San Francisco Sales Seasonality (
In early March CBS5 reported signs of a “serious real estate rebound” in San Francisco. While we debunked it as basic seasonality, the report was quickly packaged and passed along as gospel by industry folks. And now we have the actual March results.
In 2009 recorded sales volume in San Francisco increased 22% from February to March (45% from January). On average over the past four years, however, recorded real estate sales volume has jumped 44% from February to March (65% from January).
In other words, not only do we see a 34.6% decline in year-over-year sales volume and no rebound, but we also see a below average seasonality bump.
SocketSite Sees Seasonality (Versus Signs Of A Rebound) [SocketSite]
CBS Calls It A “Real Estate Rebound In San Francisco” [SocketSite]
San Francisco Recorded Sales Activity In March: Down 34.6% YOY [SocketSite]

37 thoughts on “No Rebound For You! (In Fact A Below Average Seasonality Bump)”
  1. So is the “twenty percent year-over-year bump in potential contracts written in early April” simply a delayed spring bump considering the 50% decrease in March?
    [Editor’s Note: Careful, we’re not calling a 20% year-over-year bump in sales (in fact far from it). Our poorly worded observation was simply this: we saw an uptick in potential sales activity in the sub-million dollar market above and beyond what simple seasonality would lead us to expect. Regardless, we wouldn’t use a couple of weeks worth of data to call a big turn or trend.]

  2. this data may even be just a hair rosier than reality – Easter 2008 was in March (vs. 06,07, 09 in April) so theoreticallly that March should’ve been a bit slower than normal and the 09 y-o-y comp should’ve been a bit better than normal.

  3. Related to resp’s point, my bet is that the slight dip we saw in listed volume in the post a few days ago was due to a short Easter lull (who wants to sit in an open house Easter afternoon attended by nobody?). It looks like new listings have really been heavy the past couple of days. Maybe new “pendings” have offset that — FSBO noted that it is difficult to compare “going into contract” volume YOY. We’ll see how this all develops. You need to look at both listings and sales volumes. And “apples” to round out the picture the best one really can in such an opaque market system.
    One thing we can be sure of — sales volume will increase MTM the next few months (probably not YOY), and there will be lots of reports that we just saw the bottom. And then the season will turn, and by late summer the sales volume will drop again.
    And foreclosures are accelerating as the various holds have been lifted.

  4. “Does anyone still think that there were 42 offers on the Execlsior miracle house, each with 20% down? LOL.”
    I still don’t have any particular reason to doubt it or think it couldn’t have happened. The lower end of the sales spectrum continues to sell more.

  5. I was 1 of those 42, and my offer included 20% down. I offered $1 with 20 cents down. I considered an FHA loan with only 3 1/2 cents down but the application took too long to fill out to make it worthwhile. My sense is there were others who used my strategy but outbid me by a few hundred percent.

  6. Editor – thanks for the clarification. Agreed that everyone is jumping on single data points to try to determine a trend. As someone said, like watching a painting of grass growing dry. But you can understand my impatience – I have only been waiting for 4 years for this real estate market to approach affordability.

  7. “I have only been waiting for 4 years for this real estate market to approach affordability.”
    Tell me about it, i’ve been saving/waiting for atleast 6 years. I’m pretty sure most of the bears on this site are in a similar situation. at this point it feels like an ultra prolonged game of “chicken”.

  8. I applaud all buyers who are watching and waiting. I call this the season of the “Millioniare Next Door” buyer.
    Folks who are careful and thoughtful about their offers can do well now.
    I think it is an interesting time to be making offers.

  9. “Folks who are careful and thoughtful about their offers can do well now.
    I think it is an interesting time to be making offers. ”
    Be patient Kathleen. the best is yet to come.
    My prediction since Q2 07 is that mid-2010 will be the best time to buy. I am still sticking to it, but we ahve headed down much faster than i though. I thought we would drift down 10% per year for 3 yrs. Instead SF proper has dropped 20% in the past 6 months. Even once we hit bottom, the market is likely to remain flat for a long time.
    There is more comfort in catching it on the upswing than trying to catch the proverbial falling knife.

