San Francisco Listed Housing Inventory: 10/01/07 (
New listings continued to outnumber new sales over the past two weeks in San Francisco as inventory of Active single family, condo, and TIC listings increased 5.2% (and has closed to within 3% of last year’s levels).
At the same time, we are starting to see the seasonal withdrawal of unsold listings and a quarter of all Active listings have been reduced in price at least once (versus a fifth at the same point in time last year). And while condos represented 60% of the reduced inventory on October 1, 2006, as of this morning they represented less than half (by 1%).
SocketSite’s San Francisco Listed Housing Inventory Update: 9/17/07 [SocketSite]

53 thoughts on “SocketSite’s San Francisco Listed Housing Inventory Update: 10/1/07”
  1. The active listed inventory represents a supply of nearly 5 months sales based on the September sales rate. This months of supply is about 50% higher than last year.

  2. Howard, how did you get to your 50% increase in months of supply? I’m having a hard time seeing that from this graph. Inventory appears to be down slightly from LY, so are you saying that sales in Sept were down 50% from LY? I’m not trying to flame, but there isn’t enough data on this chart to infer a 50% increase in supply.

  3. Speaking of South Beach, I would say the graph accurately reflects supply after a pretty tight summer for resales in the neighborhood, there is more supply in the last month to six weeks in existing buildings.

  4. I’m seeing 314 SFH and condo/TIC sales in Sep 07 versus 486 in Sep 06 (for all of SF). 1,481 / 314 = about 4.7 months while 1,521 / 486 = 3.1 months – about a 50% increase. (The Sep 07 sales count will go up a little more as additional reportings of Sep sales are made – but the pace is way down from 06.)

  5. Look for sales to be down from ’06. Is that a surprise in any way?
    Look for sales to be up from mid September on, as opposed to late August to early September. Is that a surprise?
    I think neither of these trends are surprising. Oh six was a highwater mark. August to mid September oh seven saw a ton of bad news.

  6. Fluj — not sure what you mean by this: “Look for sales to be up from mid September on, as opposed to late August to early September. Is that a surprise?”
    Howard pointed out that sales for the entire month of September were way down from a year ago, while the number of listings is basically the same (so fewer sales has not been the result of fewer listings). Why do you think this trend will now reverse “from mid September on”? With continuing tightened lending standards, increases in down payment and income requirements, and anticipated stingier appraisals (given the increased risks to the lender of declining prices), I don’t see anything in these numbers that could point to increased sales or for prices to do anything but continue to trend lower. Howard observed that the inventory level (listings/sales per month) is now 50% higher than a year ago — that’s a key indicator of downward price pressure.

  7. Why? Because that’s what I have observed in studying the MLS every single day. For a while there, only six or seven properties were getting into contract during the end of August and into the beginning of September. That was pretty much the period that coincided with the subprime crises, credit tightening, etc.
    Lately a more robust 20 or so properties have been getting into contract each day. It has been 23 so far today. From mid September on we have seen an increase properties getting into contract.
    I’m talking about properties getting into contract, you know? Not sales. You always have to back up a month. It’s no wonder that September was at a sales low compared to last year. First, ’06 was a banner year. And second, not a whole lot got into contract from August 10th to say, September 15 or so.

  8. OK, Fluj. Now I understand. We’ve hit bottom already. Boy, that was fast. I do give you credit, however, for at least conceding that the market has dropped since ’06. Every other RE agent I speak to insists that prices are higher than ever and everything is selling as fast as ever.

  9. Been an agent since ’03. Been developing real estate in SF since ’97.
    Didn’t say we hit rock bottom already. ’04 for volume. ’06 for high median.
    You guys are putting words in my mouth. I said, no wonder it’s less than last year. And I said, no wonder, because fewer got into contract from mid August up till about three weeks ago.
    That’s how it works. You get into contract. Then, a month or a month and a half later, it’s sold. Not to mention the fact that buyers are putting longer loan contingency times into their offers.
    Let’s not forget that because of the way

  10. By the way, I want the market to take a hit. I have buyers getting outbid left and right.
    But do not be surprised if October statistics are much more robust than September. I explained why.

