According to DataQuick, recorded home sales volume in San Francisco fell 34.6% on a year-over-year basis last month (332 recorded sales in March ’09 versus 508 sales in March ‘08) but rose 22.1% compared to the prior month (think seasonality rather than “rebound“).
San Francisco experienced the sharpest year-over-year decline in sales volume of any Bay Area county last month with San Mateo the only other county recording a decline (down 13.2% YOY). And San Francisco’s median sales price in March was $608,000, down 19.5% compared to March ’08 ($755,000) and down 5.0% compared to the month prior.
For the greater Bay Area, recorded sales volume in March was up 29.1% on a year-over-year basis and up 25.7% from the month prior (6,325 recorded sales in March ’09 versus 4,898 in March ’08 and 5,032 in February ’09), while the recorded median sales price fell 45.9% on a year-over-year basis, down 1.7% compared to the month prior.
Once again, think foreclosures and mix.
Last month 51.2 percent of all Bay Area resale homes had been foreclosed on at some point in the prior 12 months, down from 52.0 percent in February and up from 23.2 percent a year ago. By county it ranged from 11.5 percent in San Francisco to 70.0 in Solano.
And financing.
Mortgages for more than $417,000 were used to finance 19.0 percent of the Bay Area’s home sales last month, compared with more than 60 percent before the credit crunch hit in late summer 2007.
The use of government-insured FHA loans – a common choice among first-time buyers – represented a record 25.4 percent of all Bay Area purchase loans in March, up from 1.5 percent a year ago.
At the extremes, Solano recorded a 102.8% year-over-year increase in sales volume (a gain of 366 transactions) on a 45.5% decrease in median sales price, while Contra Costa recorded a 68.4% increase in sales volume (a gain of 666 transactions) on a 47.7% drop in median sales price.
As always, keep in mind that DataQuick reports recorded sales (versus listed sales) which not only includes activity in new developments, but contracts that were signed (“sold”) many months or even years prior and are just now closing escrow (or being recorded).
∙ Bay Area home sales continue climb, median still below $300K [DQnews]
∙ San Francisco Recorded Sales Activity In February: Down 36.9% YOY [SocketSite]
∙ SocketSite Sees Seasonality (Versus Signs Of A Rebound) [SocketSite]
∙ CBS Calls It A “Real Estate Rebound In San Francisco” [SocketSite]
“The use of government-insured FHA loans – a common choice among first-time buyers – represented a record 25.4 percent of all Bay Area purchase loans in March…”
Who insures the FHA?
“Last month 51.2 percent of all Bay Area resale homes had been foreclosed on at some point in the prior 12 months, down from 52.0 percent in February”’
Methinks Dataquick needs to replace the robot that generates these reports. While a transition from 52 -> 51.2 is technically down, this stat is effectively flat.
Is it me, or does this not jibe with the April 13th posting on the decreased inventory? I don’t see a huge jump in the sales volume (beyond seasonality), but there apparently was a significant decrease in the number of listings. Which I would think would mean a jump in the number of listings removed instead of sold, but I thought that wasn’t necessarily the conclusion on the previous post.
I think the post on the inventory mentioned a 20% jump in sales YOY – but that was I think for early April? Whereas this covers March only.
Either way, it would be good to see the seasonality graph updated with the March numbers. (Hint hint..)
[Editor’s Note: No! We saw a jump in activity driven by the sub-million dollar market, but that speaks to potential rather than closed sales. A seasonality update is on tap for tomorrow.]
From this point forward, the seasonal uptick shall be known as Hank Plante rebound.
When combined with the fact that active listings are down, this means that inventories are taken off the listing rather than sold. Presumably because owners are now more hopeful that the price will rebound.
The DQ data covers closed sales. The SS listed housing update tracks listings but excludes those in contract (even those that end up not closing). So they are similar, but not identical. Two snapshots of different things that record slightly different stages of the market.
[Editor’s Note: Bingo. In fact, in terms of recorded sales we wouldn’t expect to see the impact of any uptick in early April sales activity until at least May.]
