555 Edinburgh
The sale of CBS5’s infamous “42 offer” home at 555 Edinburgh closed escrow on 4/22/09 with a reported contract price of $570,000. That’s $111,000 (24%) over asking!
On a price per square foot basis ($456), however, that’s 0.2% over the 2009 neighborhood median to date ($455), 6.9% under the median last year ($490), 21.3% under the median in 2006 ($580), and about equal to the median in 2004 ($450).
Once again, the 42 offers were a result of pricing rather than a “real estate rebound.”
The SocketSite Reality Check For CBS’s Infamous “42 Offer” Home [SocketSite]
CBS Calls It A “Real Estate Rebound In San Francisco” [SocketSite]

Comments from Plugged-In Readers

  1. Posted by EBGuy

    One hundred two (102) foreclosures (NODs, NOTS, bank owned) in this neighborhood; that’s a lot of “pent-up supply”. Over 3 homes in distress for each one currently for sale. Should be some nice bargains in the fall.

  2. Posted by LMRiM

    If you look at the old thread, there was a lot of talk that these 42 offers were 20% cash down offers. Now that it has closed, can anyone see the loans on the place? How much down? FHA?

  3. Posted by Rincon Hill Billy

    The market is definitely hotter in 2009 than 2008. CBS’ case could be true if you don’t look at the numbers before 2007.
    Case in point: foreclosure in Fremont (yes, that is not real Bay Area), had 50+ offers…a record number and closed over 100k over asking as well.

  4. Posted by Snark17

    OK, so they underpriced the house. This still seems like a very healthy sales price for a fixer upper house in a dicey neighborhood in the middle of a recession. Of all the SF neighborhoods, this was subprime central– I don’t think a return to 2004 prices in the Excelsior means the sky is falling.

  5. Posted by Trip

    LMRiM, I don’t see in our RE databases the loan info (probably not updated yet in our services). I have to pay to search for this which is why I don’t generally care to dig it up, but I was also curious about this one.
    It would be interesting for price discovery purposes to see “bid” prices on places that don’t sell — in other words what the market is offering. 41 out of 42 bidders apparently were only willing to pay less than the 2009 to-date median $/sf for this place. But they got one to offer the median. Probably a complicated pricing effort to get nothing more than the median $/sf price . . .

  6. Posted by Michael

    “41 out of 42 bidders apparently were only willing to pay less than the 2009 to-date median $/sf for this place.”
    That’s worth repeating. Hasn’t D10 already taken the biggest hit? 98% of the “pent-up demand” wouldn’t even offer the current median?

  7. Posted by piper1670

    Loan amount $300,000 with United Commercial Bank.

  8. Posted by Mole Man

    LOL at the ballpark across the street. “… they will come.”

  9. Posted by joerealtor

    We have no data about the other 41 offers. My guess is that there is a whole mix from low ball offers, investor offers, and probably a good number above $550,000 which is 95% of median value of the Excelsior. Serious buyers will look at comps and bid accordingly. The market is not supporting wild bids substantially higher than “market” values, but a reasonable house also will not usually be sold at a substantial discount in this market with lots of motivated buyers (lower price range SFR).
    Underpricing will still bring in traffic, multiple offers, and ability to work with the most solid buyers with fewest contingencies and negotiation after contract. But sellers should not expect a bidding war to produce a price 10% above what the market statistics indicate a value should be.
    As a side note, most of the bank REO properties in area 10 are receiving multiple offers within days of being listed. Yes the asking prices are well well well and make it another well off the peaks. Almost as bad as Oakland. But people are buying and that is a good sign for market stabilization – at least at the entry price point for a sfr in San Francisco.
    As I tell clients, there are no more 2 bedroom, 1000 square foot single family homes being built in the city. It is truly a fixed supply.
    Finally something to consider. Most lenders require 20% down to buy a condo in SF and most buyers can buy a SFR with 10% down. This is traditional lending, not FHA or VA.

  10. Posted by FormerAptBroker

    piper wrote:
    > Loan amount $300,000 with United
    > Commercial Bank.
    I just looked since I figured piper may have missed a second, but only the first from UCB is on title.
    P.S. I know that many Asians think that 8’s are lucky (my commercial leasing friends say that any space with an “8” in the address will be in high demand), but is there anything about 555 (aka the “triple nickle”)? The UCB SF HQ is at 555 Montgomery not far from the BofA SF HQ at 555 California…

  11. Posted by Daniel

    A sucker is born every minute. Greed and fear will take over your common sense emotions if you allow it. And that’s what happened to this buyer. TIMING IS EVERYTHING!

