January S&P/Case-Shiller: San Francisco MSA Continues Decline

fluj: all those lines are pointing down very steeply but there are supposedly bidding wars erupting all over the city. How should we bitter renters reconcile the two conflicting perspectives?

anon: apparently the people participating in the bidding wars can’t read the charts either… otherwise they wouldn’t overbid. Assuming rationality prevailed (bad assumption).

John: what happens after the three tiers meet? Everyone goes down in concert or the decline just suddenly stops and levels out?
Those charts look like a system that has a bit of ‘inertia’ to it — trends don’t just stop on a dime.

2003 here we come.

Jimmy,
Don’t forget that pets.com stock was in a bidding war every day of its existence.

So Tipster, how long until real estate goes completely out of business and is delisted? I see we have gone from 20% predicted declines to 50% declines to SF housing = pets.com
I guess at that point the rent to buy is favorable, hmm…I can rent it for 0 or I can buy it for 0.

spencer,
as a landlord i have to say that you have an undermarket rent. as proof you may go on craigslist and look for a pac hgts 2br/2ba. it is possible to find smaller/darker/damper/uglier apts. for less than the going rents but IMO its not easy to find a good rental for anywhere near this rent. in the past you have said that you were offered another place (tele hill?) for a similarly cheap rent; i would contend that these places are not available
publicly but only available on blog comment boards…
of course you can post some examples from CL to prove me wrong-or not.

We will probably see a pull back, and a few months of increases. Everyone with skin in the game will breathe a sigh of relief, and then it will plummet further.
As for the convergence – who cares? That will be a n arbitrary point in time when that occurs, and will not effect consumer psychology/consumer willingness to buy, or even consumer ability to buy.
Rillion – I believe the reference to pets.com was to illustrate the naivety of believing these things can’t go down much further, or that anything is a sure bet. San Francisco is special, but not when it comes to a bubble that is so grossly over inflated. In fact, the slight resistance SF has shown thus far just means it has a longer way (percentage wise) to drop than most places that have already begun a hard drop. I get that there are differing opinions out there on “what” is going to happen, and no 1 opinion is more right than another right now, but for every 1 reason you could give for the housing market coming back (or not dropping), I can give you 4 to the opposite.

What are the boundaries of the SF MSA?

[paco] –
Spencer’s rent is pretty darn low. Spencer – I want in!! That’s a steal. How in the world did you find that?!?!?
His point is still valid though Even if he were paying $4000/mo (which would be overpriced, though only slightly) his analysis still holds. And he doesn’t even factor in insurance.
There is no analysis (that doesn’t speculate future prices) where buying makes sense in this market. Since homes we would want to live in are >800k, I have to assume the buyers are smart people to even come close to affording such a home. Once they do the rent/buy analysis… well I can’t see how someone would choose to buy.

Apples to apples, prices are down more than 13.3% yoy out here in the nice parts of District 4 that I watch.
Here is a fun example that all the “locals” are talking about: 261 San Fernando Way (in Balboa Heights/St. Francis Wood).
Sales history (from Propertyshark, also SF Chronicle for the last sale):
12/08/2003 – $1,398,000
01/07/2007 – $2,475,000
10/09/2007 – $1,710,711 (lender bought at auction)
02/27/2008 – $1,500,000
BTW, the latest buyer overpaid a little IMO, but close enough. Note the almost complete absence of appreciation since 12/2003. The $2.475M sale looks a little suspect to me – probably a cash back scam or a clueless recent arrival from Asia – but $1.7-2.0M would have been about right in 2006/07. No major renovations since 2002 (I know the house), and the 2003 price of $1.4M was about right IMO for the time. BTW, houses like this were available to rent for about $3-4K up until last year (and I bet we’ll be there again soon, as the recession takes hold). I know, because I rent one of them (mine is actually slightly nicer because it was a tremendous view and nicer kitchen).
There are a number of others out here – apples to apples – that show that appreciation has been wiped out back to end 2003/early 2004 now.
Also, a number of flipper properties are getting squished. I went to two open houses last weekend, pointed out to the realtors that both were in distress, and had apparently stopped paying taxes, etc. Both realtors expressed shock (sure, like they didn’t do a little checking before they took the listing?), and denied it. The best part of it was that one of the realtors was the owner/flipper (I didn’t let on that I knew)!! I’m *sure* he didn’t realize that he had stopped paying his taxes, heheheheh. Yeah, really ethical profession.
Anyway, out of some misplaced sense of fairness, I’ll refrain from posting the addresses to those two failed flips until they either sell or (more likely) go into foreclosure.

treeman,
you make a good point when you say that homes you would want to live in are >800k. that implies many things in regards to location and condition. the point being that you can not find this kind of quality for rent; rather, you find rental quality.
this goes back to what i was saying about spencer’s hollow boast. RE bears want to paint a picture that includes beautiful rentals for cheap and crappy sales offerings for too much money. in this world smart renters are laughing at dumb buyers. and little tatoo welcomes us to the island…

Sorry paco, flawed argument. There are several places listed on craigslist for sale OR rent. Additionally, several Soma condos for sale that come with a tenant in place. SocketSite has featured a few, like that place in the Marina with all the realtor acronyms in the headline. Run a rent vs. buy on any of these properties, and the conclusion is unchanged. I agree that for-sale inventory, in general, is nicer than rental stock. But not nice enough to justify the huge buy vs. rent delta.

“If anybody can put forth any reasonable basis why this downward trend would reverse itself anytime soon, I’m interest in hearing it — I don’t see it.”
I have 2 reasonable reasons
1) government intervention. the govt has intervened significantly, and this MAY open up lending a bit, which might allow more people to buy again. It will not lead to rapid super-appreciation, but it may lead to a small turnaround
2) seasonal factors. We may see a spring bounce again, many call this a “dead cat bounce”. It may or may not be sustained. RE downturns take a long time, and you will often see some headfakes here and there.
notice I am not saying that i think that SF has a high probabilty of significant sustained appreciation… but it does have a possibility of some positive months here and there, especially the later spring due to the above factors.

My pets.com reference was misconstrued so I’ll clear it up.
Jimmy implied that with prices falling, you can’t have (or haven’t had) bidding wars. Pets.com shows that you can. People were bidding for it all the way until its last day. Doesn’t mean the stock is going back up, it just means people were bidding for it. I did not mean to imply anything other than people can be wrong! They bought millions of shares of pets.com right before it went out of business.
I interpreted Jimmy’s comment to imply that bidding wars would soon be over (not true if someone wants to underprice a home) or that fluj could not be telling the truth (also not true: he tells us what he sees and he’s been pretty darn honest). I’d use him in a heartbeat.
However, let me be clear: bubbles are characterized by an inflated demand. The reason they take so long to pop is that there is one way to pop them: the supply has to EXCEED the inflated demand. That’s when they finally pop and it takes a long time to create that much supply.
There’s just one problem, when the supply exceeds the INFLATED demand, the supply GROSSLY exceeds the REAL demand. So when the bubble pops, you’re in big trouble on the supply side.
The country is awash in houses. Maybe not everywhere, maybe not even here (though I’ve lived here for a long time and I’ve never seen that many cranes in SF). But in a capitalist system, the workforce can do something magical: it can MOVE. And it will.
If I were in my twenties, I’d think about moving to some place where homes are practically free, but jobs are plentiful. Phoenix would probably be on my list in about a year if I were younger. That will improve my standard of living immensely. I could buy a home, and have tons of dollars left over to do what I want. Don’t like the restaurants? If homes are cheap enough, you can hire your own chef.
Will it take a while for jobs to spring up to take advantage of the lower wages that will be required to provide the same standard of living? Of course. But the jobs will come. And people will move from high cost areas to lower cost areas to take advantage of them. And when that happens, even the supply constrained areas will fall dramatically.
It was only a matter of time before home prices fell, and dramatically: we’ve been building them to supply a bubble, not to supply normal demand.
The US is awash in houses. Prices are heading way down. There isn’t any way to stop it. We built too many of them.