  10. Every line has a story and it would be interesting for someone to recap the stories that follow the February-March slopes in each year in terms of: Housing Prices, Interest Rates, Ease of getting a loan, Buyer’s psychology, Where in the housing bubble are we…etc…

  11. Here ya go Pumpkin Patch, gaze into the nighttime stars as I tell the story:
    2004-2005: The big dipper.
    2005-2006: The big dipper.
    2006-2007: The big dipper.
    2007-2008: The big checkmark.
    2008-2009: practically flatline: March

  12. when the economy improves we’ll be at the 2004-2005 line. it then becomes an argument as to when the economy will improve or as many bears believe won’t. I believe Americans keep figuring it out just because we can. OUr infrastructure allows it. One bubble follows another, innovation is unbridled in this country.

  13. Viewlover,
    What is the next bubble? I think the housing bubble was a last ditch effort to prop up the economy…it was as though someone was hoping that another great idea would come along (like the Internet) and energize the economy so that the housing crisis would not even be a crisis. I don’t think there are anymore bubbles in the air this time around…

  14. I don’t know for sure, but it could be around energy given the Obama’s green movement. Besides, that’s an unfair question because no one can predict the future, not even a pumpkinhead. No one predicted the tech, housing or otherwise, and I mean the outside players. My general point is that I believe the economy is cyclical and America is pretty innovative. It comes down to believing we can recover or that we can’t. I chose to believe that we will, only because I believe the economy is cyclical, no hopes or pipe dreams, just observation.

  15. “Instead SF proper has dropped 20% in the past 6 months.”
    I wish this was not the mentality of the buyers who I am working with, but unfortunately, it is. I’m not a miracle worker. I cannot make people with nice properties — the sort of properties most people on this site would want — comply with CW. Five to 10. Sorry. It’s realer than your “real.”

  16. But surely it’s a self-fulfilling prophecy. If buyers think prices have gone down more than they have, then either they’ll a) capitulate and spend more money than they think something is worth or b) not buy until they have gone down the amount they expect. I think a) is becoming a difficult choice when combined with current down-payment requirements and a reduced expectation of increasing real estate values in the short to mid term. Sort of how increasing prices were self-fulfilling on the way up.

    I guess the ultimate question is who believes what they believe the most and who can afford to stick to their guns.

  17. two would be buyers who have waited on the sidelines for 4 and 6 years…. there are a LOT of them out there which is why we agents doubt the uber bears most dire predictions.
    by the way – this year’s seasonality not as high as bubble mania years…. is that a suprise? how it compares to ’02 and ’03 would be more interesting.
    [Editor’s Note: The February to March bump in both 2002 and 2003? 51% (53% average for January to March). That’s seven points higher than in those “bubble mania” years. Shouldn’t an agent know that?]

  18. 45 yo hipster-
    Yes, i agree, the fact that it was a nice MoM comp (of COURSE it was a big YoY decline), seems in fact good news to me.

  19. Viewlover,
    You are talking to a dot.commer family. The Internet was going to be big…nobody predicted that it would turn into a bubble, though.
    Alternative energy is going to slowly hum along for awhile. Oil prices are way down, which slows the incentives for producing other choices since those other choices are more expensive. We have been sitting on alternative energy ideas for years. Many average Americans are too poor to spend money on these expensive products right now. the economy has to get stronger before the average Joe can afford going green. The Internet, in the late 1990s, was cheap in comparison….
    I think this time, there will be no more bubble. I do believe we will see pieces of Silicon Valley pick up steam sooner than later and, that will bring money into the housing sector…
    My bet, before alternative energy becomes hot (a bit down the road), you will see strong movement with companies who are geared to anything with video on the Internet…

  20. hangemhi, the smart ones are still on the sidelines. see anonn and matlaws comments for part of the reason why.

  21. The next “bubble” probably happens like this – although I cant predict timing-
    1) De-leveraging globally (real estate/loans/ credit cards, etc.)
    2) Not enough private capital to do so
    3) Governments print several TRIL new money
    4) Inflation
    5) Cash devalues
    6) Move into non-cash assets – materials, real estate
    7) n/c assets values push up sharply, again.
    timing ??? 2-4 years
    So the Bears will feel “right” for at least a year or 2.