  12. Posted by dub dub

    If the 300k loan is correct, then no matter what happens, the taxpayer won’t be on the hook. Everybody wins.
    As I’ve said earlier, enjoy your spring!

  13. Posted by LMRiM

    Please tell me that that loan info is incomplete. UCB is a bank focused on Chinese-Americans, many recently arrived. I hate to think that after all this, some hard-working immigrant family put $270K of cold hard cash down in the first loss position on that property. I can see that I still have a lot of work ahead of me. Like that ancient Greek wrote, “The life is so short, the craft so long to master”.

  14. Posted by joerealtor

    Slightly better comparable data shows a slightly different story….
    10 sales of 2 bedroom homes with at least 1 car parking in the Excelsior between 1/1/09 and 3/15/09 that would have been comps at the time of offers for this home. The average per square foot of these 10 best comps is $484 a foot.
    So perhaps a sale even slightly under market value?
    Next up on the Price is Right…..70 Williams
    A very similar starter home in Silver Terrace. Clean, original not staged, not fancy, not reo/short sale. Listed for $349,000.
    Here is a clue, 3 comp sales only at $421 a foot and this one is 1250 square feet. $526,250 going once…

  15. Posted by Willow

    “A sucker is born every minute. Greed and fear will take over your common sense emotions if you allow it. And that’s what happened to this buyer. TIMING IS EVERYTHING!”
    Wow, you were able to make this assessment based on what? This home or neigborhood may not be your cup of tea but you really have no idea what motivated the buyer. Clueless…

  16. Posted by diemos

    “some hard-working immigrant family put $270K of cold hard cash down in the first loss position on that property.”
    Hey! All of that money we’ve been spending on plastic injection molded crap has got to come back here somehow.

  17. Posted by anonn

    “I can see that I still have a lot of work ahead of me. Like that ancient Greek wrote, “The life is so short, the craft so long to master”.”
    Chaucer was English, and it was “learn,” not “master.”

  18. Posted by LMRiM

    You know, I always thought it was originally said by Hippocrates, and a google search will turn up hundreds of attributions of it to Hippocrates, with a few crediting Chaucer for following it.
    I remembered the quote differently from my high school days, as “The life is so short, the task so hard to master”, but that was back in the days before the internet, so people were smarter 😉
    I’m really not sure, although I did flub the “learn” v. “master” (although whether in Old English or Ancient, I’m pretty sure the original word is neither).
    Any literature historians out there who know definitively whether the thought is original to Chaucer or Hippocrates?
    In any event, it’s a good thought.

  19. Posted by LMRiM

    Thanks, anonanon, for that cite! It looks like Hippocrates expressed the idea (that’s who I was thinking of), and Chaucer (through Seneca’s translation of the Ancient Greek) gave us the genesis of the current quote in (I guess) Middle English.
    Cool. Maybe the internet is going to work out after all 😉

  20. Posted by Trip

    As I always suspected . . . Chaucer was just an unoriginal hack and a foule!

  21. Posted by anonn

    Yeah. Well, Wiki gets a lot of stuff wrong. I don’t doubt this one particularly.

  22. Posted by YeeDiddy

    I don’t get it. A 1250 sq ft 2/1 in Excelsior that sells for $570k? I can understand it if the home was completely updated and EQ retrofitted – but that price seems awfully high for what the buying is getting.

  23. Posted by Debtpocalypse

    As I always suspected . . . Chaucer was just an unoriginal hack and a foule!
    He’s also said to have lost a fortune on a chain of inns between London and Canterbury.

  24. Posted by hangemhi

    i’m sorry, was Chaucer from 555 Edinburgh???
    and since when does a home have to sell at Median for it to mean anything? maybe this is the worst friggin home in the set.
    and where is exSFer telling us no one puts large cash down in SF. we’re not even talking “real sf” here.

  25. Posted by Salarywoman

    The nice thing about a bidding war, or an auction, is that the winner invariably pays more than anyone else is willing to.

