While the pace of home sales in San Francisco continues to slow, with fewer than 20 new homes listed for sale in San Francisco over the past week and a typical end of the year culling of unsold listings picking up steam, the number of homes actively listed for sale in San Francisco has dropped to 585 but remains at a 7-year-seasonal high.

And in fact, on a year-over-year basis there are now 69 percent more homes on the market in San Francisco versus the same time last year while pending sales are down 16 percent and the average list price per square foot of the homes in contract has dropped to $873 (which is 1 percent below its mark at the same time last year).

At the same time, the number of homes on the market listed for under a million dollars is now running 61 percent higher on a year-over-year basis and 27 percent of the homes listed for sale in San Francisco have undergone at least one price reduction (which is even with the same time last year).

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Comments from “Plugged-In” Readers

  1. Posted by qt

    Housing Bubble 2.0 Exploding! Grab some popcorn and relax. Bottom in 3-5 years…

  2. Posted by Hancock

    With all due respect, the Bay Area’s economy is humming along, and will continue to do so for the foreseeable future. A housing correction? Sure! A housing bubble bursting? I wouldn’t bet my popcorn on it 🙂

  3. Posted by jimbo

    any thoughts on how the 1000+ millionaires (post tax) that will be created from the LYFT and UBER IPOs in the coming months will affect the market. They have both registered now.

    • Posted by Tipster

      70,000 bay area homes are sold each year. Home sales are down 16%, so we’re missing 11,200 buyers.

      Most of the Uber/Lyft millionaires (post tax) already own homes. If 25% of them buy homes, that’s 250 additional buyers!

      Just 10,950 to go and we’ll be back where we were last year. 10,950/250 means we just need 44 more Ubers and 44 more Lyfts, all going public next year, just to get back to where we were.

      • Posted by Panhandle Pro

        Can you tell me a little more about how you determined that most Uber/Lyft employees own homes already? The median age at a tech company like this is around 30. That means the majority are likely to have been renting for the last few years, likely with roommates. They want to upgrade ASAP. Not only are there the actual millionaires, but plenty of other people making a nice $50k-$200k chunk – a huge push towards a down payment. Then you add in all of the employees of AirBnB, Pinterest and possibly Slack. Will it keep the entire Bay Area afloat? Clearly not. But it could contribute to certain segments where that population wants to buy: SF, Oakland and possibly areas of the Peninsula

        • Posted by that_dude

          Correct.

          • Posted by Tipster

            So what, even if every single one of those 1000 guys is single and living in a dreary basement with 30 others and runs out to buy a home rather than just renting a 1 bedroom, Facebook and Netflix stock is down 30%: Apple is down 25%, Uber’ll barely make up for the lack of newly minted Facebook millionaires and those of all the other companies that have similarly declined that had been feeding the market and that have now dried up.

            In the meantime, on the other side of the equation, the greatest generation is dying off and the boomers are all retiring. The supply is increasing and the demand is falling, Uber or not.

    • Posted by lazycub

      We dont know how many have already cashed out (at least partially) on pre-ipo market. and, of those that wait to post-IPO, they do have vesting period. so its not like a bunch of new millionaires runnning around on IPO day. and like tipster mentioned, they probably already own something anyway

    • Posted by anon

      This will certainly be interesting. Uber originally was targeting fall of 2019 and Lyft summer of 2019. Now they are rushing to beat an uncertain environment with the SP hitting a 14 month low today, any potential recession, rushing to beat each other etc. Talk is around $120B for Uber; a couple of months ago at their last raise, they were valued at $72B. That is a big jump esp considering in the meantime they announced a $1.07B loss for the quarter.

      What is more interesting is that they are also racing announcements from Waymo who is so far ahead in autonomous and has started to charge customers in Arizona; they have been methodically rolling out as an actual business. To quote the ex-CEO of Uber, Travis Kalanick: “”If we are not tied for first, then the person who is in first, or the entity that’s in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber’s, then Uber is no longer a thing,”

      Waymo is so far ahead from every standpoint possible- safety disengagements, actual and virtual miles. Right now, it is Waymo (Google), then Cruise (GM), then everyone else. Uber is not in the top five. In the spring, Dara announced that he was trying to do a deal with Waymo but nothing happened since.

      I think they’d move the IPO to tomorrow if they could to beat all of these other factors.

      • Posted by Amewsed

        Assuming post IPO, there will be newly minted multi-millionaires who is in the market for a new home, why would they buy now instead of waiting for a couple if years when the market goes lower?