  11. I don’t mean to be a smart aleck, but what you’re saying is that it is no wonder that sales were down because fewer homes went into contract. On that obvious point, it is hard to disagree with you.

  12. You don’t get to dispute me and then tell me how obviously correct I am.
    No, that’s why I initially said, “Is this a surprise in any way?”
    People got scared in August. Less made offers. Then the rate cut happened, and the dog days of summer gave way to fall. More started making offers.
    That’s it. So, consequently, look for October to have better statistics than September. And look for 07 to be overall weaker than 06.

  13. “I don’t mean to be a smart aleck, but what you’re saying is that it is no wonder that sales were down because fewer homes went into contract. On that obvious point, it is hard to disagree with you”
    Yeah , I think we can all agree with that! hahaha. Fluj is in fantasyland. The market is just teetering now and the bootm will fall. The questions are 1) will it fall 20%, 30% or 40% and 2)when will we hit bottom in 08, 09 or 10?
    My bet is on 20% with a bottom in 09.

  14. Twenty, 30, or 40, eh? A record setting decline!
    Explain to me how the market is teetering? I’m simply not seeing it.
    By the way, Spencer, were you hollering “bubble” in ’05? Because if you were, you were totally wrong. Can you admit that at least?

  15. There was a bubble in ’05. That was when peak prices were reached in SF and they have been declining ever since (according to CS — OK, the SF MSA).

  16. I thought spring of ’06 saw the highest median salespoint?
    You folks honestly call what we have seen around here a bubble? Be real for a minute. It still costs 700K to live in Parkside.

  17. fluj,
    you should just give up here – there is no teaching the armchair economists on this site. they will believe what they want to believe regardless. your efforts to try and educate them otherwise are fruitless, and appear a bit overzealous. just sit back, read and enjoy like the rest of us – i think you are stressing yourself out trying to prove your (very valid, but falling on deaf ears) points on this blog. I don’t think you will convert many, if any, of them into buyers in the near term, either.

  18. For those of you who are predicting sharp declines in the selling prices of SFH’s in San Francisco, have you considered the impact of substantially rising rents in SF? In Noe Valley, where I live and own, rents are up on average 20% since last year. Owners who have held on to their places for five years or so — and who are not forced to sell — can now recoup their monthly TIPI by renting. These owners simply will hold, rent, and wait for the market to adjust again.
    My prediction: The ‘froth’ is gone from the market; prices will be flat for awhile; will dip in some areas (3-5%); and then resume their historical (3-5%) climbs upward.

  19. the median salespoint is a good measure of what people are spending but it is a terrible measure of appreciation.
    the fact that it still costs 700k to buy in parkside is an argument for rather than against an overpriced market. any idea what it would cost to rent a place in parkside?

  20. yes, prices in SF are high, very much so. does that mean they are ‘overpriced’? maybe. But I have been hearing this about SF home prices since 1995, when I first started to consider home ownership here. I think the fact that rents have been moving substantially higher in recent months is the best evidence that the market is stabilizing.

  21. By the way, Spencer, were you hollering “bubble” in ’05? Because if you were, you were totally wrong. Can you admit that at least?
    Yes, there was a bubble in 05. The bubble started in 03 and will probably last through 08.
    I think 2010 prices will be approximately 30% higher than 03 prices thereby deflating the bubble.

  22. 20% fall is hilarious, I almost burst out laughing at the absurdity. Not gonna happen, except maybe in the tenderloin. Well, not there either. Prices of good condos in good buildings are pretty much as high as ever (look at the brannan for example). And each day that goes by we are one day closer to the housing market rebound. The window for delclining prices is ever-shrinking – we are already in Q407.
    And on the last day before the market rebounds, some posters here are still going to be saying “gee, prices are going to fall by 30% today, well because they must, it is just soooo expensive here. And some economists that I like to read who have never even been to san francisco let a lone visited a condominium or fifty in SF said that all housing in the US is overpriced so that must mean here too.” Prices in SF decline later, decline less, and rebound faster than just about anywhere else in the US. Good luck out there.

