Posted by: pablo at September 17, 2013 3:47 PM
I was trying to concisely summarize the distinction the IRS now draws between periods of qualifying and non-qualifying use. Gains during periods of non-qualifying use would be taxed.
I suppose if the house dropped in value while it was rented out (non-qualifying use), then you moved in and the value subsequently surged over the next two years of qualifying use ... you could try and claim that the entire gain occurred during the period of qualifying use and should therefore be tax free up to the limit.
No one really reads these tax returns anyway so don't worry too much about it.
Posted by: Jimmy (No Longer Bitter) at September 17, 2013 3:58 PM