  22. @Louis,
    You assume most of the bears here are ignorant of the possible threat of inflation. Most aren’t, and they also realize there are numerous options to deal with the prospect that you are obviously missing. The bottom line is that even *IF* wage inflation keeps up with dollar inflation, RE will still suffer in real terms more so than other commodities and investments which have come much closer to terms with their real price discovery already. RE will be just as sticky on the way up when/if the inflationary scenario comes into play. I also doubt that the diminished pool of buyers with a 20% down payment in two years will be chomping at the bit to get into a mortgage.

  23. “Alternative energy is going to slowly hum along for awhile…. The Internet, in the late 1990s, was cheap in comparison….
    I think this time, there will be no more bubble.”
    Alt Energy as currently proposed/funded is easily the biggest scam going. Remove all the subsidies and/or tax breaks and you have an industry that is years, maybe decades, from real profitability. It is at best a niche market in relation to the end consumer, as the real cost would only be paid for by the militant greenies.
    Competition for these Gov’t $$ will be fierce, with few winners. Furthermore the only way to produce this stuff affordably is to use prison labor in unregulated over-polluting, environmentally disasterous factories in China. So we now trade Human rights for the chance to go green. Never mind that “these new Green Jobs” touted by politicians are dead end, low paying jobs with little to no real opportunity for advancement.
    Follow that bubble with the healthcare bubble for Baby Boomers.
    Wash(the next big thing),
    rinse(empty our collective wallets),
    repeat(Bubble goes burst)

  24. jtothed….
    I still don’t believe Alternative Energy will be the next bubble for exactly what you said, it is a niche market. If oil prices stayed at at its highest level, I could possibly buy into this being the next bubble…but, the prices came down, making green options frivolous, once again. It lacks practicality and, it has lacked practicality for many years. The government is placing money into it–so, it will hum along….just hum….
    Besides, for a bubble to be meaningful to the Bay Area, it has to directly impact the Bay Area. Low property taxes in CA made this state ripe for the housing bubble AND, nobody needs to explain why the bubble impacted this area…

  25. What would be a much more useful blog post is to tell people how to benefit from this info, Mr. Editor. Since this is the state of the market, where are the opportunities? The wisecracks and alarmist headlines are really a big yawn by now. The wise person sees data like this and figures out how to use it to their advantage.

  26. “What would be a much more useful blog post is to tell people how to benefit from this info, Mr. Editor. ”
    Very well …
    Rent, live beneath your means, wait.
    Capitulation is yet to come. Decreasing inventory with low sales means we have entered the buyer/seller stand-off. That stand-off will be broken in favor of buyers by the coming forced sales.

  27. Unemployment in SF County has increased from 4% to 9% in 12 months. Unemployment will increase through 2010. Reduced current and anticipated earnings will impact purchase prices.
    Jumbo loans defaults are accelerating.
    The SF tax base is eroding quickly, due to commercial RE, which will lead to a reduction in services. Reduction in services will lead to further increases in crime and reduction in quality of education. Housing values will fall correspondingly.
    The current buyers sitting on the sidelines are looking for a home, not a get rich quick investment. They are looking for ~30% of income mortgage payments. Their decision to sit on the sidelines will continue until reason returns, hence the decline in sales.
    We’ve got a way to go to burn through those nest eggs and see more forced selling. I’d give it 12-18 months once SF county breaks 10% unemployment before we see a bottom.

  28. when do you see the Alt-A resets hitting SF hard?
    I know it was mentioned alot over past year or two that they would be a huge factor in 2009, but can’t remember the exact timing?

  29. REpornaddict, take a look at this recent presentation with up-to-date estimates — esp. starting at slide 37. Of course, one can always debate how SF will be affected by these broad trends. You know my position. I’ve never seen any indication that SF has done anything but move right in line with the California and nationwide trends — slightly better in some respects, and slightly worse in others, but the only material difference being a few months variance in timing.

  30. Thanks trip.
    only comment I would make (without reading the whole thing!)is that Alt-A looks like in $ terms to be about a quarter of the problem subprime was – which still isn’t small of course.
    but I guess, as the average Alt-A loan was most likely larger than the average subprime the number of loans affected is most likly lower than 25% – maybe 15% or something of the number of subprime resets?

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