  23. I have first-time homebuyer friends– and each couple has been scouring the less-expensive parts of SF, looking for a decent home that is not right on a freeway or next door to a large housing project. And they still are getting outbid for homes. Neither wants to move to Contra Costa, where finding a first home would be much easier.
    Demand in SF may be down, but supply, in absolute terms, is still low.

  24. First off, prices in “some areas” are already down much more than 3-5%. I’ve seen many short sale and foreclosure properties in the city recently, most of which were listed for ~$100K less than last sales price, on average. And we’re only in year 1 of the down cycle. I agree the froth is disappearing from the market, but we still have a ways to go.
    Sure, rents are up, but if you do the math, cap rates are still too low to justify buying over renting unless you roll $500K of bubble equity. The market is hardly balanced.
    Realistically, those of you who are bullish are just as guilty of armchair analysis as many of us bears. You look at the three cherry properties that millionaires bought for over asking last month and conclude the market is strong, and we’re all idiots because we don’t realize that SF is a playground for the rich and famous and will remain permanently detached from fundamentals. Maybe you’re right. But we lose nothing by waiting to test our theory.
    And yes, SF has always been expensive. But the ratio of price to incomes has increased substantially over historical levels. SF will never be cheap, and will definitely not experience a 40% correction. But 15-20% over 2-3 years is very realistic and not without historical precedent.

  25. Socketsite’s ‘listed inventory’ chart tells part of the tale – and it must be disappointing to those who have been anticipating steep price declines. The selling pressures just are not evident in the market. Inventories are below what they were this time last year and already have reversed early 2007 trends (when there was greater available inventory than in 2006). The reason? Most SF home owners can, and will, choose to hold on to their homes and will not give in to a selling panic that would be necessary to generate the 20% declines that some readers here hope for and predict.
    Homes are not like stocks; one does not have to sell them to realize value. You can use your home; realize tax benefits; rent it. Any analogy to the stock market “bubble” of 1999-2000 that fails to take into account the differences between stock markets and real estate markets is flawed.

  26. The historical precedent for 15% declines in SF is the 1989 quake. I agree that, given an earthquake, we might see such declines.
    I do not consider myself to bear ‘bullish’ on the real estate market. As I said above, there definitely has been ‘froth’ in the market, and some recent buyers — who intend a quick resale — will get burned. Dude refers to several of these unlucky buyers, and they will provide ideal buying opportunities for a few.
    Bottom line: if you can find a place you love and can afford, ‘buy and hold’ is a tried-and-true strategy that has paid off for generations of San Franciscans. “Timing the market,” on the other hand, is uncertain and risky.

  27. Buy and hold does indeed work if you can afford the place you bought. Given that 2/3 of this city has adjustable mortgages, I submit that they can’t afford what they bought.
    Somebody posted this in the Chronicle’s comments section a few weeks ago. I can’t take credit for it, but though it was a pretty accurate summary of the local mentality. They called it the “10 stages of real estate denial.”
    Stage 1: Real estate never loses value.
    Stage 2: Real estate outside of the midwest never loses value.
    Stage 3: Real estate on the west coast never loses value.
    Stage 4: Real estate in California never loses value.
    Stage 5: Real estate in the Bay Area never loses value.
    Stage 6: Real estate in the west Bay Area never loses value.
    Stage 7: Real estate in San Francisco never loses value.
    Stage 8: Real estate in the northern half of San Francisco never loses value.
    Stage 9: Real estate in the Marina or Pac Heights never loses value.
    Stage 10: Oh shit.
    Right now, most people seem to be in stage 8. Last year they were still in stage 5, so at least some progress has been made.