Perhaps hank plante will prove to be an accidental genius, (just slightly) ahead of his time.
“Who insures the FHA?”
Ha ha..you do, buddy, along with the rest of us taxpayers. A jump in sales at the low end serendipitously corresponds with a HUGE increase in the use of FHA loans, and the media are proclaiming that a bottom might be in sight? Many of these buyers are just tomorrow’s foreclosure “victims.”
I’ve said this before, but FHA loans are designed to default, and that’s precisely what they’re doing in increasing numbers. It really is the noveau subprime, and nobody really seems to care since more people are (at least temporarily) getting a bit of that American dream. Anything to pretend we can stabilize the market, I guess. Wonder when the FHA bailout comes?
There is a subtle change in the DQ article this week in my favorite paragraph:
“The median price paid for all new and resale houses and condos combined fell to $290,000 last month. That was down 1.7 percent from $295,000 in February and down 45.9 percent from $536,000 a year ago. It was 56.4 percent below the peak median of $665,000 reached in June and July of 2007.” (Emphasis added.)
The release no longer mentions the last time the median was this low. Last month, it was December 1999 – I assume we’re well into 1999 by now. Amazing! I’ll be curious if the release continues to omit this info now on a going forward basis.
I also found this paragraph interesting in the context of the “sales bump” we’ve been hearing so much about lately:
“Last year’s March was the slowest in DataQuick’s statistics, which go back to 1988. Last month was the third-slowest March of all time, ahead of last year and 6,210 sales in March 1995. March sales have averaged 9,025 and peaked in March 2004 at 12,645 sales.” (Emphasis added.)
Given that there is so much increased activity at the lowest end, this overall slowness is pretty clear evidence that this market is far from normal.
I suspect that the median is close to stabilizing (perhaps we’ll get down as low as $270Kish this year, perhaps not), but apparent stabilization will mask increasing declines apples to apples at the higher ends of the market. In other words, mix factors have for a while been working to overstate apparent declines, and at some point in the next few months I bet that a relative shift to sales of higher end properties will allow the reported medians to mask the apples declines that will be sustained in that segment.
I suspect that the median is close to stabilizing (perhaps we’ll get down as low as $270Kish this year, perhaps not), but apparent stabilization will mask increasing declines apples to apples at the higher ends of the market. In other words, mix factors have for a while been working to overstate apparent declines, and at some point in the next few months I bet that a relative shift to sales of higher end properties will allow the reported medians to mask the apples declines that will be sustained in that segment.
Totally agree.
The action is no longer about further decline in the median itself, but rather, the top’s compression toward it as the high end is starved from below.
Not sure exactly how to track that.
To pull a number from my bidet-benefiting undercarriage, I would guess that at least 75% of all California homes that were valued at +$1 million at the top will “compress” their path back to six-figures in the process.
Certainly mix still plays a huge part.
a year ago it was widely agreed mix was playinga significant role in supporting the median.
now it is, as LMRiM says, dragging it down.
my gut feeling is this is big enough to account for over half the YOY drop in median price, but this is very much a gut feeling!!
It looks like buyers are acting rationally. There is normally a moon shot in volumes practically straight up after the Super Bowl that peaks in late April/ early May.
This year, the slope is less, for March. I suspect that is because A) the buyers who “need” to buy in the spring are waiting longer (each month drops the price another 1%); and B) the springtime deals are taking longer to close due to financing issues, inspection issues, and contingencies for the buyer to sell their existing home.
A lot of that could be made up for in April and May.
And yes, FHA delinquencies are absolutely skyrocketing. When an uncreditworthy buyer buys a foreclosure home from Goldman Sachs, thereby beating out a lower priced offer, your tax money goes to pay Goldman Sachs, and then the home gets foreclosed again, so we’re right back where we started, except Goldman gets a lot more money than they otherwise would, and the socialists running the country get to pretend they are providing opportunities for homeownership to the lower classes, when, in fact, the loan limits have been raised so high that most upper middle class homes now qualify.