        Being suddenly wealthy doesn’t mean you stop being a savvy or smart buyer. Also any potential buyer is probably looking at a lot of other factors like current age, career plans for the next 5-7 years, where opportunities lie, marital prospects, kids or no kids, whether home will be a keeper or a trade up down the road, etc. No one wants to make a losing bet on one’s own future and sell for a loss.

        Regardless, the housing market will move the way it is going to move and globally, all major cities are experiencing weakness.

        • Posted by Panhandle Pro

          Because if you’ve been on-paper multi-millionaire for years with no liquid cash, you have extremely pent up psychological desire to achieve your new status. I think you overestimate how many people own places already: most are late-20’s to mid-30’s and probably renting, possibly with roommates. Why would they stay in that suboptimal living situation for longer…for the *chance* that the market drops 10%? Nope.

          • Posted by Jeffrey W. Baker

            Employees of these companies will be locked up for a year after the IPO so don’t expect them to go around shopping for houses until 2020 earliest.

    • Posted by Sabbie

      So this is what it’s come to. The entire hopes and dreams of the Bay Area housing market rest on the private equity ponzi cashing out of Uber and Lyft. If you’ve been following the stock market lately, you might see that investors right now have little appetite for risk, in fact they appear to be rushing for the exits. It’s a race against time- popcorn indeed!

      • Posted by Notcom

        Oh b,b,BUT it’s not risk,….it’s Uber !!

      • Posted by SFRealist

        No one is saying this.

        I will say that our housing market depends on how badly Trump destroys the entire American economy. Recent signs are bad.

  4. Posted by hundoman

    I wonder what effect the changes with the reduction in deductibility to only $10,000 a year for state and local property taxes will have on our Bay Area housing market?

    Also, long time homeowners would have to now pay taxes on HELOCS if they use the cash for anything other than home improvements.

    These tax changes could really shake up the Bay Area housing market for all but the very top end and then also possibly change builders’ approach to the types of units they build as buyers carrying costs would now be going up quite a bit for units over $750,000 in purchase price.

    • Posted by Pablito

      I’m guessing the tax changes are going to shake things up a lot. Buyers get quite the subsidy at the moment. While there will be political pressure in Congress to reinstate the ‘free money’ to high end buyers, pushing more money at the top 10% is not a vote getting strategy for the Democratic majority in the House….

    • Posted by SFRealist

      I think that will shake up the market to some degree, but nowhere near as much as Trump doing everything possible to drive the economy into the ground. I do think the damage will be worse elsewhere, but no place will escape.

      • Posted by another anon

        You’re being way to pessimistic. There are always approaches to make tons of money in any market. If you are that down on the US economy, go nuts with a 3x inverse S&P500 ETF. You’ll be a billionaire in no time.

        • Posted by Amewsed

          Or sell the losing stocks before the end of the year to offset capital gains, and 31 days later, buy the same stock (good otherwise) at a lower price to avoid a wash sale. The stock market presents daily opportunities to buy, sell, trade options, etc. and profit. How far an investor wants to go is dependent on how much elbow grease one is willing to put in.

        • Posted by Sabbie

          Oh don’t worry, I’ve been all cash plus a chunk of long dated small cap puts for months now. Every time I think it’s scraped bottom, there’s another round of selling, it’s quite amazing. I’m guessing we drop another 5-10% soon, rally, then eventually bottom out 40-50% off 2018 peak.

        • Posted by SFRealist

          Maybe I’m being pessimistic, or maybe we’ll have another round of tariffs and deficit spending. I would love to be wrong, but the stock market agrees with me.

          • Posted by Sabbie

            Hey what did you expect from the guy who proclaimed that he’s “the king of debt” and called the stock market “a big fat ugly bubble”?

          • Posted by SFRealist

            Me? I expected things to be bad. Nothing inflates the economy like deficit spending, but only for a little while. Now is the time we all pay the piper.

            The BA will weather the storm better than most but the outlook is bad.

    • Posted by Sabbie

      Didn’t you hear that CA state Dems are now trying to get the SALT deduction restored? Dems: the rich need to pay their fair share! Also Dems: we’ll bring back those tax deductions that Trump took away from our wealthy constituents!

    • Posted by South Bay techie

      No one here has paid AMT? For couples making >$250K (depending on how much was being itemized/deducted), they were already hitting AMT, so Trump’s tax cut reduces the taxes paid. Under AMT, there is 0 SALT allowance. The only really negative change is that interest on $1.1m is no longer deductible and only the first $.75m; for techies who don’t believe in Bay Area appreciation, there is very little financial incentive to purchase over renting.

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