Not only CAN one look to certain neighborhoods, but one MUST do so. Yeah, there are eight Potrero SFRs on the market. I alluded to that in my post. Look at them closely, however.
54 Blair Terrace — Under 1000 feet, townhome, south slope.
73 Littlefield Terrace — Also smallish, also south slope.
1459 Rhode Island — South slope, under 800 feet.
2136 18th street — C-minus level North slope loaction. 740 feet.
2104 24th street — south slope. No parking. Protected tenants.
447 Vermont — A stone’s throw from 101N.
619 San Bruno — Also parallel to 101N.
969 De Haro — No parking. Probably C level location, a bit far from the village but still nice. More in keeping with what I perceive people would like. But challenged.
Contrast these with any of the pending or active contingency properties. They include 1136 Rhode Island, 519 Arkansas, 237 Texas, 773 Rhode Island, and 752 Carolina. (In fact everybody should look at 752 Carolina just for fun. wow. talk about RE pornography.) Each of those properties spent scant weeks on the market at most.
When you’re talking Potrero Hill you MUST talk north slope versus south slope. That is not debatable.

@Spencer
A few notes from someone who has gone to see many many rentals. First, you are getting a good deal. No doubt about that, so for you rent vs. buy is an easy decision, but you have a below market rent. Second, when you factor in buying affordability, don’t only use 30 year fixed as the cost basis, run the numbers with a 5/1 or 7/1 IO ARM. Then you will see how people are affording it and why some chose to go down that path and come up with different numbers on rent vs buy. Those numbers would come to much closer to a market rate rent than you would think. That is how virtually everyone I know has bought their house or condo.
I have been amazed at how people have been able to justify buying in this environment, but one thing is for sure, not a lot of first time buyers are anymore, because we are priced out of the market. That will take some time to ripple through, but eventually it will catch up and really hurt prices.
Satchel also has a great rental deal, as do I, but with that comes market exposure. If we get kicked out, or the landlord jacks up our rent, then we may have to move, and might find it difficult to land the same deal we now have. There are a lot of variables in rentals that you don’t think about when you have a good, secure deal.
Anyway, for you, this is an easy decision, but for other people it may not be as easy. People look on shirt time horizons these days, and 5-7 years seem like a long time to live anywhere, so that is why you see so many ARM’s in use, plus short term money is way cheaper than long term money these days.

I think the dingo ate my comment….

i don’t know what the market is going to do next, but i know this: i sold a house in SF in 2002 higher than what i’d paid in 1999. all the dot-coms were dead and SF’s population declined by almost 10% in that time. but you know what? the market never went down. never. and hasn’t gone down since. (well, until recently, i guess!) all i’m saying is that was one of the 5 most-obvious trades of my life, & i couldn’t have been more wrong. just when you think you’ve got it all figured out…

So Fluj…did I not say two weeks ago we’d see some data that would show SINGLE Family down substantially when you were saying the data would show no change or modest decline. You mocked me!!! and what do we see now? How do you explain this? Do you think the data is flawed?
BTW here is a good link to a story by Barry Ritholtz on seeking alpha entitled–Is realtor spin counterproductive. Basically an argument would be by encouraging buyers with false data it ends up making corrections much much worse then they otherwise would be.
http://seekingalpha.com/article/69852-how-counter-productive-is-realtor-association-spin?source=i_email

Dude
8% on a jumbo?
If you take a 8% jumbo (even though the cost of mortgage has increased significantly since six months ago), you will be ripped off whether you buy, rent, or buy a TV from BestBuy.

Cooper’s seekingalpha post raises a point over which I’ve been scratching my head for months. Local real estate professionals as a whole are getting killed by the dramatic reduction in sales volume. Yet the industry, locally and nationally, continues to push the myth that the market will go back up soon so now is the time to buy — seeing quite plainly that people are not that stupid and they are not going to buy such sloganeering and jump in.
The best thing for the profession would be an immediate and steep reduction in prices (say 20%) rather than having it slowly play out over years, which is what we’re seeing. That way all the excess inventory might start to sell and realtors could return to earning commissions (emphasis on “might” — hard to tell if buyers could get financing to jump in even with 20% price declines). I just don’t get the self-defeating party line that has resulted in a stalemate, with very little moving and realtors consequently losing bigger than anyone.

Spencer,
There is a spread between renting versus buying, but I think your math exaggerates the extent of it, for a couple of reasons.
1) While I don’t know rents in Pac Heights very well, I assume Treeman’s number of $4000 is closer to the norm for the property of the calibre that you described. Before we bought we were renting a high floor [with Bay Bridge view] 2/2 at the Metropolitan [in SOMA] for about $4k, including parking.
2) In terms of the 7.5% interest, that is likely the prevailing rate on jumbos. However, one can structure it differently to reduce the rate. We have two mortgages, each about $417K .. the first one conforming even before the limits were recently raised. We got both in February at 5.125% and 6.125% respectively, before mortgage rates rose recently despite lower fed. funds rates … although we expect that anomaly to reverse fairly shortly. Accordingly our monthly payments are about $4,300 … I know your principle amount would be slightly higher, so your payments would be too … but not that much. Property taxes and condo fees are additional, but there are the interest and property tax write offs.
Just yesterday I had someone from one of the bigger banks offer me a loan that was quite different from what I had seen before. While one does need 20% down [maybe one could get away with 15%] this would be a jumbo mortgage tied to Libor … with a 1.375% premium to either 3 to 6 month Libor. While the ‘introductory rate’ would be 4.625%, after six months it would tie into prevailing Libor rates, plus the premium. Based on current Libor rates, that rate would today be around 3.9%. The glaring issue is that this is a floating rate with a 6 month reset, so it’s definitely for those with a certain amount of risk aversion. However, an instrument like this would make the buying vs. renting comparison far more compelling.

duuude,
you wrote ” Sure, the Beacon may not be “prime” SF, but the same relationship holds for most properties/areas throughout the city.
So the points made by Treeman and Spencer are valid: prices are still disconnected from fundamentals such as rents and incomes, and will keep falling until an equilibrium is approached.”
i’m talking about pac hgts (spencer’s example) and you’re comparing that to a newly built, large unit building in a area of many others just like it. now i would venture that they built more units in the beacon than perhaps all of pac hgts over the last few years! these are not two apples.
as for your contention that prices will fall to an equilibrium in pac hgts, i say “show me”. when was the last time that happened?

Here are some Case/Shiller Home Index data points for price depreciation to put into the buy vs. rent calculators for the SF Bay Area. Yes, the futures are very thinly traded (and I’m sure most of the depreciation will be “contained” in Antioch).
Jan 08: 183.81 (current)
Nov 08: 154.80 (approx. Feb. 04)
Nov 12: 153.40 (approx. Nov. 03)
Good luck to those with 5/1 ARMs.

Treeman,
Need to look at net present value. House might be worth 40 million in 100 years but a dollar will be worth less also.
My forecast: prices moderating, not tanking.

Treeman – not a realtor nor do I have any interest in selling anytime soon, but my guess is that the “nice” areas of SF will hold their own in this market…. from what I’ve seen, that seems to be the case so far in Pac Heights as I continue to see stuff come on the market, get multiple offers, and sell including a recent 2.5 million transaction my building last month.

Dave, I think your comments are spot on and well-said. It’s a nice perspective on some of the numbers from the latest CS report. Also, there was another interesting relationship here that either didn’t get noticed or was just plain skipped over. The 3% drop in prices for the upper tier (presumably the best indicator for SF) is shockingly similar to the declines for San Francisco that Dataquick has been reporting recently. The editors and many others are quick to say that Dataquick is understating the housing drop due to mix changes, but now Case-shiller (the “superior” survey) is suggesting essential the same drop. A 3% correction is a lot different than a 30% nosedive, and I think you’ll continue to see things pan out that way. We’ll get slight decreases for the next couple of years, which is similar to the pattern that we saw in the late 80’s and early 90’s. As a reminder, prices dropped then by around 10% from the peak. Yes, I know about the random 40% drops during that timeframe (per some other posts on here), but that was obviously offset by appreciation somewhere else in the city.
Spencer – I’ve said this before, but I think you must have below market rent. Either that or your perception of your unit’s value relative to available purchases is not accurate. Everyone has their own rent vs. buy numbers based on where they live, but this is what they look like for my condo building. You can buy a 2BR unit for around $800K or rent one for $3200. After factoring in HOA dues, taxes, and tax deductions – the difference in renting and buying would be around $500 monthly. This assumes a 6.5% interest rate and 10% down…and I’m not taking into account opportunity costs on the 10%. I’m also not factoring in the big increases in rents that have been happening over the last few years. My point is that $500 alone wouldn’t make me decide what to do one way or another. If other factors suggested that I should rent (e.g. – no down payment, expecting to move in 3 years, job stability), then I’d rent and not think twice about it. I wouldn’t however rent with the primary assumption being that prices are going to drop on SF units by 30%. That’s where our opinions are different.