And get this, the number of FHA borrowers who fail to make a SINGLE payment is also skrocketing, though small (about two dozen a day, 7 days a week). They move in, then wait for foreclosure. Happy days are here again – this time, it’s on you.
I suspect the reason why SF medium prices hovers around 600k (down from the height of 830k 2 years ago) is because most of the houses that are selling are the cheaper foreclosure ones while the high end expensive ones are not moving since not too many people have hundreds if not millions dollars in cash available for that 20% down. Plus my assumption is also that rich people have the means to hold onto their property longer than those at the lower ends. Once the expensive houses come down in price and credit market becomes more liquid again, I suspect you’ll see the medium price in SF goes up from 600k?
LMRiM likes to talk about how we will likely never see real valuations in RE like the peak of the bubble again in our lifetimes. How severe is the snapback? Will we ever see real valuations like the bottom of the market in our lifetimes again?
How far above historical norm when comparing average income to average house are we these days?
Most of you on here are delusional! There is NO sign that housing is getting better any time soon! Commercial RE is tanking now, unemployment keeps raging, and all Washington wants to do is bail out Wall Street! All the comments about a rebound in prices in SF are simply wishful thinking by those that have their butts tied down to a underwater mortgage. We have another couple of years … at least … of price declines in SF. At the end of those two years we will be closer to 1995 median prices than any snapback above 600k.
There seems to be a lot more activity lately. I’ve made 4 offers at the Infinity in the last week.
The 800 pound gorilla is the near certainty of the hit the dollar will take when the trillions of newly created currency spread throughout the system. In April 2009 dollars, maybe your apartment’s price will rise, maybe it won’t, but in April 2012 dollars, it just has to. Don’t fight the Fed is the old saying, but even better is: Don’t fight the printing press.
If you buy a 608k condo today, in 2012 your condo may decline to 500k in 2009 dollars, but could be 750k in 2012 dollars.
This may seem simplistic, but it can be easy to forget that a nominal dollar is just paper, just a promise.
Unwarrantedinlaw,
The hedge against inflation theory, the last stand of out-of-work salesmen. If a product cannot be sold on its merits/costs then you have to scare people they’re going to lose their shirts if they don’t buy your overstocked wares. High inflation will save RE? How does that work out these days? So far, all we see is DECREASING paychecks, bonuses, benefits, 401(k)s, etc, etc…
We’re now competing w/China+India for so many markets/jobs that arbitrage is now more present and this crisis is how this might happen.
In short, an alternative to the “inflation will save prices” would be both a pick up in inflation AND a decrease in nominal housing prices. Not very likely, but still a possibility.
Your 608k condo today, in 2012 could be 500k in 2009 dollars or 400k in 2012 dollars. Knowing RE tripled in many places in just 10 years, that wouldn’t be too surprising at least in the next few years.
“There seems to be a lot more activity lately. I’ve made 4 offers at the Infinity in the last week.”
I’m curious, Paul: what is the average $/square foot of your recent offers compared to the averages you were seeing a year or two ago?
Legacy Dude,
Although I cannot give out specifics of my clients transactions, let’s just say none of the four offers have been ratified yet.
Paul
The YOY numbers for San Francisco may be down by such a large percentage due to ORH and Infinity. They began closing in March of 2008, and I would guess that they represented a decent percentage of total closings in San Francisco in March of last year.
[Editor’s Note: Keep in mind that March 2009 recorded sales were down 55% as compared to March 2005.]
“Although I cannot give out specifics of my clients transactions”
Oh yes, Legacy Dude was asking for names, addresses, unit #, sq ft and offer price on each offer. And giving that out on an open forum would be a no-no.
A fine example of a RE professional!
I still wish I didn’t have to endure his ads without any value add.
