Listed housing inventory in San Francisco dipped slightly (4.5%) over the past two weeks in a typical pre-Labor Day slowdown and is currently running just 3.1% (or 36 listings) below 2006 levels.
Once again, listed inventory continues to run at roughly two months of supply (based on September 2006 sales volumes) which isn’t too atypical for San Francisco (but continues to represent less than half of all units that are currently competing for buyers in the city).
And yes, we fully expect to see a post-Labor Day bump in listings (and slow down in sales).
∙ San Francisco Listed Housing Inventory Update: 8/13/07 [SocketSite]
∙ SocketSite’s Complete Inventory Index (CII): Q3 2007 (SF) [SocketSite]
There’s just not a whole lot of units for sale out there, particularly in SoMa/SoBe. For all this talk of a bubble and crisis, very few people are really selling right now in these neighborhoods (many buildings have no units for sale or just 1-3, unlike earlier this year when I saw something like 20 at the metropolitan). Prices are still high and the main thing that has changed is days on market has maybe doubled. We’ll see if there are any further changes in the next few months.
“There’s just not a whole lot of units for sale out there,”
Sorry, but I got to disagree. There are basically the same amount of units as last year when the market was close to peak, but as you point out houses are selling a lot slower, and we aren’t seeing the effects of the credit crunch yet on this graph. What does that tell you? It tells me that inventory is going to keep increasing steadily, and perhaps exponentially.
Prices aren’t going to move for a while, but it’s coming. As we hit the ARM reset peak in October, and people discover they can’t refinance, there is going to be more inventory, and downward price pressure. Many of these people are still making a bundle even if they drop their prices 10-20% (assuming they didn’t withdraw all the equity as they went along), so with little to lose I think we’re going to be seeing some notable price drops by December. Maybe not 20%, but there will be some for sure.
Well, more units *may* come to market in soma/sobe in the future and prices *may* decrease but it sure hasn’t happened yet. It is an undeniable fact that there are just not many units for sale in these ‘hoods.
Available units:
88 King – 2
Watermark – 3
Metropolitan – 5
Hills – none
Bridgeview – 1
Brannan – 8 in three towers
301 Bryant – none
200 brannan – 3
clocktower – 1
musem parc – 2
YBL – 1
etc.
And (I can’t speak of other neighborhoods but), prices are very near the all time high and selling within a few percent of asking. These are the facts of the current market and not predictions or opinions.
Prices are currently set for desperate buyers. Three weeks ago, all buyers were desperate.
There *are* one set of desperate buyers still around, though their numbers drop every week: people who rate locked a loan they know they will never see again. They are desperate to use it.
As they either buy or the rate locks expire unused, the ranks of the desperate buyers diminish. Then, and only then, will prices start to fall. Not before.
And I suspect that as the mortgage meltdown started, anyone who was even thinking about buying in the next 6 months locked their loans, all around early-to-mid-August. That means that you have 6 months worth of buyers panic buying within their rate lock periods – mostly 30-60 days. And that will keep prices buoyant for at least another two weeks.
And then poof. 6 months worth of buyers will largely, though not entirely, be gone. And the pricing pressures on the sellers will begin in earnest.
Until the rate locks start to expire, you won’t see anything fall significantly.
“Prices aren’t going to move for a while, but it’s coming. As we hit the ARM reset peak in October, and people discover they can’t refinance, there is going to be more inventory, and downward price pressure.”
People have been hearing about this ARM reset, subprime mess, stricter mortgage standards, etc all summer long… so why would they wait till October or the month of their reset to sell or refinance??
These SF home owners are more savvy than those that bought with subprime loans in the central valley, so I doubt they’ll wait till their ARM resets before realizing they can’t refinance. If inventory is to spike and prices weaken substantially, I think that would’ve started now (or a month ago), but none of those doomsday scenarios has happened…
” As we hit the ARM reset peak in October, and people discover they can’t refinance…”
I don’t mean you missionite, but does anybody ever factor in the fact that a lot of people have taken ARM mortgages they can afford and will pay the increase, and that the %interest rate increase may in fact be limited , and they knew at the start what the worst case would be- and planned for it? And maybe their salary went up or their spouse got a job? And maybe they don’t have to sell. And maybe they can make other adjustments in their lifestyle expenses like keeping the BMW for another year and not trade up to a Lexus or maybe just go to Europe for vacation and skip the winter Australian vacation.
so “active listings” are the same as last year. what does that mean? Answer: the sky is falling, home prices will follow. The answer is always the same, only the questions change.