  26. Posted by NoeValleyJim

    Someone paid over HALF A MILLION DOLLARS for a small home on a small lot with bars on the windows in a neighborhood where there were half a dozen murders last year.
    Yes, it is across the street from a park. But still.
    And this is somehow proof that the housing market is San Francisco is in utter collapse?

  27. Posted by MossySF

    From UCB’s website:
    …If you have little or no credit history in the United States, lacks sufficient proof of income, or is self-employed, our QQ Home Loans are a good choice for you. We can qualify you without asking for paycheck stubs or tax returns. Your source of down payment can be your savings, gifts from family members, other business sources, or even from overseas…
    With these terms, UCB probably keeps their loans in house so I wouldn’t be surprised if 40% downpayment is the requirement. But what other choice does a business owner who has been underpaying taxes for the past decade have? (Ok, they could come clean with the IRS and pay their back taxes… or they could keep renting…)

  28. Posted by ex SF-er

    and where is exSFer telling us no one puts large cash down in SF. we’re not even talking “real sf” here.
    I guess if I have to be called out, I’ll reply. I have never ever said that “no one puts large cash down in SF”, nor anything even close to that.
    I have simply argued against other people who claim that the majority of buyers in SF are ALL-cash buyers. there is a big difference.
    listening to some people around here you’d think that most buyers are uber rich folk who slap down all cash offers for themselves or their children. The demographics of home ownership simply do not support those wild claims.
    Data has consistently shown that downpayments as a percentage of purchase price have plummeted in recent years, especially with the increase in so-called “80/20” loans. it has also shown that the mortgage owed as a percentage of home value has increased over the same time period. Simply put, people have more debt on their homes today than they did in the past. Even in SF. thus, it argues strongly against the mythical Loch Ness “all cash” buyers out there.
    I am personally not surprised that some cash was put down on this property, although I am surprised at the amount of the cash down. at the time it was purchased loans were tight, and thus the 80/20 was hard to come buy. thus, I would have predicted 20% down, 79-80% mortgage.
    this seems to be a 50% cash purchase. surprising? yep. astonishing? nope. against anything I’ve ever said? nope.
    hangemhi: shall I start posting the loan balances on every socketsite home that goes up for sale and then call you out for them if they’re not an all-cash purchase?
    I’ll start with this one.
    this was not an all cash purchase. it was a 50% mortgage situation.

  29. Posted by Trip

    I share the amazement that anyone would put $270k down on this place, and that anyone would pay $570k for it. My bet is that in 3 years all, or nearly all, of that $270k “equity” will be in money heaven.
    Of course, even more stunning is that, on a $/sf basis, the area price was 21% higher in 2006 — another example of how truly overblown the bubble became (and remains).

  30. Posted by ex SF-er

    hangehmi: sorry for my irritated tone. I just tire of people putting words in my mouth that don’t even approximate my positions.
    As a data-oriented person, I would be happy for someone to post data that shows the percentage of SF abodes that are purchased for all cash. I pass the baton to you in fact.
    I am not an uber bear. I am currently a bear due to fundamental analysis of markets. I had RE bullish data that I was going to post, but this post is way way too long already anyway.
    in 2007, (national data, for OWNER occupied units):
    8% paid all-cash
    51% had downpayment 20% or LESS.
    9.4% put down NO downpayment (included in above 51% figure)
    so you can see that the % paying all cash is as significant as the % who put nothing down. (LMRiM’s recurrent “non-sucker” theme)
    source of data: page 158, US census.
    warning: large pdf.
    the source of downpayments of owner occupied units (NATIONAL data again): (not restricted to all-cash purchases)
    -sale of previous home (32.6%)
    -savings (44%)
    -sale of other investment (1%)
    -borrowing, other than mortgage on owned property (3.5%)
    -inheritance/gift: (2%)
    -land where building built used for financing (0.8%)
    -other (4.4%)
    -no downpayment (9.4%)
    -not recorded (2.3%)
    same source as above, page 160.
    thus, you can see using my data why i’m reluctant to believe in all these all-cash SF buyers. I am very willing for you (or anybody) to show me DATA on why SF is “different”.
    typically, I don’t get data from people arguing against me. instead I get “you just don’t know because you aren’t here, and I know this friend who paid all cash because their dad is an oil sheik etc etc etc”
    Or they try to say “well SF is different” but show me no data that would indicate otherwise.
    As example: did you know that the % of homes owned outright is NO DIFFERENT in SF compared to the nation (both are about 1/3rd of homes owned outright). I did.
    The ball is in your court. SF specific data showing percentage of homes purchased outright without a mortgage. I’d be even happier with a breakdown of downpayment percentages. And happier yet with data going back a to 1995 to see if there were changes as a result of the worldwide credit bubble.
    I don’t doubt at all that there are some all-cash buyers in SF. I wouldn’t be surprised if it were near the 8% national figure. I wouldn’t be surprised if it were a little higher due to the wealth of SFers and SF transplants. I wouldn’t be surprised if it were a bit lower due to the absolute cost of SF Real Estate. But I’d sure like data before I just throw out national trends.