I suspect most of us have our anecdotal evidence in support of the continuing slide of the SF real estate market. There may be arguements regarding the degree and future direction, but none reasonably doubts that things are challenging. For my immediate neighborhood (D10) I see two foreclosures that haven’t been able to resell, two foreclosures that simply haven’t been put back on the market, and two owner sales that were pulled for lack of interest.
There is an interesting article in this month’s Atlantic, comparing the nature of our economic predicament with those of 3rd world countries forced to go begging before the IMF. In particular, the article throws lots of scorn in the direction of the finance industry (and thus presumably gentlemen like LMRiM).
I’m not even passably familiar with the field, so I was wondering what some of you think of the article’s prescription for recovery (nationalize troubled banks immediately, fire management, break up the assets, resell packages of viable business as smaller regional banks, tighten regulation, and strictly limit future industry consolidation)?
chuckie:
1) I closed 35+ deals in South Beach last year.
2) Currently have multiple listings at The Infinity, One Rincon Hill, Metropolitan, Brannan and the Watermark.
3) Have made multiple offers for buyers in the last week.
4) Am a member of multiple owners associations in South Beach.
5) Manage 100+ units.
You have represented in the past that your real time knowledge is equivalent to mine. Do you have a basis for this (i.e. u bought something in South Beach in the last 3 months)?
I’m sorry if you don’t like my posts, but I am just repsonding to people’s queeries on this site.
Perhaps I will stop posting here and stick to my new twitter sccount: http://www.twitter.com/myskybox
Oh god another ad!
But you didn’t respond to the dude’s query! Instead you wrote an ad!
Write something of value to the readers,
or
buy an ad on the site.
Doesn’t sound like you are so hard up that you have to resort to being a pest!
Paul, you are a superagent. After your clients’ offers are ratified, I guess we’ll then wait for them to be accepted/rejected. Then perhaps you could answer Dude’s question.
Debtpocalypse articulated a point I’ve made much better than I have done: “The action is no longer about further decline in the median itself, but rather, the top’s compression toward it as the high end is starved from below.”
I’d love to see some of the market trend data SS posts broken down by quartile. I have a feeling we’d see some widely varying markets, ranging from weak to near-dead.
chuckie,
I responded to your flame. If you don’t want me to post, don’t direct queeries and flames toward me.
Paul
About “inflation”, people on here know that’s been one of my big bug-a-boos for almost a year and a half now on here.
CPI-U just turned negative y-o-y for the first time in over 50 years. And imo the USG is “fudging the numbers” by assuming increasing rents for the OER component, which counts for almost a third of CPI. (I’m not sure if this is just statistical noise, incompetence, artifacts of the data collection methodology, etc., but I suspect it is part of an attempt to show less severe GDP declines, as OER is a “plug” amount that is made up and feeds directly into GDP.)
In related news, the dollar is back up to where it was before Bernanke started his “quantitative easing”, and it looks like the European Central Bank is gearing up to do some “printing” of its own.
Mish had two worthwhile surveys on these topics in recent days:
http://globaleconomicanalysis.blogspot.com/2009/04/deflation-has-gone-global.html
http://globaleconomicanalysis.blogspot.com/2009/04/trichet-joins-beggar-thy-neighbour-club.html
I’ll just reiterate what I keep saying and have been saying for a long time: this is not going to spin out as most people imagine. The Japan path of “very mild price deflation swinging to very mild inflation and back and forth and back and forth” for a decade or more is a distinct possibility and the one I incline towards. Of course, in the event of a currency “accident”, all bets are off, but I bet real estate prices would get slaughtered (initially) because of a ramp in inflation expectations leading to skyrocketing interst rates and/or strict credit rationing by a government that cannot fund itself.