Regarding the rent vs. buy, somebody does seem to have inaccurate assumptions. But I’m not convinced it’s me.
30 years jumbos have crossed the 8% threshold, folks. Here’s a link to Wells Fargo’s daily quotes page. Note the 30-year jumbo at an APR of 8.2%. And this is still low by historical standards.
https://www.wellsfargo.com/mortgage/rates/
Even the veritable 5/1 ARM, the loan of choice for pretend millionaires here in SF, is now over 7% coupon. I’ve always argued that if you can’t afford a 30-year fixed, you can’t afford the property. But I may be overly conservative.
And my previous example isn’t contained to Soma. What about 2243 Greenwich? That Marina treasure was for sale for $2.2MM or rent for $11K a month. Now a short sale:
https://socketsite.com/archives/2008/02/a_little_extra_perspective_on_the_listing_2243_greenwic.html

“Figures don’t lie, but liars figure,” as they say. Not to call people on either side of the argument liars, but there’s a relative dearth of granular data on real estate (which is my main issue) and it’s easy to pick out a comp that sold for more than listing and had multiple bids and say the market is hot– or to point to other data to say the market is tanking. It’s not easy to refute that activity has been steadily declining for more than two years to very low levels and that prices in many areas have fallen. The argument here seems to stem around the sale of shiny new condos or pac heights SFH’s- nice places in nice neighborhoods. Is that market still intact because of . . . foreign buying or the no new supply story or those buyers have cash and don’t need financing, etc.
Obviously no one knows the future. I have a view which may or may not come into fruition. I think it’s going to be a slow drawn out contraction that is deeply unsatisfying for both sellers and buyers. Buyers see the fundamentals collapse and the activity collapse and expect prices to rapidly follow. Sellers see prices very slowly leak and activity dry up and hold on to the belief that there is no end to the- “no new supply in sf/real estate can only go up” story; they are sold a story that there is only a temporary cutoff in financing and if they don’t sell now, r/e will be back to “normal” in a year. I think the most likely scenario is a long protracted sideways/ lower market. R/E is auto-correlating. A lot of times it goes up, because.. .well, because it’s going up. And it’s a slow and inefficient market to correct as a result. I feel strongly that the primary drivers for the boom of the last decade (financing trends (the ’03/’04 secular low in rates followed by the proliferation of a series of sequentially more leveraged affordability products)) were unsustainable and that even if the market doesn’t collapse, risk/reward tells you to be very patient here.
I think the contentiousness in this discussion comes from the fact that a lot of us have had bad experience with realtors. It doesn’t mean that there aren’t very knowledgeable and ethical realtors out there. But I certainly have had personal experiences as well as casual third person experiences with realtors who were neither ethical nor informed. But this does not condemn an individual. i.e. I don’t agree with fluj in many posts but he certainly seems a lot smarter in his viewpoint than many other realtors I have dealt with. But Fluj has to understand that a lot of us have had direct experiences that have left a bad taste or cursory experiences– going to an open house and having the realtor tell you that it is just on the market and sure to sell soon if you’re interested– when you know it’s been on the market for a while. I’ve literally been told that the market is heating up and then while I am upstairs have the two realtors talk about how bad things are thinking that I am out of earshot.
It’s amazing that the single largest purchase/investment people will ever make is also the one with the least amount of data and regulation. It’s not illegal for someone to say that real estate can only go up and you can’t lose whereas you can’t say that about any security. I am not a big believer in regulation as an abstract concept, but wow it does amaze me what goes on in r/e. Without the internet, the NAR would be fighting tooth and nail to prevent more data and information to the consumer. It would be simple for them to have readily available data by zipcode and zone for monthly sales, price per square foot, average square footage, etc. I know this info is out there but it should be easily available that anyone can chart any time period, any zipcode, by all of the basic measures. The fact that we argue about Case-Shiller and data quick and NAR or homebuilders numbers, show how most of us dont’ have easy access to very basic granular data about the market. I firmly believe that if there were no internet and no outside pressure, the NAR would keep it that way for as long as possible.
What’s at stake here is not only the real estate market collapsing or maintaining, but how houses are bought and sold. 5-6% commission– frequently for little data and little value added is not a problem if the market is up dramatically. But if we do end up with a sideways lower market for five years and people are losing money, there will be a much greater call for reform of the NAR, and it’s likely that commissions will drop significantly or go to a fee-based system. It’s happened in every market and every business– margin compression from competition and more readily available information and price discovery through the internet. Whether you are selling cars, airplane tickets, or stocks, this has happened. I have a strong belief that the way houses are bought and sold, the amount of data available, and the fee structure will be dramatically different ten years from now. Whether or not it happens soon depends on how bad the market gets, how politicized the issue becomes, and how successful the NAR is at lobbying against this. . ..

“I’ve always argued that if you can’t afford a 30-year fixed, you can’t afford the property. But I may be overly conservative.”
True. But, for most people, if you choose a 30 year fixed, you don’t know how to manage your money. The I/O’s ARMS etc are the tools for the wealthy to use their money smart and the less wealthy to get in over their head . . . sometime also in a smart way.

Cooper I take it you didn’t read my posts that show the opposite of what you say.

https://www.penfed.org/productsAndRates/mortgages/mortgageCenter.asp
30-year fixed, 6.375%
5/1 or 5/5, 5.375%
http://www.ingdirect.com/google/
5/1, 5.25%

If you can up your down payment, I have seen as recently as last week a bank offering 6.25% on jumbo money, but you have to go to 70% LTV. There have been some decent rates out there, but most come with an additional 5% to 10% of LTV to secure those rates.
I agree with Tom, if you can borrow cheap in an ARM or IO ARM, then you can save money that can work for you in more productive ways, then it is not a bad idea.

treeman,
you wrote “Are you telling me there will never be more houses for sale than buyers in pac heights? That’s a bold statement.”
that’s not what i said but rather that the 500+/- units built at the beacon represent more units than were built in pac hgts in many years. in other words pac hgts will never be inundated by large condo towers. so comparing soma to pac hgts is not apples/apples.
dude,
you wrote “And my previous example isn’t contained to Soma. What about 2243 Greenwich? That Marina treasure was for sale for $2.2MM or rent for $11K a month. ”
this does not bolster your point.

Having bought and sold 2 residences in the past, I can honestly say I walked away from both the transactions wondering what the true value of the services my RE agents provided was. The experience was neither bad nor good, but I think within those 4 transactions I would have done better to just hire a RE attorney in the end. That being said, had any of the agents I dealt with tried to push that garbage on me from the Realtor magazine link that Satchel posted, I would have filed a complaint (however I don’t which consumer protection agency you would file with). Is it really legal for RE agents to make such claims and give market advice without being subject to at least some sort of civil action?

276 states,
Ummm, try again. 276 States is not even in the same District as St. Francis.
Anyway, about the example. Seems like a good profit for the developer who brought his skills and expertise to the market (it looks like it was a company from Prop shark). There are still many foolish buyers with money who are willing to pay through the nose for that “turn-key” lifestyle or “new condo” smell. Take a look at th recent thread on the condos at 41 Federal, and think of the owners who are about to get a nice wakeup call from the market, as one of the original unit failed to sell at more than 10% below its sale price last year and is now going to be “auctioned”. Fortunately, out here in District 4, the number of people who are falling for these flips seems to be fading, and the flips are flopping. It is hit or miss, though. The trend is down, that’s what is important. Out here, at least. Not in the neighborhood of 276 States I guess. Yet.

Fluj, I agree that it may be difficult to convince individual sellers to drop their prices to levels where the place will sell. Perhaps that is why sales volume has fallen so dramatically. But perhaps it is also the result of the RE industry continuing to pronounce to the world that prices are “just about” to go back up. Either way, realtors would be far better off with lower listing prices and higher volumes, which was my point.
And I also agree that if you strip out all the districts where sales have plummeted and look solely at those few areas where sales volume has not changed — you can conclude that for those select areas the sales volume has not changed. Can’t argue with that logic.

jsut took a quick peek and there are a slew of 2bdr with parking in Pacific Heights on CL for less than $3000

I’ll have to agree with Spencer. I have multiple family members who are landlords, and they do not like to use craigslist. They have had a lot of less than serious applicants for their rentals. And yes, sometimes rent can be negotiable.

Spencer is right about what rentals actually go for vs. what they are listed for. Two recent arrivals in my office have rented in the city for about $750 less than what was being asked on Craigslist. One 2br in Cow Hollow on Pierce street near Union was rented for $2400 a month, and one on Scott St with Parking which was a 1br in the Marina rented for $1900 a month. I am amazed at what Hipsters pay for rent in other hoods such as the Mission and the lower Haight, which in both cases can be more expensive than the 94123 depending on what landlords can get away with. If you have perfect credit and are responsible, landlords would rather cut the price than see their units loaded up with potential problems.