  31. Posted by joerealtor

    The sale of this home for $570,000 is not unique in this current market. While some may think this unreasonable, there are many who do not.
    There have been at least 35 sales of 2 bedroom homes in district 10 over $500,000 this year. This does not include quazi-three bedroom inlaw situations listed as 3 bedroom houses in the mls.
    1261 average square feet and $566,271 average price.

  32. Posted by anonn

    Hangemhi, myself and others said the recent market was typified by large cash down payments. You seem to be saying “all cash.” I’m sure you realize how much, infinite variation there is between those two points?
    In my case, my initial anecdote was that I personally saw scores of situations 2004-2008 where buyers put down more than 20%. The point was that many of such buyers will find it easy to re-fi, and avoid any sort of ARM reset.

  33. Posted by viewlover

    1. New found respect for you. I wish I had your patience.
    2. Great information.
    FWIW, It used to be that anything under 20% would require expensive PMI, many buyers bougth that way. Then it moved on to 10% first and 10% seconds. It also used to be that if you had 20% down it did’nt matter what your credit score was, you’ve got 20%!

  34. Posted by ex SF-er

    Hangemhi, myself and others said the recent market was typified by large cash down payments. You seem to be saying “all cash.” I’m sure you realize how much, infinite variation there is between those two points?
    yes, that is true. I recognized this point after I posted.
    It may be just that we have a problem with verbal communication. Perhaps the problem is words like “Typified” and “large”.
    When you say that the “recent market was typified by large cash down payments” I understand typified to mean either the majority, or the mean, or at least a significant minority of the sample.
    I understand “large” to be… well… large. I don’t consider 20% down to be large, so that may be the area of greyness. I consider 20% to be A BARE MINIMUM downpayment, and 20% WAS the bare minimum downpayment until the mid 1990’s. I do not consider a $200,000 down payment on a $2,000,000 home “large” even though $200,000 is a big number. it’s only 10% of purchase price. we’ve seen what such a SMALL downpayment means to loan portfolios.
    Since my sourced census data only has a category of “40% downpayment or higher”, I am fine saying that a 40% downpayment is a “large” downpayment. (for instance, the house in THIS THREAD had a large downpayment, around 50%).
    looking at my NATIONAL (not SF specific) data,
    -one sees that over half of the purchases used downpayments of 20% or less. (a SMALL downpayment)
    -Only 13.4% of people paid ALL-cash OR put down 40% or more on their property.
    If more than 50% of people had downpayments less than 20%, and only 13.4% had downpayments of 40% or more, then I would say the market is TYPIFIED of LOW downpayments.
    Unless of course you feel that 20% is a large downpayment. then it’s 50/50. But then I go back to the fact that 20% was considered the bare minimum downpayment until the 1990s. hard to call that “large”. I’d call that “relaxed credit standards”
    I will word my position very carefully and very specifically thusly: You may all quote everything below from here on:
    I do not know SF specific data, but request said data if anybody has it. However, national data indicates that:
    -just over half of owner occupied homes are bought using downpayments less than 20%
    -9.4% of owner occupied homes put nothing down
    -8% paid all in cash
    -5.6% put between 40-99%
    -a total of 13.4% of people put 40% or more down or bought outright. (8% plus 5.6% is 13.6%, which differs from the above 13.4% number based on rounding… go to the data itself and you’ll see that it all fits).
    -I consider a 20% downpayment to be “small”
    -I consider a 40% downpayment to be “large”
    -since 50% of people put down a downpayment less than or equal to 20%, I would say that “the national RE market is typified by small downpayments”
    I anticipate that SF will have some variances from the above data, but I do not think it will be striking, similar to the fact that about 30% of SF households own their home outright, and 30% of national households own their home outright.
    I welcome data to the contrary. I use the census data because I believe they have a very good methodology with checks and cross checks. I also understand the limitations of this data, and that the data can have errors due to sampling. However, I still maintain that this data is superior to people making unsubstantiated claims.