If a product cannot be sold on its merits/costs then you have to scare people they’re going to lose their shirts if they don’t buy your overstocked wares
I think this is an unfair characterization. I have consistently warned people since early 2007 NOT to buy a house. And yet I also believe that it is possible that nominal 2012 prices will be higher than nominal 2009 prices, while the real price of 2009 housing being far lower than the real price of housing in 2012, due to inflation.
one can believe the ka-POOM theory withough being a realtor trying to sell you a home. (I’ve argued for years that most of the real value declines in SF would be due to inflation)
note: I am not saying I am 100% sure we’ll see significant inflation. It is my guess. In order to have inflation and also increased RE valuations we will probably need EITHER
-coordinated worldwide currency devaluation vs assets (very likely IMO)
or
-US inflation combined with protectionist measures. (protectionism is not as unlikely as some would hope IMO).
I agree with others though… if we only have inflation then you will possibly see LOWER nominal and real RE prices in the future due to continued outsourcing of American labor due to global wage arbitrage. global wage arbitrage breaks the wage-price spiral.
=====
as for the original post:
we can clearly see that transactions will occur at lower pricing valuations.
this is why the outlying areas are seeing many transactions, while SF proper is not.
all we gotta do is let the market do it’s thing, and transactions will come back (albeit at lower pricing). unfortunately, the govt continues to inhibit true price discovery.
Although ex SF-er and I disagree a bit about timing of future inflation, I do agree with him that the bulk of real declines for The Real SF (TM) will occur through inflation.
First, about 30% down (average) in nominal terms.* And then down another 40% or so in real terms through inflation. It could take as long as a generation to complete the adjustment 😉
* note – I think SF as a whole will go down further than 30% nominal from peak on average, but perhaps not The Real SF (TM).
Dear Mr. Superagent:
Once may be an accident, twice is, well, embarassing.
The word is “queries” not “queeries.”
Superagent? cough..cough spammer
🙂
I don’t think my irony comes across too well in blog postings.
Are you gay; have you tried it?
Sorry I should use spell check more often, English is my 3rd language.
Tipster,
Today you have actually spelled out the word “desperate.” That was a stroke of genius. The imaginary jury is now convinced. Kudos.
i think the ragging towards the real estate broker industry as a whole is justified but singling out paul doesn’t seem fair. there’s some salesperson-speak in some of his language which is essentially required for being a successful agent but other than that he’s not saying anything way out of line.
“all real estate is Theater….You’d be more effective asking a magician to tell you how a trick works.”
Subtle but important distinction, tipster. The purpose of theater is entertainment and escapism through suspension of disbelief. The purpose of magic is similar, but it’s done via misdirection.
Real estate may have been theater when the bubble was inflating, but today it’s more of a magic show.
Shoot, the HTML thing did my first comment in: I’ll try it again:
Queeries: Are you gay, have you tried it?
Lot’s of people still have an interest in real estate, hence the existence of Socketsite. Isn’t that the purpose of this site: to buy real estate?
“Subtle but important distinction, tipster. The purpose of theater is entertainment and escapism through suspension of disbelief. The purpose of magic is similar, but it’s done via misdirection.
Real estate may have been theater when the bubble was inflating, but today it’s more of a magic show.”
Huh. And here I thought the purpose of analogy was to make sense.
Just happened upon it, but maybe the FHA spigot is being shut a bit. Looks like appraisal requirements tightened April 1:
http://mortgagedfuture.com/why-it-just-became-more-difficult-to-get-an-fha-loan-declining-markets/
Oh, you mean the spigot that never even got turned on? Trip, bud, you are so out of your element so frequently on here. It’s laughable. Sorry.
“The use of government-insured FHA loans – a common choice among first-time buyers – represented a record 25.4 percent of all Bay Area purchase loans in March, up from 1.5 percent a year ago.”
All I was commenting on. Nice try.
hahahhaha. whatever, trip. You’re funny.
Yeah, trip, why use facts when we can just attack you with no basis at all!
End of sarcasm.