  28. No one really knows what will happen to the SF market– whether this is a short pause, as in 2001-2002, followed by a rebound, or a period of declining prices followed by years of stagnation, as in 1989-1996. Or perhaps things will be quite different than the last 2 dips.
    Thinking there is no risk buying now is wrong, of course, but so is thinking that waiting a year means you can buy a cheap foreclosure in Cow Hollow.
    When I bought my house in 1995, it was a leap of faith. I moved to what was then considered a less desirable neighborhood than where I rented, with a mortgage payment that was triple what I was paying on my rent-controlled apt. And prices had been stagnant for years, with no promise that things would change.
    Little did I know that Al Gore was about to invent the internet 😉 or that the median price of homes in my neighborhood would quadruple in the next 12 years.
    I wish I could say I bought then because I was smart, but really, I bought because I wanted more space and a garage, and finally had saved enough for a down payment. I just got lucky and bought at the right time. A friend of mine bought at the wrong time in LA (1991), and had to live in her home for several years after she wanted to move, because the value of the place had gone down by 25%, and she couldn’t afford to pay off her mortgage until real estate prices rose again.
    Some people on this blog are convinced that buying at anything above 2002 prices (or even 1997 prices) is stupid. And maybe they are right. Or maybe they will wait until it is even more difficult to buy a home.
    Others, however, will decide that they want to own, can afford it, and are willing to take a risk for the right home. Maybe they would have been better off waiting. Maybe they’ll be glad they bought when they did.

  29. Real estate does dip in “value” sometimes, everywhere. I would not want to be in a position, however, of betting precisely when it will lose value in SF, and, if so, when the “bottom” has arrived.
    But, again, home “values” are not like stock portfolios. If a home owner notices that the “Zillow-value” of her home dips $100k in a given month, this does not compel her to want to sell. It probably instead makes her more likely to want to work hard for that bonus at her current job, as she envisions a longer time horizon when she will have to be in this home, paying (because it is SF) a very high mortgage.
    Hence, don’t buy a home unless you really want to live there (and can afford to) for at least five years. If you find such a home, now is pretty much always the right time to buy. This advice works pretty well in SF, despite boom-and-bust cycles in house values.
    I disagree with Dude’s view that up to 2/3 of recent SF homeowners cannot afford the homes they bought. If Dude is right, and I am wrong, then more owners will be forced to sell as mortgage rates reset and additional selling pressues, and lower prices, will result. I just don’t see the evidence is of this over-paying by recent purchasers.

  30. Dan, you make valid points. And I have no idea what you do for a living or how much you make. But as an apples to apples comparison, imagine a modern Dan, working the same job you worked in the 90s, but at today’s pay. Could that same Dan save enough to afford same house today, at 2007 market prices? I’m guessing no. The house you speak of, which sounds like it was very expensive for you to buy in 1995, is probably completely out of reach of your modern-day counterpart looking at a first-time purchase.
    My point is that I look at real estate prices not only compared to past prices, or to other cities, but compared to what people here make and can afford (both today and historically). And I’m convinced the P/E ratio is out of whack for the first-time buyer.
    In other words, it’s become impossible to achieve what you did in 1995. Neither incomes nor the city’s population have risen by 400% since 1995. So how sustainable can these prices levels be?

  31. the bubble started in 03. The bubble was in 05. We have yet to see the bubble.
    A natural disaster caused a 15% dropoff. We’re due for a 20% dropoff, maybe 30 by ’09.
    This has been very enlightening. Thank you, all.
    Once again, I am in the trenches. Looking at things on a daily basis. Trying to find good deals for clients with a substantial amount of money. They can’t find jack shit, in fall of ’07.

  32. To my point that there is no evidence (yet) that SF buyers overpaid (relative to their income/assets), SF Gate reports that foreclosures are DOWN in SF in 2007, as compared to 2006. The rest of the bay area is a different story, however. Does this mean the SF market is “different” or merely that the proverbial sh** has not hit the fan here, yet?
    Only time will tell.

  33. Tim – mortgage resets are besieging homeowners across the country as we speak. Is SF different? Maybe. But why so many ARMs and I/O loans then? Possibly some crafty financial engineering and cash flow management by rich and savvy San Franciscans. Or maybe people speculating on appreciation and getting in the market by the only means possible. Time will tell.