The top, middle and bottom tiers are approximately 8%, 18% and 30% off respective peaks now.
8% isnt that different to numbers for SF that are coming through Dataquick.
I’m not sure from that I can see 30% drops in SF itself which some predict -as the current pace that would mean drops of around 90% for bottom/65% off middle.
There may be a time when the declines for the bottom two thirds cease or slow down while those at the top accelerate but at the moment the opposite is actually true.
For declines in SF to hit 30% this shift will have to happen though – and I’m not sure I see it coming.

peanut,
You missed all the listings from surrounding areas which use pacific height to catch spencer’s attention.

“I just looked at CL and didn’t see anything under 3K for 2 beds and parking in Pacific Heights. Except one in the western addition…Am I missing something?”
The know-how to use Craigslist?
http://sfbay.craigslist.org/search/apa/sfc?query=&minAsk=min&maxAsk=3000&bedrooms=2&neighborhood=23

“8% isnt that different to numbers for SF that are coming through Dataquick.
I’m not sure from that I can see 30% drops in SF itself which some predict -as the current pace that would mean drops of around 90% for bottom/65% off middle.”
So an 8% drop to date isn’t that bad because it’s less than 30%? Am I the only one who is floored by that reasoning? Forget the differential in monthly payments an 8% loss on an $800K condo is a $64K loss of principal!

“Does the market tend to overvalue these turnkey renovations as Satchel suggested?”
10,000 flippers would say “yes”. Otherwise why would anyone renovate to sell if the market’s perceived value of a remodel was equal to or less than the cost of the remodel ?

dude – I think your comments are generally worthwhile when I read the litany of things written on this site, but come on 8% 30 year fixed? We may be headed there, I have no idea really, but I know for a fact we aren’t there right now.
You saw the links posted above with regard to rates. I’ve mentioned elsewhere that I just refi’d my loan to a 30yr fixed jumbo at 5.75%, and though I’m not sure rates will head there again anytime soon, they were there just two weeks ago yet again.
Just like you shouldn’t buy sticker price on a home (unless you think it is worth it), you should never believe the garbage rate sheets that WF and other major lenders publish on the web. I’ve called them directly and been told that the real rates (on which they have serious wiggle room) for those with good credit and reasonable LTV, are significantly lower.
Right now I would state that 6.5% for a 30 yr fixed jumbo is about the going rate. You can find cheaper, but for most folks this will be about the rate at present. If you are even contemplating an 8% standard 30yr fixed you need to have your head examined.

“Volume down” is bad for realtors, true.
Is volume down in the areas I posted? No, only in the Sunset. Sixty-six SFR sales so far this year for the Sunset is higher than many would have guessed.
And again, I did not provide YoY single month numbers. I provided basically an entire quarter (1-1 through today) last year versus the same time period this year.

Milkshake of Despair – obviously with a good renovation project there should be a component in the final price that values time, skill, management effort, and some return on investment. This should provide the appropriate incentive to quality renovators. By “overvaluing”, I was wondering if people are then also adding an unnecessary premium to the construction and raw material costs.

@ enonymous et al:
I didn’t realize the 8% would cause such a stir! Look, I realize you can get jumbo rates under 8% if you have a large down payment. Prior to doing that quick analysis, I checked the most recent published rate. It was 8%, was it not? Have some faith…I don’t pull this stuff out of thin air.

PG2,
That was funny, I am clearly no expert at this online thingy…I think I just searched “pac heights” assuming it would pic up “pacific heights”. I clicked your link and there are a few that look to fit the sub 3K bill. One is open tonight, if someone is in the hood would be interesting to hear about it. I am surprised that those deals are out there.
IMO, If you are renting a nice place (2 beds, workable kithcen/bath) with parking in an area you enjoy for under $2,400 that is a great situation. Bonus for outdoor space, view. I certainly would not be lining up to purchase a comparable unit with that rent.
Location: 2336 B Webster
Open house Tuesday, March 25 at 6:15pm.
2 Bedroom, 1 Bath, Pacific Heights, Carpets, Miniblinds, One car garge, No laundry in bldg, Gas heat
Terms: Rent $, 2095, Sec Dep $2,600, 1 Year lease, No pets, All utilities included

It’s called a Housing Crash. And, the liquidation phase has begun.
But this housing crash conform to what’s called a Triple Waterfall Decline. There will be three big legs down, with two ledges. We should wash out in August of 2010.
SF Bay is about to reach its first ledge, as this first leg down bottoms this Summer.
Lots and lots and lots of supply is about to hit the market.

Satchel – regarding 190 San Pablo Avenue, MLS shows sale date of 2/12/2008 with a selling price of $3,650,000(*). The (*) indicates that the actual selling price has been masked (at the request of buyer or seller) so the number is set to the list price.

276 States is in my neighborhood, here are a couple other listings that are pretty far apart on price around here:
230 Roosevelt – $1.055MM – 2171 Sq Feet – looks newly remodled
4588 and 4590 17th Street – $1.4 and $1.35MM- each about 1800 Sq Feet. Brand new construction (these were featured in SS a couple months ago as they were being built)
These are basically in the same neighborhood, and are all on busy streets, the 17th St. properties are on the corner of Clayton, it is really busy there.
So, here are two data points that tell very different stories. 230 Roosevelt is very well priced, the other two are pretty high. Seem listing agents going in two different directions on pricing in this area.
Any insight?

FSBO,
Thanks. So we’ll have to await the tax assessment to figure out what 190 San Pablo went for.
All this talk of renovation is interesting. 276 states brings up “wholesale” costs for a developer company. Well, that’s GREAT if you happen to be a developer company. The question is what can the individual OWNER expect, and how should the individual purchaser evaluate the risks versus rewards?
It’s funny how many bring up abstractions like median or “mix” and then go on to theorize about it (I do it myself!). But the data *hide* a lot of risks and *mask* a lot of what is going on. That is why I like the apples to apples comparisons. And from the potential purchaser/homeowner perspective.
@ 276 states, YOU offered 276 states as an “antidote” to what I posted about 261 San Fernando Way in St. Francis/Balboa Terrace. In case anyone missed it, 261 San Fernando sold for $2,475,000 on 1/12/07, and was resold (after foreclosure) for $1,500,000 on 2/28/08. THAT IS A 40% DECLINE. 40%, PEOPLE! So, in response, you highlighted a property in which a developer/flipper was able to make a nice profit. Again, nice if you are the developer.
How about a truce? Your point about doom and gloom is well taken. I will continue to dig up and highlight investment disasters, from the perspective of actual economic losses incurred (not abstractions like median is “up”, volume is holding “steady” etc), partly as an attempt to provide some highlighting of the risks that SFH and condo purchases at these lofty valuations present. The bulls are free to highlight “success” stories, and in fact in a much older thread I suggested just this. Apples-to-apples is the best measure IMO, because it most closely approximates individual investment experience. Deal?

Satchel when apples to apples threads are proffered you are typically nowhere to be found.

Paco, a slew = A large amount or number.
I would say 16 listings under 3K is a slew, especially when a lot of people on here are saying the average is 4K
here is a breakdown of 2bdrooms on CL in Pac Heights
under 2000/mo = 2
2000-2500/mo = 2
2500-3000/mo =12
3000-3500 = 8
3500-4000 =10
4000-4500 = 8
4500+ =12
keep in mind that these are asking prices. From my personal experience in 5 apts in SF and from most of my friends who are either tenats or landlords experience, apts usually rent for 10-25% less than listed on CL. (totally anecdotal)
Also keep in mind that CL is only one source of information. Usually word of mouth deals are even cheaper. Most out of towners use CL. A lot of locals use word of mouth.

the bunk said: “230 Roosevelt – $1.055MM – 2171 Sq Feet – looks newly remodeled
4588 and 4590 17th Street – $1.4 and $1.35MM- each about 1800 Sq Feet. Brand new construction (these were featured in SS a couple months ago as they were being built)”
i agree that those seem pretty wildly divergent. 230 roosevelt is really competitively priced and will move over asking if i had to guess. the 17th / clayton properties, i have no idea. i haven’t been inside of those units (although they seem reminiscent of the townhouses at mars and corbett). that seems like a really bad intersection to live on.