“Bay Area” FHA purchases, eh? Good one Tipster. What’s this site about again? You let me know when the banks start carrying the loans, OK pal? LOL
Hi, I’m anonn, and I finally have a plan for getting rid of this 2-unit flip I bought at the exact peak of the bubble that’s been hemorrhaging money (4/18 12:37 https://socketsite.com/archives/2009/04/san_francisco_county_unemployment_hits_90_percent_in_ma.html)
“in my opinion, this scenario really is the chief quote unquote ‘deal’ that the downturn has revealed for SF so far. Especially once these high limit FHA loans kick in. Seventy K down to get a 1.4M property that’s producing exellent [sic] rent roll? That was so unheard of the last decade. The multi unit market is about to get hot. And it’s down to the USG. IMO, get in now if you’re so able. The subsidy is going to get subsumed by demand, and quickly.”
Yeah, the government’s going to start just giving money to people to buy 2-units. Finally some chump, er, investor will take this money pit off my hands!
Wait a minute. What’s this about FHA loans tightening up? Hmm, didn’t know that. Let me read about this . . . Nooooooo! I am so screwed! I know, I know, I’ll mock the guy who posted this information and that will . . . well . . . Damn! I’ll do it anyway.
OK, OK, keep calm. I know, I’ll pretend that I didn’t really expect anything with these FHA loans after all, notwithstanding the prediction and advice to “get in now” that I JUST made a few hours ago. Nobody will notice, right? And my unquestioned integrity will remain intact.
Joe,
The stimulus loans haven’t even shown up for the SF marketplace. It is a fact. Go ahead and pay attention to what Trip says, and ignore me. I care not. But the hostility is really weird.
Because you’re incessantly personal and angry at me. I gotta say. I’m not at all sure why that is. This was an opinion I shared. Feel free to disagree, but the anger and hostility is really off putting. Let’s watch multi units once the loans start getting tabled. If I’m wrong, I’ll say so on here. OK?
Joe/nnona/Jorge Friedman/anon/yourmotherwearscombatboots
o. and my property? not a flip. never was a flip. it is a portfolio buy I hope to get cash flow positive and keep forever. Thanks for thinking about me.
Go ahead and deride/dismiss the anticipation that exists within the r.e.community regarding the FHA loan limits supposed arrival. I care not.
Trip, “uh oh. FHA loans just got tougher.”
Me, “What FHA loans?”
Tipster, “Yeah. Don’t worry about facts. Just attack.”
Me “What FHA loans?”
You, “Hmmm. I’m going to attack the r.e. professional and side with a couple of hobbyist nitwits because I like to be mean on the internet for fun.”
please
Joe, I haven’t laughed that hard in a month.
@anonn
Joe isn’t me.
@anonn,
It was a funny post, though. For someone in your business, a good sense of humor would serve you well right about now.
As for the derision you regularly receive on this site, that’s on you.
Look man. It’s like three people. You got Trip overstating everything, ignoring anything positive, and attempting to frame every single thing as negative as possible. You got Tipster crafting 50 kakamamie left field lies for every one kernel of useful information. And then you got LMRiM, who posts tons of useful financial information, but holds a vert particular scorn for all things SF r.e., for a reason he has never shared with the website. It only hurts my feelings a little bit when it’s a random person. I’ve a sense of humor and you know it. But you can’t help but get personal, and it’s pretty off putting.
Half of my “left field lies” had to do with ORH: that the first resale would be a joke (yup, I predicted it before it ever sold*), and that the place would generally be a disaster.
Those “left field lies” seem to all be coming true! Funny how that works! So you can expect many more of them!
BTW, Trip and LMRiM, keep up the good work! Your information is ALSO true.
*I said, before the sale ever took place “If the developer is as crafty as I think they are, they’ll offer the buyer all sorts of extras to goose the sale price. Why do this when it isn’t theirs? To mask the true sale price, of course.”
Posted by: tipster at March 14, 2008 9:08 AM
https://socketsite.com/archives/2008/03/the_first_official_resale_and_open_house_at_one_rincon.html
It looks like Fannie and Freddie are also tightening appraisal requirements starting May 1:
http://www.freddiemac.com/singlefamily/pdf/hvcc_746.pdf
It will be interesting to see if these slow down the sales rate in the low-end where FHA and conforming loan availability have been providing support the last year or so.