  34. Dude, there are lots of reasons why buyers in recent years might have utilized an ARM or an I/O loan, and these reasons do not equate to a lack of the buyer’s ability to afford the home purchased. Most likely, buyers simply have been betting that, given the fluctuating mortgage rates in recent years, they will be able to refinance at a more competitive rate during the adjustable or I/O period. I know I did. As the spread between adjustable and fixed rates has narrowed considerably, I would imagine that there are fewer ARM/IO loans being written for current purchases than, say, a year or two ago. I don’t know if this has happened, but it makes sense to me.

  35. Have you been reading the papers? Credit Suisse report? Where’s badlydrawnbear with the “reset tsunami” links?
    There are fewer being written today because a sizable percentage of them are going into default nationwide. That’s what shifted the spread in the first place: turns out most folks who got those loans could not afford the payment once it adjusted and began to amortize, nor could they afford the payment under a 30-year fixed mortgage. Hence the name “affordability loans” – they let people who couldn’t buy property under traditional terms become homedebtors.
    Sorry, maybe I’m old fashioned (and I’m repeating myself now), but if you can’t afford the property with a 30-year fixed, you can’t afford the property, period.

  36. Dude- that is simply false. Many people choose mortgage products that give them greater flexibility for a variety of reasons. If you plan to move in 5 years, a 10 yr. fixed I/O loan is for all practical purposes the same as a 30 yr. fixed, except that with the former your payments are lower, and with the latter your investments are less diversified. A 30 year fixed mortgage is an unnecesarily conservative finance vehicle.

  37. sigh. are we on the ARM’s again? that hit is happening righchnow. ’07 sees the most ARM resets of any year. Look it up. ’08 is distressing too. But the big hit is now.

  38. Point taken. Exotic mortgage products such as I/O and even stated income loans all serve a bonafide purpose. Unfortunately, over the past few years they’ve been abused by speculators and people who couldn’t otherwise afford property at all. If more people were “unnecesarily conservative” like me, I can’t help but think that a good portion of this mortgage mess would have been avoided.
    And to counter your point, if I buy with a 30-year fixed, I’ve reduced the principal after 5 years and get more equity out when I sell, all else equal. If my property and my other investments appreciate at the same rate over 5 years, it’s basically a wash. It only makes sense to go I/O and invest the difference if your home is your worst investment alternative……

  39. “You folks honestly call what we have seen around here a bubble? Be real for a minute. It still costs 700K to live in Parkside.”
    A peculiar argument, especially given that prices are currently at historically unusual levels in relation to both income and rents. After all, one could have made similar arguments about dot com stocks throughout 2000. Not saying there is or isn’t a bubble in SF real estate prices, but given the time real estate cycles usually take to play out, the jury’s going to be out a lot longer, imo.

  40. Rents have been skyrocketing. Incomes at the higher earning levels have increased dramatically in recent years. What is the evidence that rents/incomes are not in line with current home prices?

  41. Amen Corner, everyone wants to be reductive, but it doesn’t work. This is not a logical equation that can be deduced so simply. Again, stocks are not equivalent to homes. And wasn’t the Parkside comment posted in response to someone who posited that the bubble had already popped two years ago?
    If anybody on here is not on the sideline, I would be surprised. Those who are out in the middle of this market know the real story. Ich mochte nicht shadenfruede mit dumkoffen.

  42. Take a look at this NAR report from a little over a year ago (yes, I know this is the SF “region” — please feel free to offer stats indicating that SF proper is dramatically different):$FILE/06CASan%20Francisco.pdf
    Some choice stats:
    2006 Mortgage Debt Servicing Cost to Income Ratio: SF = 41.1%; nation = 22.0%
    Historical Mortgage Debt Servicing Cost: SF = 35.4%; nation = 22.0%
    2006 Share of New Loans with ARMS: SF = 72.0%; nation = 28.0%
    Percentage of Mortgages for Second Home Purchase: SF = 8.3%; nation = 15.3%
    3-year Job Growth: SF = (-2.4%); nation = 2.4%
    The evidence certainly appears to indicate that SF home buyers are far more strapped than those in the nation as a whole. Does that mean prices are poised to continue falling here? It would seem so, but we can only wait and see.