“…but the whole point is they are getting bad advice from their realtors who are trying to tell them what they want to hear.”
How do you know that realtors are issuing bad advice ? Could it instead be sellers being stubborn against the advice of their realtor ?
If I were a seller’s agent I’d want the property priced to sell so I’d get my commission earlier and could move onto other prospects.
Selling agents get paid the same commission whether the property sells in a week or if it drags on for several months. There’s motivation to move properties as quickly as possible. Advising the seller to hold out for an unreasonable price doesn’t make any sense.

Cooper why take offense to what I said to Satchel? Interesting. Satchel even specifically challenged me about Merced Manor last week. I responded with apples to apples. Where was he though? Not interested in any positive apples to apples, that’s where.
Then you went on to say, “Now that the data actually shows single familiy homes heading down precipitously ” and you said the shift would be on if people would wake up and smell the coffee.
Wow. I mean, I showed the exact opposite today. I showed stasis in volume and pricing for the middle ground type buying sector for SFRs Q1 ’07 vs Q1 ’08.
Is your theory that last year sellers were stubborn too? Because it’s the same.

When interpreting this data, it’s useful to look at the household debt service rates.
By digging through the detailed tables of the American Community Survey at census.gov, you can get the following data for San Francisco County (*not* SF MSA):
Percent of homeowners with mortgages that spend 35% or more of their household income on mortgage payments:
1999 — 32%
2000 — 33%
2001 — 33%
2002 — 35%
2003 — 38%
2004 — 38%
2005 — 41%
2006 — 40%
Even more interesting is the percent of households that pay >50% of income on mortgages:
2000 — 15%
2001 — 18%
2002 — 18%
2003 — 20%
2004 — 20%
2005 — 22%
2006 — 24%
These tables tell the following:
1. A significant majority of mortgage payers continue to pay a reasonable amount (

There was a server error in the last post. The trailing end of the first point was:
“It is simply *not* true that in traditionally expensive cities like SF, house price to income multiples of 10X are acceptable. Those who claim otherwise are taking the median house price and dividing by the median household income, without realizing that the “median” household rents, and historically only those that are able to pay more traditional multiples can own.”
Also, renumber “6” to “4”. Don’t have 6 points 🙂

“Need to look at net present value.”
Fred- a perpetuity is the NPV of infinite coupon payments.

“The point is what’s happening in the SF market for real estate.”
I showed you what has happened for SFRs in a broad, common swath. How you can call that a precipitous decline is not known.

How the heck does anyone spend 40%+ of their income on housing? Why?
Seriously. I know everyone loves SF, but there are other places to live. Heck, try the East Bay. I’m looking at nice SFR’s (not condos/apartments) now that I can buy with a 15 year note in Boakland/Alameda (and at 30% of my income)d. And it’s barely a 20 minute commute. I’d have to pay at least 5X to live within 20 minutes of downtown SF.
SF prices will come down as more people realize that.

Back to the C-S Index for a moment. Here are the month-to-month % changes in the index for the San Francisco MSA starting with the peak month (for this MSA) of May 2006:
May-06 0.39%
Jun-06 -0.11%
Jul-06 -0.22%
Aug-06 -0.19%
Sep-06 -0.39%
Oct-06 -0.44%
Nov-06 -0.73%
Dec-06 -0.80%
Jan-07 -0.16%
Feb-07 -0.47%
Mar-07 0.15%
Apr-07 0.18%
May-07 -0.27%
Jun-07 -0.67%
Jul-07 -0.40%
Aug-07 -0.23%
Sep-07 -0.81%
Oct-07 -2.15%
Nov-07 -3.24%
Dec-07 -3.20%
Jan-08 -2.86%
Saw this array over at the CR blog for the 20-city composite index and it looks similar. Note the increased pace of the decline since Sep 07. Another 12 months of %3 declines (per month) will knock us all the way back to the Nov 2000 level (for the MSA of course – not for all of SF).

I don’t think we are going to hit 100…more like 115 or so for the index. 130 by this summer then a 2-3 year slow drop to get that next 15 points to 115 then probably 5+ years of flat to 0 percent real increases. I think a decline to 100, especially if it happened quick would put us into a materially severe depression. Even that 115 is going to cause severe pain frankly in terms of restraint on bank lending and growth. The one thing I have noticed tat is hopeful is that when we see these declines, buyers are responding…they are coming in and buying the foreclosures and eating through some of the supply. That makes me think hitting 100 is not as likely as bottom at 115 to hopefully 130.

@fluj,
Ok, now, I promised to address your Merced Manor “apples” to keep you and me honest, and even though it is a little OT, perhaps the other readers here will indulge this discussion. It’s pretty funny, and illustrates how so many of us are talking right past each other, and how fluj in particular doesn’t seem to have a very good grip on the whole concept of “apples-to-apples”.
fluj wrote above:
“Satchel even specifically challenged me about Merced Manor last week. I responded with apples to apples. Where was he though? Not interested in any positive apples to apples, that’s where.
Posted by: fluj at March 25, 2008 6:15 PM”
Well, fluj, I never really “challenged” you – it was just a passing reference to a house that has been for rent in that neighborhood (3700 sq ft 4/4, remodeled) and vacant for about 6 months at wishing rent $4.2K, in which I mentioned that I always bring up that empty rental whenever “fluj talks about demand in Merced Manor”. Anyway, no big deal – if it seemed like a challenge, well, so be it!
Here are fluj’s “apples” that he was referring to, but of course we should all agree (I thought this was obvious to everyone, but I guess I was wrong) that these apples-to-apples comparisons are generally between sales prices for the same house over some recent period, where the house in question was basically unchanged. I mean, of course a little updating or remodeling is no big deal and is to be expected, but I thought we agreed that entire remodels, gut renovations, etc. changed the tenor of a house and made the sales price comparison not too useful.
Here’s fluj’s first “apple”: 2750 Ocean. Here’s what he wrote:
“Satchel what about 2750 Ocean Avenue, in contract within 11 days during the holidays and sold in January after a mere 32 days, listed at $1.395 and sold at $1.45M ?”
Well, the LAST time that house sold was in 1949!! Take a look at the website (www.2750Ocean.com) and click on “details” and you will find “First time ever on the market”. I agree, fluj, apples-to-apples, Merced Manor has gone up a LOT since 1949. What has the latest trend been? Well, who knows? But if you think this is an apples to apples comparison that will shed some light on this question, well I would be inclined to discount your opinion. BTW, that’s about $450 psf, BELOW what zillow says is the “comps average” – not that zillow is a reliable source or anything, but the real estate industry has a HUGE problem with “reliability” of sources, hehehehe.
Now, for fluj’s second “apple”: 2930 24th Avenue.
Here is what you wrote:
“Or 2930 24th Avenue? Bought in ’06 for 1.089M, it underwent an interior remodel. Then it was listed at $1.499 and got into contract during the credit scare within 15 days, selling in under a month at $1.52M ?”
Well, what was this “interior remodel”? Some choice quotes from the listing website:
“has been remodeled from top to bottom!”, and “Other: New roof, new double pane windows, 200 amp electrical service, copper plumbing, crown moldings and hardwood floors throughout.” There’s more, you can read it here:
http://www.2930-24thavenue.com/wfPropertyDetails.aspx
MOST IMPORTANTLY, the square footage of the house “magically” grew from around 1500 sq ft to 2700+ square feet! It’s now a 5/3. So, it’s true $psf cost is around $560. But of course, that doesn’t stop the realtor/scamsters from using a phony $1027 psf “selling” price! See here (look under “How this home stacks up”):
http://www.zillow.com/HomeDetails.htm?zprop=15196444
I would be curious to know whether this phony $1024 psf has fed through to the average psf that is used on the MLS data, and gets into Dataquick, etc. Does anyone know?
In any event, NOT an apples-to-apples comparison, I am sure you will agree.
fluj’s last “apple” in Merced Manor: 3035 25th Avenue.
Here is what you wrote:
“Hey, if the only Merced Manor property on the market, 3035 25th Ave, listed at $1.429M, doesn’t sell for around that pricepoint (at only 2260 feet it is sort of pushing the $psqft envelope) you may have something to say about M.M. Otherwise you should really consider holding your peace on the subject.
Oh, by the way, that one is apples to apples. It was purchased for $1.287M in June of ’05 and it doesn’t appear to have been remodeled since.”
Well, it hasn’t even sold yet!! It’s been on the market for a month, so who knows at what price it will sell? The listing says “remodeled”, but I’ll take your word for it that nothing was done lately. I’ll also take the “remodeled” in the listing as just typical real estate salespeople puffery, but maybe I’ll visit at an open house and ask the agent a few questions (not that I expect straight answers!). I notice, fluj, that you “sanction” the $psf fraud right there in your comment above. 2260 square feet, huh? A 4/3, with obviously some rooms added in the lower level – those must all be some pretty small rooms, LOL!, to fit in those 2260 square feet!
Anyway, in all seriousness, this will be an “apple” WHEN it sells. It’s the ONLY valid comparison you’ve made. IF it sells at the listing price (it has been on the market for a month), it will show annualized appreciation of about 3.6% over the past 3 years, which honestly is not too shabby. I wouldn’t say it illustrates “strong” demand for Merced Manor. Maybe. Let’s see what it sells for and we can revisit it, deal? You seem to think it might sell for lower, so I guess the appreciation will be less than 3.6%, fair?
Anyway, fluj, I’ve spent a lot of time on this. Would you return the curtesy and please give me any insight you have on what happened at 261 San Fernando Way? I mean, that is a GREAT neighborhood – nicer than Merced Manor I’m sure you will agree. $2.475M to $1.5M – a MINUS 40% decline, in one year? Was it a cash back scam do you think, in one of the nicest neighborhoods in Western SF, when it sold last year for that crazy price? How could a buying and selling agent (bound by ethics rules of course) have been involved with something like that? Or have house prices gone DOWN 40% out here in one year? Hmmmm. (actually, IMO prices are down about 10-15% for properties like that out here since late 2006 – but I bet that $2.475M “comp” was touted by a lot of agents and may have even got some very clueless buyers to bite early this year; the $1.5M recent sales price is actually a tiny bit high IMO). Anyway, though, seriously fluj, if you have any insight into 261 San Fernando, I would really like to hear it (general question to all agents reading this).
And, BTW, 261 San Fernando is a REAL “apple”. I have a number of other disasters buiding around here, but out of fairness to the sellers and agents involved, I will refrain from posting details until they sell or (more likely) go into foreclosure.