  35. Posted by anonn

    OK. When I say large I mean over 25 percent down. If I had data I would share it. I really don’t want to get into a sphere in which six or seven posters go to the “It’s that way because I say it is” card.
    In theory, folks who put over 25% down will have an easier time refinancing. That’s all.

  36. Posted by ex SF-er

    so clearly our disagreement is mainly simply one of semantics, specifically the use of the word “large”.

  37. Posted by LMRiM

    25% down is not going to be nearly enough to “save” the people who bought in 2005-2007.
    I do agree w/anonn and hangemhi that a significant percentage of SF properties had significant cash downpayments, although we could all argue about the meaning of “significant”.
    It won’t matter in the least, though, for the pricing structure, although it will effect the timing of the unwind a bit. Long term owners will set the new comps lower, and buyers set the price in all markets over time, anyway.
    People who wait too long to sell will just be trapped if something happens to cause them to want to change their living arrangement. Psychologically, the ones who cannot sell without recognizing the implosion of value of much or all of their downpayment will over time convince themselves that they really wanted to live in their starter property for 10+ years all along, every month paying more than twice what it would have cost them had they been throwing their money away on rent. It’s not really too complicated to think through how this is going to go. Watch as this market unfolds in coming months and years and we will see.

  38. Posted by anonn

    Lots of predictions there. Lots of assumptions too, all made in a spring 2009 that’s seeing a surprising bounce. Among your assumptions is seemingly one that most of these houses were viewed as starter homes.

  39. Posted by JimAtLaw

    A surprising bounce? LOL… A surprising bounce in the number of foreclosures, with yet another new record:
    And a bounce DOWN in price:
    Prices have much, much further to fall when these foreclosures (and the other millions of units of shadow inventory) hit the market! Not everyone in the Bay Area makes $250k and has $200k in the bank, which is what would be required to pay for all these million dollar homes. Not even close, and the people who are arguing that there are plenty of buyers with hundreds of thousands of dollars in cash around who are willing to invest it in a PLUNGING real estate market all seem to have a vested interest in believing that to be true and convincing others of the same.
    A surprising bounce… Hilarious.

  40. Posted by Trip

    From the second Bloomberg link: “Prices dropped in 134 of 152 metropolitan areas, with the deepest declines in Cape Coral and Ft. Myers, Florida, followed by San Francisco and San Jose.”
    But, you know, that doesn’t mean San Francisco. Snark aside, I would be shocked if May sales were not quite a bit higher than March and April, which were totally in the tank. One can debate whether that is a bounce. I suppose in some sense it is.

  41. Posted by sparky-b

    “the other millions of units of shadow inventory”..also hilarious

  42. Posted by anonn

    There is a guy who shows neighborhood/ZIP code foreclosure stats on this website at least a couple times a week. We’ve got a very long way to go to get to the capitulation/critical mass you’re assuming is a given. So you’re one of those ARM reset tsunami-ists, huh? OK. Let’s wait and see.
    As for the surprising bounce comment that cracked you up so badly, there have been a number of higher priced properties moving since late April. Many of them have been talked about on this website. So let’s wait and see what June’s look back shows us. I think I might chuckle. I think you might not remember to post here again. It’s all good.
    If you don’t think there are plenty of people in the market right at this moment in time with hundreds of thousands to put down on SF r.e. in a falling market, that’s fine. I don’t need to argue against your opinion. I know that there are, and every day for the past month or so this website is shown evidence of that fact.