“Sorry, but I got to disagree. There are basically the same amount of units as last year when the market was close to peak, but as you point out houses are selling a lot slower, and we aren’t seeing the effects of the credit crunch yet on this graph. What does that tell you? It tells me that inventory is going to keep increasing steadily, and perhaps exponentially.”
Huh? If there are same amount of units as last year, and the sales are slower, doesn’t it mean fewer sellers have put the unit on the market this year?
“Many of these people are still making a bundle even if they drop their prices 10-20% (assuming they didn’t withdraw all the equity as they went along), so with little to lose I think we’re going to be seeing some notable price drops by December. Maybe not 20%, but there will be some for sure.”
Seriously!! Most of these houses more than doubled in the last 5-6 yrs. There is no way (except for exotic loans) that these prices can remain unless the average income increases dramatically. I for one did not get a 100% raise, but more power to the people who did (and i dont mean a raise through promotion).
I don’t know if the strategy will work, but I see Citiland listing a couple of studios in my building (Baycrest) listing for $415k and so …. WAY over what the past few have sold for ($375-ish). Good luck with that. In the meanwhile, the rent for studios has gone from around $1,700 a month to $1,900 a month – maybe as corporate rentals, there’s no problem hitting that number. ??? Just some observations … I’m a resident who plans on sticking around for a good number of years to watch Rincon Hill develop.
I sense a fallacy of composition developing here…
I’m not in financial distress, and neither are any of my friends at the yacht club or country club. One CEO I know just sold a $10MM estate in Atherton in less than a month for full asking price. Furthermore, neither the regatta nor the cotillion have been cancelled this season. So obviously the local market is fine.
The real problem lies not with the millionaires, but with the hundred-thousand-dollar millionaires. Locals who make $150K/year and bought $900K properties are no different than the Sacramento couple who makes $50K/year and bought a $300K McMansion. And there are A LOT of those here.
The pace of sales (listed) dropped pretty significantly in the second half of August. The 1,133 active listings now represent about a 3 month supply at this recent pace. Demand is down – and prices will follow.
A preemptive I’m-a-friend-of-Thurston-Howell post. I’m in shock and awe.
Heavens…a Yale man!
“more units *may* come to market in soma/sobe”
Like the thousands under construction?
“prices *may* decrease but it sure hasn’t happened yet.”
Talk about opinion rather than fact. Any proof? You might want to tell that short seller over at the shoreline.
Ironic how many of those units you list have been sitting on the market or reduced. From one at 88 King: “MOTIVATED SELLER – Bring Offer!!”
“prices are very near the all time high and selling within a few percent of asking.”
That’s not so reassuring if you bought AT the all time high. Wasn’t so long ago that the party line was “everything sells for OVER asking”!
Heavens, the Bush Boys are Yale Men! Maybe Thurston was onto something.
ACs numbers show one thing: there is no ‘wave’. But DOM would be nice to know too. There could be a lot of like-to-sells watching what happens to the small number of units on the market.
To address AC’s comments, according to the Watermark’s website, they have five units, not three, available for sale.
As for prices not going down, and I admit that this is only one data point, at least one of those units has reduced its asking price considerably. As I mentioned on another thread, unit 8G (which Socketsite highlighted as having “spectacular bridge views”) has reduced its asking price thusly:
Its most recent listing appears to have expired. I wonder if that unit will soon be re-listed with yet another price reduction.
Was touring a soma complex a few weeks ago when the agent said to me:
“If you are really interested in this building, I know of at least half a dozen units that the owners would like to sell, but are not putting on the market for fear of driving the price down.”
I smiled a cheshire cat’s smile and said, no thanks, we’ll wait.
Melinda’s experience rings true with what I’ve been hearing from friendly agents as well and the Watermark is far from the only building in town with 2x the number of sellers quietly shopping their condos versus listing them on the MLS for all to see.
“Melinda’s experience rings true with what I’ve been hearing from friendly agents as well and the Watermark is far from the only building in town with 2x the number of sellers quietly shopping their condos versus listing them on the MLS for all to see.”
Michael, I have heard exactly the same from my realtor friends, although they wouldn’t want me posting it here.
As a real estate novice, can I ask how an individual owner shops around a condo without listing it? For sale by owner web sites? Do many places really get sold without listing them? Just curious.
Trip –
I had a friend who did not list her Pac Height home on the MLS. Her realtor knew several couples that were interested and were working with other agents in the same office. I believe it was Pacific Union. Her home did sell so it never made it to the MLS.
One interesting statistic to track would be the # of condos/homes that were prematurely “retired” on MLS and then relisted after the requisite waiting period to appear as “fresh new listings.”