FSBO,
Thanks for that info. Fascinating about 261 San Fernando, isn’t it? As I said originally people around the barber shop are talking, and people out here are getting scared that their “equity” is evaporating.
Property shark shows that Chase ate the loss on the 1st mortgage I guess – $1.71M, of which I guess they recovered maybe $1.2M, after selling/carrying costs/clearing back taxes, etc. Couldn’t happen to a nicer bank IMO – I used to work once in a while with the old Chemical bank people (back in the old days before the Chemical/Manufacturer’s Hanover Trust/Chase serial merger fest).
The tax assessment for 261 San Fernando makes sense. Add 3 years of 2% prop 13 appreciation in the assessed value from its last sale at $1.398M in 2003, and there you have it. I’m sure the supplemental bill was updated to the new price, and I’m equally sure it was never paid. It looks like it was a cash back scam to me, or else someone just evaporated an ENORMOUS down payment!
Interesting, that we are basically back to late 2003 pricing out here, especially if you accept my characterization that the recent sale at $1.5M was a little high (it was advertised as a foreclosure at $1.329M, and the opaque auction process of course is always sure to generate a “winner’s curse” high bid IMO). Apples to apples, I know it’s hard for people to accept that, but it is really basically true out here (obviously some exceptions – like that house on San Aleso that you and I talked about that sold high IMO before ever being shown to the public).
Great insight, too, into the acceleration of monthly declines in the CSI data. Back to 2000 pricing – I basically agree. Aren’t we there ALREADY for 246 2nd and 1150 Folsom (both featured on SS recently)?

261 San Fernando is interesting. The real question is not how it got sold for 1.5M, because that sounds a fair price. It is how it was sold for 2.4M early 2007.
For comparison, 399 San Benito Way was sold for 1.36M in 7/07, got remodeled and sold for 1.6M in 1/08. It is not apple-to-apple. However, it was a cheap remodeling. The remodeled interior looked like a condo. Actually I think this property deserved better.
My point is, by bringing up 399 San Benito (3000 sqft+, not including basement), you will see 1.5M for 261 San Fernando (2000 sqft) is about fair. Actually, I went to a few open houses in that area, and they were generally listed for 1.3M to 1.6M.
So, I want to hear the back story too….about that 2.4M transaction.

Those were not the only apples I asked you how about, Satchel. There was also 49 Samoset off the top of my head. But I will look at San Fernando way, yes.
Cooper, if you don’t read my posts stop asking me questions. Or at least stop asking “deflujional” questions. Again, I plainly showed a number of very popular mid-level neighborhoods with SFR sales showing no change YoY. In my view that refutes MSA data. In my view MSA is not particularly relevant anyway because I tend to favor the superstar city theory.

@ fluj – Those were the only apples you asked me about in Merced Manor, about which you said I “challenged” you (I didn’t, really). 49 Samoset (as I recall) you said “had a stairway opened”, so there was some remodelling, but I DON’t know the house, or the neighborhood, so I couldn’t comment. But I am starting to take what you say with a little grain of salt, frankly (butstill, it’s all in good fun!) 🙂 After all, you said that that MM house on 24th had an “interior remodel” when of course, just about everything that you COULD do to the house and propert WAS done (including new landscaping, systemes, electrical, windows, NEW ROOF, etc.)…
@ John – I doubt very much that the San Fernando print at $2.475M was a “clerical” error, especially as Chase ate the loss on the first mortgage at $1.71M in October 2007!! Looks like a lot of money died there and went to money heaven.
About 399 San Benito, it may be a cheap renovation to you, but the average buyer is not very sophisticated, and the nature of real estate sales practice is that the least sophisticated sets the sales price (at least in a boom)! A better “apples-to-apples” right on that very same street (actually a nicer block than 399 – which is one of those “little houses” that were built for the “peasants” back when the neighborhood was laid out) is 135 San Benito. I know the house VERY well. It had only had a little updating, painting, etc. between sales. Sales history:
03/09/2004 – $1,751,000
11/30/2007 – $1,801,000
Annualized appreciation: About 0.80%, more or less (using standard 12/360 convention)
Keep in mind also that that 1.8M sale probably wraps some closing costs into it, because (as you know) this is becoming the standard practice to grant “selling concessions”. That didn’t happen in 2004.
Also, do you think the market is stronger today or last November?
As I said, I think that we are generally back to late 2003/maybe early 2004 pricing out here in this part of District 4, apples to apples. There are OF COURSE exceptions, but I’ll stand by that estimate until I start to see a preponderance of convincing evidence to the contrary. Unfortunately, as I have noted and as is obvious, even cosmetic remodels – cheap or not – have the potential to snare a buyer who is looking for that “turn key lifestyle” or “new condo smell”. I would think that realtors should counsel their clienst to engage in remodeling efforts where cost effective. It still seems to pay off, at least a bit.

@ fluj,
Thanks for the info, sincerely. I have no idea what happened to 261 San Fernando, but since it went into foreclosure within 1 year of its $2.745M sale (it takes a WHILE for a foreclsoure to happen, assuming that the owner made even a few payments!), what MAY have happened is what has been happening all around the country, again as you know. A straw buyer buys a property with 10% “down”, say $275K. The first mortgage bank lends 70%, say $1.71M. The second mortgage holder lends 20%, say $500K. The deal “closes”. The buyer “gives” the seller $2.21M, the value of the two loans. The seller of the property gives the buyer $200-300K, keeping $1.8M for himself, and giving his agent $100K. The new “owner” simply walks away, and laughs about the whole thing. 3 months go by, and no payments after demand, so the bank starts foreclosure proceedings, which take another 6 months. Surprise, surprise, the owner never even responds to the demand notices…..
I want to emphasize, I HAVE NO KNOWLEDGE OF WHAT ACTUALLY HAS GONE ON HERE. I’m just trying to think about this from what I can glean from the available public data.
PS: Although technically this address is Balboa Terrace, most people around here think of this as St. Francis (it’s technically a block or so away). Sort of like 1420 Douglass Street. *Most* people think of that as Diamond Heights, but I guess it’s technically Noe Valley 🙂
PPS: That 445 Darien is a beautiful house.