  43. Posted by hangemhi

    exSFer – i’m pretty sure i never said “majority pay all-cash” or anything close to that. and I don’t ever recall anyone else saying anything remotely close to that. yet…and maybe i recollect wrongly…. i recall you saying that virtually no one puts any significant amount of cash down even when they have cash available. if i recall that incorrectly, excuse me. i post on this site a couple of times a week and rarely bother to go back a day later to see the reaction my comment generated… but when i do it seems like “your all-cash anecdote is meaningless, not true, ridiculous or all three”
    so i had fun pointing out an “anything but” prime sf property getting a 50% cash offer since even I would not have expected that in that hood
    as for data… i find all data sources sorely lacking for SF-specific data. recently someone provided an option-arm link for SF loans, and it would not actually spit out the data.
    SF does need better data… because most on here use macro economics to explain our market, and i know from being in the thick of it every day that there’s a lot more than meets the eye. can i prove it? no, and i have no interest in being a data source when i actually have to work for a living. i have no idea how you all spend so much time on this site

  44. Posted by LMRiM

    The full table referred to in those Bloomberg stories is here (at the bottom), and it’s sortable by heading:
    The Bay Area really tunrs in a command performance – if you sort by median % loss, only Cape Coral (FL), Saginaw (MI) and Akron (OH) are doing “better”. But I still have faith in the Bay Area that we will ultimately get to the numero uno spot one of these days 😉

  45. Posted by Trip

    Nice chart. It may be true that the SF MSA is only #4 in terms of % loss, we are way ahead of (er, behind?) the top 3 in terms of dollar loss given the fact that median home prices are only $30k – $87k in the top 3. Looks like we’re still #2 behind the San Jose MSA in terms of $ losses. (Snark alert) Hey, isn’t that where all the jobs and innovation are?
    For the budding Trumps out there, for investment purposes, I suspect buying 5 median-priced rental properties in Fort Myers, FL will do you better than 1 such purchase in SF. Skip the hurricane insurance . . .

  46. Posted by JimAtLaw

    How is a rise in sales during the spring and early summer at all surprising? This is completely normal, and hardly evidence of a housing recovery in light of plunging prices, record foreclosure and pending foreclosure levels, and sky high inventory.
    Sparky-B, it’s almost fair to say I’m “ARM reset tsunami-ists,” but it’s less about ARMs than about interest only and option loans, methinks – right now, rates are so low that resets of a typical ARM aren’t hurting that badly for many. But for those who are paying zero principal in negative amortization, the resets will hurt. And of course, there are some people with more cash to put down right now than sense – but enough to turn the market around? We’ll see indeed.
    Trip, if you don’t think there’s a lot of shadow inventory, do you really think that all the listings that have been pulled from the market over the past couple of years but not foreclosed yet, or in foreclosure or pending foreclosure but not for sale, or which are not in immediate foreclosure danger but for which the owners just gave up after a while, are gone for good? Seriously? Of course not – a huge number of these will be back on the market soon, either as foreclosures, or with each passing hope that sales are picking back up. The snails pace of sales and fall in prices over the last couple of years has certainly clogged the seller pipeline and it’s going to take more than a month or two of slighty greater sales (still at a fraction of boom pace) to unclog it.
    Of course, I could be wrong – perhaps the entire city of San Francisco is filled with people who make $300k+ or are independently wealthy and who just can’t wait to get themselves a $1.3M two bedroom condo. I just don’t see it.

  47. Posted by JimAtLaw

    Er, pardon the typo/grammatical error laden post, was watching last night’s Fringe episode in another window…

  48. Posted by anonn

    How is a rise in sales during the spring and early summer at all surprising? This is completely normal, and hardly evidence of a housing recovery in light of plunging prices, record foreclosure and pending foreclosure levels, and sky high inventory.
    I didn’t say that it was evidence of a “housing recovery.” You did. I said it’s a somewhat “surprising bounce” and for some reason you took great exception to that statement. Well, I read the news and follow the markets just like everyone else does.
    Let’s face it. Conventional wisdom these days was that a bounce would not take place spring 2009. Because, as you put it, plunging prices, record foreclosure, pending foreclosure levels, and sky high inventory will all work against properties continuing to sell every single day for near-peak levels (or a few points off) in mid spring of 2009. I think you might even be one of those people. In fact, you are one of those people. So how many of these factors you are absolutely certain about are not actually in effect at this moment in time?