  43. Rents have been rising rapidly, but still aren’t higher than they were at the peak of the dot-com bubble (very close though). Care to tell us what has happened to real estate prices in the interim? For apartments at least, it’s not difficult to compare the after tax carrying costs of owning (interest, taxes, hoa or repairs, insurance, loss of interest on downpayment) versus the cost of renting. And even with this year’s big rent increases, carrying cost are still way out of whack with rents.
    As to income, are you really claiming it has increased in anywhere near the same proportion that prices have this decade?
    And, fluj, that stocks are not the same as houses is essentially my point:- real estate cycles, unlike stock prices, take years to play out so it is far too early to make a definitive judgment that prices were or were not at bubble levels in the 2005 timeframe.
    As for folks on the sidelines, well, I am not. I go to open houses most weekends and if I see something I like at a price I like, I will be buying. Went to two open houses this weekend in Pac. Heights. Noone there but me (rather different from earlier in the year) and both agents very pushy that I make an offer.

  44. I don’t think you can use general Bay Area 2006 stats to try to support what is going on in the SF market now. 2007 foreclosures and trustee notices are lower in SF than they were in 2006. Not true in the Bay Area generally. Inventories are down over 2006, despite the high number of condos coming on to the market.
    Is it too simplistic to suggest that people who buy homes in SF just have more money to do so? Sure, as a percentage of income, home costs are higher here; but that statistic is less significant at higher levels of income. It does not signify that mass foreclosures are imminent, and the facts suggest otherwise.
    According to the Noe Valley Voice, in July 2007, for the ten sales of SFH’s in Noe Valley, buyers paid on average 19% above listing price. How’s that for a stat?

  45. We can argue both sides of this all day without resolution. The market will tell its own story. But for the sake of debate:
    1) Foreclosures are definitely up in the city – I’ve physically seen more foreclosed/short sale properties this year than I even heard about in ’06. Not all data agencies do a good job of picking these up (the RealtyTrac numbers were understated).
    2) Inventories are about flat, and that’s because a lot of sellers have pulled their places from the market because they didn’t get their wishing price. They’re waiting for the market to improve before relisting, because this blip is just temporary (this is what half of Stockton was saying in early 2006). The spring bounce will save us!
    3) San Franciscans have more income: True. Average American lives 3 paychecks away from bankruptcy. Average San Franciscan lives 6 paychecks away from bankruptcy. Maybe, if they cut out wine and lattes, 10 paychecks.
    4) According to properties I’ve found and posted links to, there are well over 20 places in Sunnyside, Excelsior, and Sunset/Parkside selling for $100K or so below what they sold for in ’05 and ’06. How’s that for a stat? Coincidentally, would those Noe Valley properties have sold for more in ’05 or ’06? Were any of them reduced and relisted before selling?

  46. sanfrantim, here are some more Noe Valley stats for single-family home sales:
    Jul 07: 10 sales at $940/sf
    Aug 07: 11 sales at $878/sf
    Sep 07: 6 sales at $790/sf

  47. From what I’ve seen both top notch houses and fixers in Noe Valley have done nothing but climb since ’05. I can tell you that fixers in Noe with yards and parking are going for well over $1.2M these days. Two years ago it was like ~1M. Last year 1.1. People are going nuts for fixers in nice areas right now. Fixers and perfect houses in nice areas — they go, fast. It is now commonplace to see a $2M+ Noe home. It wasn’t in ’05. In O6, moreso. But now? All the time. But if anything has a flaw, it lingers. (It still aint cheap tho.)

  48. And a few more Noe Valley SFH stats:
    Current SFHs in Active-Contingent or Pending status: 4 (so maybe the October 07 sales count will be only 4!)
    Oct 06: 13 sales at $821/sf
    Sep 06: 11 sales at $775/sf
    Current SFHs in Active status: 10 at $782/sf (two of these show price reductions including the well-covered Droubi listing)

  49. All I know is that the SF market is on fire right now. I’ve been outbid 5 times already ($1-2 mil price range). It is absolutely nuts. I might have to capitulate and spend $1,000/sqft (if i can find that kind of value) in SOMA!

  50. At the risk of feeding a troll (prime?), what were the places and what did you bid? No addresses, no credibility.

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