I think we should rename this site.
Perhaps it should be called fluchel

John,
I understand the dynamics of this area VERY WELL. The bubble here (in the nicest areas) happened 1997-2002, largely as a result of the tech boom. As I have often said, some of that bubbliness would hae proven durable, but some was in the process of reverting in 2002, but then it intersected with the massive national bubble. Prices DID rise out here 2004-2006, in some cases to crazy, stupid heights. One example I have given is 1260 Monterey, sold as a total fixer (needed *everything*, and the house was “see-through” for a month! It sold in a frenzied bidding war at $1.6M after being listed at around $900K (my wife and I knew the owner well – nice lady, she deserved the windfall, took the loot and hightailed it out of California!). That flip was subsequently listed at $2.4MM (I wouldn’t be surprised if that was breakeven!). You know the area, drive by that house. What do you think it is worth today? (Hint, even fully renovated, they will not get $1.6MM.)
Oh yes, there was a bubble all right. And now it is being unwound. How far it will go is the question. My guess, to around 2000/2001 prices, which in many ases will be 20-30% MORE than they were in 1997-98. In looking at sales data, remember, MANY houses failed to sell and were withdrawn, so there is a bit of bias (always) in real estate data. The “winners” sell (that is, where the owners can make some $$). The “losers” are often withdrawn, and the owners continue to make their payments, hoping the market will come back – just what the Fed is counting on BTW).

@ fluj,
This is fun that we all do’t have to fight! 650 Eucalyptus – nice house, I know the corner. It;s one of those corner houses in MM and it was GUT RENOVATED in 2003. Nevertheless, it did sell in 2003 (after renovation) for $1.05M (not $950K), and yes it DID go up dramatically by August 07. Of course, August 07 was before the credit crisis, when SF medians were still rising….
About 2000/01 prices, well, nothing happens immediately. Patience, my friend, patience. I know itsounds outlandish (still). We’ll see.
Not to harp on this, though, but what do you think a condo owner in 246 2nd (different area, not SFH, of course, I know) in 2005 would have said if he were told that the price would go back to 2000 pricing? Well, it’s happened (as you know from out thread – $775K foreclosure sale for a property that sold new in 2000 for $750K).
Ditto the people at 1150 Folsom. Unit 8 (large, tri-level loft, 1850 square feet) sold new in 2001 for $960K, and now there is a short sale languishing at $825K today, SEVEN YEARS LATER (large, tri-level loft, but 1650 square feet, so maybe it is worth a *little* less than the short sale one that hasn’t yet sold at $825K).
Patience. As Buffett says, money flows from the impatient to the patient. Jump into it when you think it makes sense. When I get bullish on SF real estate (and I will at some point, no doubt), you can be sure I’ll post my reasons and I won’t be shy about them!

“Now Single Family homes have fallen of a cliff with no end in sight and nobody seems to know what they are talking about but you.”
I stopped reading right there. Good luck.

Here you go fluj…since you don’t like complicated graphs Since I guess you were sick that day in math class.
“According to the January 2008 S&P/Case-Shiller Home Price Index (pdf), single-family home prices in the San Francisco are down 13.2% year-over-year.”
That is a cliff and and its accelerating dramatically from the prior month.
By August its going to be 20%. Ill bet ya a million dollars. put your money where your mouth is.

Cuz it doesn’t matter.
Very popular homes can’t survive broad changes in pricing trends. when has it ever? In the great depression, super popular homes still had their values go down 30%. Does not matter if it’s “Super popular”.
i guess you wont take my bet tho.

I don’t know enough to comment about the specific real estate in question, but Cooper’s “I’ll bet ya a million dollars. put your money where your mouth is” comment cracked me up.
Cooper – do you really have $1m in cash/collateral to bet with? If so, are you assuming that Fluj can take the other side of this wager? Sounds like some serious chest thumping without much substance, but its fun to observe from the sidelines.

Since we’re slicing apples again, 414 Foerster (aka the Satchel house) has been reduced yet again, now down to $589K.
http://www.foerstersf.com/
Last sale was in June of ’06 for $770K. It went REO last November with a balance of $608K. Now down $180K, or 23%, from last sale.

@fluj,
“Why don’t you pay attention to what the average SFR buyer says who crops up every now and then on here?”
The 13.2% in cooper’s post is an average which includes your star properties that have not declined, no?
So the average SFH home is down not even or up.
You might argue that your examples are of average homes but the data says otherwise.

@fluj
What dynamic would that be? Only what fluj thinks is average in SF is considered average. Data be damned.
Then I guess you have made your point, albeit not plainly or cogently enough to be convincing.

So where was the conventional wisdom when the not so safe neighborhoods were appreciating like crazy.
Can you provide data that proves those neighborhoods that you consider bellwether were not affected by the lax lending practices of recent times?

Maybe but I won’t. It isn’t all about data. It now takes 15 to 20 % to get into the market. Who’s gonna put 90-100K down to live in Silver Terrace? Not many. Who’s gonna put 105K- 170K down to live in Bernal Heights? From what I’ve shown all of you, about the same number as last year when it perhaps only took 45 to 85K to get in over there. Does that make sense to you? Because it is real.

Would those putting 105K-170K still do so if they expected prices to fall 20% or so?
Just look at the market sentiment on wall street. Just last week the Dow was up 400+ points. Today suddenly everything that was fine last week isn’t. Most people are hoping things aren’t that bad.
I would guess that those still willing to put 20% down are in that category. I have a friend in that category. He knows things are bad but doesn’t still grasp the extent of how bad things can get and is hoping low ball offers will get him a good deal because things are bad.
It is pure speculation to thing there are any bellwethers in any market.
All you have said fluj is the market is flat. Which is a change in trend from the appreciating one just two years ago in those same bellwether neighborhoods. It only take a few distressed homeowners in those neighborhoods to change the trend to a downward one.

@fluj
You posted MLS data about sales in portero hill, Bernal heights and Noe valley.
Could you post the inventory numbers for Q107 and Q108 please?

Heehee, Recent ORH buyer…you will have to target the ladies for the events.
Another idea, just for fun, let’s really have cooper write cover letters, with a copy of the CS index, for everyone on SS who want to make an offer 20% off listing.
If even ONE of those offers (20% off) got accepted before the end of August, cooper wins. Otherwise, fluj wins.
The loser invites everyone on SS for a dinner party at some reasonable resturuant. It doesn’t have to be very fancy, but I am sure it will be a big crowd.
I think that’s a doable bet. The wager is enough to cause some pain, but won’t break the bank.
How about that, cooper and fluj?

Fluj, Ok I assumed MLS would give you that info.
Please don’t bring up DOM and MLS in the same sentence. It is nauseating how easily that number can be and is manipulated on the MLS.
We have have no idea how many of the units that sold in the 1 quarter were withdrawn during the winter and re-listed. Which is more likely to have happened in the end of 2007 than 2006. I know of one potrero hill property that failed to sell after two price drops in Nov 07 but sold in feb 08 bellow asking(not a SFH).

People can’t even agree on what the graphs represent and apply them to real life examples. I can’t wait for the debate as to when the 20% has actually materialized or not. I’m sure it’ll be just another 200 thread post/rant.

blah blah blah blah blah – these 200 thread post and rants are more amusing than anything. Unless you are out there in the trenches trying to buy a property right now, in many of the more desirable neighborhoods in this fine city, you really have no idea what is actually going on in the market other than what you are reading in the papers, on blogs like this, and seeing in the news. The graphs are really nice and pretty, and the way Satchel and the rest of you guys dissect them is fascinating to the point of being totally obsessed.
A lot of you really need to get a life and grow up!

SFR prices are down 13.2% in SF? B.S.
No way. I am not going to trust Cooper’s assessment of value. When would it stem from, first of all? Second, we would never agree. But I would rather take that bet than John’s idea of going out to dinner with a bunch of Socketsite armchair (and actual) economists and real estate hobbyists.
Talk about a drag. “Hey Satchel, will you pass the salt?”
“Why certainly Fluj. Did you know that salt was one of the chief exports of the United States prior to the Clinton era NAFTA agreements declinng export revenues, resulting in a …”
No thanks!
(But, by the way, my brokerage and I are donating a sizeable portion of my next commission to the Red Cross fund set up for the displaced St. Paddy’s day Valencia St. fire folks. If any of you have enough disposable income at the moment, you should think about doing same. At last count fifty nine people were displaced.)

edit- -13.2 % for january in the march report. my baad.

john, that isn’t what I said. I don’t think the Case Shiller study is unfair difficult or in any way off the mark. If you want to adjust it for some particular type of subset of data that’s your business. But data is data, and nobody can argue that study does not give you an accurate picture of overall prices for Single family homes period. But yeah the bet isn’t an offer between me and socketsite readers or anyone else. It’s just to Fluj. Up to him to accept or not. And you keep missing the point. Realtors tend to open their mouths about how great of an investment housing is without anything at stake. But you keep trying to make this free or negotiating for fluj or making into a socketsite dinner.