  49. Posted by Trip

    Hmmm, JimAtLaw, I think you misinterpreted my post. Maybe the tone did not come through. My point was that sales have been so amazingly low — clear evidence of a declining market — that they simply have to rebound. I don’t think that means a “bounce” in anything other than (1) typical seasonality and (2) a predictable rise off of extreme lows.
    I am 100% with you on the “shadow” inventory (heck, even the listed inventory is way up over recent years). FSBO did a very nice analysis not long ago of the extremely high number of listings that have been pulled in the last year or so. And yes, the SF-phase of the foreclosure hit is still to come with the I/O recasts.
    I’m sure we will see plenty of anecdotes of pretty high sales prices on individual places. An incredible home in Noe going in the high 2 millions. A fantastic condo in D7 going for $1.3 million. And people will say, “see those are ‘peak-type’ prices. No decline here in the Real SF ™.” Of course, the fact that they are high prices certainly does not mean they would not have been 20% higher two years ago. That’s why the apples-to-apples sales and broader measures are a much better indicator — less subjectivity (but not as fun to debate in the anonymous blogosphere).

  50. Posted by anonn

    It would be fun to debate with you if you were sincere in any way, Trip, but you’re not.

  51. Posted by ex SF-er

    i recall you saying that virtually no one puts any significant amount of cash down even when they have cash available. if i recall that incorrectly, excuse me.
    I believe you recall incorrectly. It is LMRiM and others who use the 100% financed jingle-mailer examples.
    That is, unless your definitions align with anonn’s. I consider a 20% down payment THE BARE MINIMUM. anonn considers a 25% down payment large. some use my definition of “large”. others use anonn’s. thus people talk past one another.
    I would argue that history is on my side in the “large” debate. Historically, a 20% down payment was the bare minimum down payment that reduced risk of loan default. Somehow during the credit bubble sensible life practices were abandoned, and now people have forgotten what “normal” really is.
    a healthy market is one where the owners put down at least 20% (and more is better), where they plan on paying off the note, where they pay no more than 3x income (or maybe 4 to 4.5x income in a desirable area like SF), pay no more than 33% of their TAKE HOME pay on a mortgage etc.
    those practices died the last 10 years. so now people think it’s “normal” to do an 80/20 IO ARM at 6x income, paying 50% of take home pay on mortgage. And then they think that doing the bare minimum (like 25% down) is a big deal.
    and then people are surprised that we are where we are, including our government. And everybody talks about “getting things back to normal”. And the terrifying thing is: they’re talking about 2005. Sorry folks, normal was like in 1996.

  52. Posted by LMRiM

    It is LMRiM and others who use the 100% financed jingle-mailer examples.
    I just want to go on record that I have no problem with the idea that many people (perhaps most?) put down “substantial” downpayments. People can argue about what “substantial” down payments mean – could be anywhere from 10% to 70%+ — I don’t think it’s going to make a bit of difference to where prices will ultimately wind up anyway (just affect timing in particular areas a little, though). You’ll never find me arguing on SS about sizes of downpayments, or option ARM “recast” versus “reset” schedules, etc. It’s not going to matter in my opinion in the end.
    I only point out that people who were smart put down 0% wherever possible during the most extreme bubble years (say, from about 2002 onwards in most of SF), and when I find an example like that in a house we are examining on SS I note it. If there is one thing this unwind should be showing people, it’s that very very few average homebuyers are particularly savvy when trading a leveraged asset that is typically much larger than the productive surplus their earnings are ever going to generate (at least after paying for all the other things necessary to live in modern society).
    In hindsight, once the bulk of the losses are behind us (they’re still in front of us imo for most of SF), it will be easy to pick what the “trigger events” were. But it’s impossible to try to forecast them with exactitude right now, and always a poor trading strategy. People who have traded other forms of leveraged assets (and, unfortunately, that’s what housing has become) will immediately recognize that in the presence of an extreme overvaluation on a fundamentals basis, once the trend changes, “that’s the ballgame, folks”. The key has always been the decline in sales volume to the identification of the trend change. The market will fill in all the “trigger events” later – just sit back and watch it unfold (this would have been a beautiful market to trade from the short side with a trailing stop – textbook beautiful).

  53. Posted by JimAtLaw

    Looks like I was transposing names in my responses, that’ll teach me to attempt to watch TV and post at the same time… In any event, interesting site and posters, I’ll be back. 🙂
    — Waiting for the dawn in SF

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