What do you mean you feel no need to combat my agenda? I’ve been arguing price #s as measured by case shiller would go down 20% for 2 years now. At least a good portion of that time, you’ve made the opposite arguments.
ok so either
1) you’re a big chicken.
2) You’ve given up
3) You want to keep telling people how great an investment SF real estate is while maintaining zero skin in the game.
4) or you’re a big chicken.
e) Or you’re a big chicken plus all of the above.
BE A MAN FLUJ. PUT YOUR MONEY WHERE YOUR MOUTH IS!!

Well credibility is measured by backing it up with dollars..thats something I am willing to do with any number and you are too scared to. So who has credibility and who doesn’t deflujional. Like most realtors I know, you have zero.

1. I am only referring to what I see you write on real estate. I am not referring to anything I don’t see constantly here. You have a bullish view and believe SFO will be spared. I am simply saying put your money where your mouth is.
I am saying that mostly because I can’t beleive anyone who sees the #s as anyone on this site could reasonably hold the views you do. That’s why I made the offer, to see if you were for real.
You aren’t.
2. I am not vaguely anti realtor. I think its an industry that has escaped any kind of real change or reform since World War II and from head to toe –brokerage to finance needs a rejiggering. i.e. I am in no way vague about my negative view.

My agenda couldn’t be more clear.
But yeah, is this some long winded way of you saying you are scared to take the bet?
Wow–no credibility. Quite the laughing stock.

I thought not.

fluj,
if cooper has reasonably OK savings (meaning he can afford to buy), he indeed has a stake in this game – meaning, if he doesn’t buy and price appreciates, he loses out.
However, if cooper cannot afford either way, then you have a point – he is just visiting for RE porn (which a lot of us do).

What does my RE experience matter on taking a bet. Either I am correct and win — or not. He didn’t want to take the bet–even when I made it 500 bucks to charity.
Oh and I don’t consider the attacks by Fluj to be personal. Calling me Dr. Evil or an idiot or whatever –I really found it humorous. If someone calls me Dr. Evil in a debate, i consdier it a win.
It’s great that you know Fluj in real life and you felt like he was a punctual realtor or whatever and he gave you great advice. I’d love to hear that advice if you don’t mind sharing with us what it was exactly.
Now back to your question on my RE experience. The whole reason I came up with the bet is that I could not believe someone could look at the same data i was and have that different of a view.
Sorry but we’ve had an 80+ year old investment bank go under, a bailout the likes of which we have not seen since the great depression, and the near collapse of a financial system that’s been in place for almost a hundred years. Things are not going well.
All of this because of bad actors in real estate from investment banks, to mortgage brokers, to realtors.
All of these guys were paid to push “tin” (more accurately wood, cement, and stucco)..They had no stake in how the ultimately turned out–they just rushed to get to close. This system needs to change.
Similarly, Fluj seems to look at all this and for the past 6 months or so –son of fluj etc…all are bullish on real estate and still despite all that has happened think everything is fine. It’s not fine and it’s going to get much much worse.
Picking a neighborhood and trying to use that to say prices are rising in some segments ignored a broaded deflation in the asset class and the loans leveraged to them that’s causing problems.
So I thought of the bet to see if fluj would act differently if he wasn’t pushing tin –but instead had some skin in the game.
Owning RE in SFO can often make you just like a tech stock investor in 2001–the market is falling but you hope your stocks will be spared because they are quality stocks –or you are in love with them and they sare special. They are not, and your house is just a piece of paper to a deed with some wood and cement on it.
Sam Zell for example is one of the best RE investors in the world, and he sold ALL his RE last year. because he is not in RE does that make him bad at it or his opinions on it less than worthwhile.
But now that I’ve proven how totally worthless your question was, and devoid of any analytical meaning I’ll answer it anyway.
I have RE in Texas but NO RE whatsoever in CA. In 2003 I sold my RE in SFO becuase I felt like a big crash in RE was coming–and it seemed like it would be smarter to rent just in case. Texas never had the run up sfo did and plus I plan to keep that house in Austin until I die–its too awesome.
All my bet was designed to do was prove one thing, and by declining my offer–which I knew he would. It pretty much proved my point anyway. It’s a shame though, that 500 bucks from fluj would have gone to a nice charity. I am pretty sure I would have won that bet. We’ll see when the data for August comes out. or sooner when SFR hits -20% before then.

First of all I’m not from Texas, I was born and bred in California. And two, what’s to be impressed about. Either you take the bet and put some skin in the game (your opinions) or not. He chose not and thats really not a big shock given how out of tune with reality the opinions he tried to push down people’s throats were. Oh and why don’t you use your actual forum name “teeny Cooper” kinda reminds me of SonofFluj.

Not a fan of yours either, cooper. You sound like a big baby now. Nor am I a fan of Satchel. Like I have said elsewhere on this blog, unless you are out there in the trenches, trying to buy like some of the rest of us, rather than only reading about everything online and in the papers, you really have no idea what is going on in each and every neighborhood or district in San Francisco. Yes, we all know the market has definitely changed here – but not everyone is in agreement that it’s going to hell in a handbasket, like most on this site are totally convinced.
Like viewlover said – take your graphs (or arguments) to the sales office or attach it in an addendum along with your offer on a property and see how far it gets you.

ok coop,
just so i can be clear who i am reading the opinions of i want to get this straight; as far as sf real estate goes you are not a buyer, not an owner and not a seller. nor have you ever been and from the sounds of your posts will you ever be. so why are you spending so much time writing about it? just curious.

owner, buyer and seller in san francisco?
“And stop asking questions that are off topic and none of your business and perhaps more offensively booring and irrelevant.”
pretty clear question and clearly relevant on an sf real estate blog discussing local real estate.

Malcolm X said that. Reverend Wright just used it.
Cooper, I already mentioned that I and my brokerage are already donating to the Valencia fire charity. I suggest you take that $500 and put it toward that worthy cause if it is burning a hole in your pocket.
I just don’t have any interest in betting with you. I don’t trust you. Twenty percent from when? Based on what? the MSA? You know I don’t believe in its relevancy or accuracy. You can if you want to. I don’t.
You keep going back to “picking a neighborhood” thing. I showed you like, what, six neighborhoods?
You keep saying I’m clamoring for continued appreciation. I’m not. Nor have I ever, really.
You start off saying you want to bet a million dollars. A MILLION DOLLARS, bro? I stopped taking your bet seriously at that point. Sorry. If you had started with 500 bucks in the first place it would have been one thing.
But you didn’t. you said a million dollars. You went off on me calling me a chicken and talking about skin in the game and stuff.
A million.
Too funny.
Paco, who the heck are you in real life? If you still have my email address shoot me an email and say hello!

Cooper, you must think you have some mighty big britches to fill. There you go again spouting off about people ‘… rethinking their argument because they are probably wrong’… This is what makes you annoying. You are one of those here that think you are right about everything … it’s your way or the highway. Like I said before, we all have different opinions – and ideas about the market and SF real estate in general – and again, I say – not everyone is under the belief it’s going to hell in a handbasket, on every street, and in every neighborhood. Sure, things have changed – and will continue to change – but life isn’t going to come to a screeching halt just because of the charts and graphs you believe in and just because you think it is.

in my mind that shows a pretty competitive market still in the better parts of town.
this was a virtual teardown w/out parking on an alley with a small lot-for a million bucks.
translation: even in this market people will take a risk on a total project w/out even knowing how the planning department will look at their proposal and knowing that it will take quite possibly two years to complete.
i guess these risklovers have not gotten coop’s memo…

Of course one will always be able to say “I know of one place” that sold for a high price and had lots of interest. That is not completely meaningless, but nearly.
To illustrate — good friends of mine just bought a nice Victorian in Sacramento. Housing prices in Sacramento have been pummeled — no reasonable dispute on that. Yet this particular very nice place had four offers over asking and my friends bought it the first day it was listed. Say anything about the Sacramento housing market? Not really.
One can always assert the tautology that “good places” that are “priced right” are selling well. Applies to SF, Sacramento, Las Vegas, Miami, etc. But you need far more to support anything about the broader market.

sorry, typo. 07 vs 08.

Trip said “Fluj, I’m not discounting anything utterly. I think you know what you’re talking about in the areas where you specialize. But you pointed to a very small sample of solely SFRs in very small areas over two very short periods of time. Not “utterly” meaningless, but nearly so in drawing any real conclusions. This is particularly the case in that we have no idea of the mixes involved, which is critical given the small sample you use.”
Exactly. ALthough I think you are being generous in saying that his projection is not utterly meaningless.