San Francisco County Unemployment Up To 10.1 Percent In August

Green shoots my ass. When will people stop confusing “we’ve stopped going down for a little while” with a recovery?
Without the consumer and housing engines revving, please oh smart ones, tell me what’s going to lead us out of this? Business spending? LOL! Good one!

sobroke, government spending only moves forward purchases slated for another time. Hence, my “we’ve stopped going down for a little while” comment. Once the government interference is done, we’ll just keep going down again.
Take one look at the Fed and you’ll see that all the liquidity in the world isn’t bringing banks back to lend because people aren’t borrowing money.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/20/MNOR19N2B1.DTL&type=business&tsp=1

sobroke, government spending only moves forward purchases slated for another time. Hence, my “we’ve stopped going down for a little while” comment. Once the government interference is done, we’ll just keep going down again.
Take one look at the Fed and you’ll see that all the liquidity in the world isn’t bringing banks back to lend because people aren’t borrowing money.

Mole Man, are you for real? The Fed tried to get things going by cutting rates to 0, but failed miserably. Guess what, consumers don’t care how cheap money is right now. Consumers as a whole just got burned big time and are undergoing an attitude shift. People won’t start spending until they feel comfortable about their income and their jobs. It’s very clear that neither of these conditions are about to turn around anytime soon on the horizon.
So once again, I don’t see why people are claiming green shoots from some trumped up auto sales and mediocre inventory depletion.

anonnn, unemployment does usually lag yes. However, what are the two things that turn first in almost every recovery? Housing and consumer spending. Yeah, good luck saying those are on the rebound.
We’re at a pit-stop here people, still going down. You don’t unwind the greatest liquidity bubble in history in merely a year and half with only a 20-30% asset haircut.

Jim Grant is making the point that the worse the recession, the more robust the recovery. It is an oversimplification to look at the recessions since the 1970’s and make this case. They were all induced by inflation and interest rate shocks, which dramatically cut consumption. Once inflation was tamed and rates lowered, the party resumed. Much different scenario this time – rates can’t go any lower than they are now. This is debt deflation, and the only comps are the GD and Japan since 1989.

If the labor force is now at 452,000
and the number of employed is 406,300
shouldn’t the number of unemployed be 45,700 (instead of 45,600)?
It sounds like an increase of 900 people to me.

Unless you really love it and intend to stay the rest of your life, you should wait AT LEAST 12 months. Rent instead, you will almost certainly pay a lot less for similar housing. Purchasing a primary residence does not qualify as anything approaching a good “investment” in the current market.

Japanese real estate prices have been in decline for 18 years. I guess it all depends on what one thinks of as a long horizon. Personally, i am waiting until at least 2012 if not longer no mater what recent comps are.

Jo, I have no idea if your facts are right, but your emphasis is very wrong. If there are only 7200 properties sold per year (you said 600/month) in SF, then having 7200 Option ARM properties is significant.
The housing market is different than the stock market in terms of volume. In both cases, the market price is set when the asset is sold. But in the stock market, an individual stock has many many transactions per day, and the market price is determined essentially continuously because there might be hundreds or thousands or even more transactions per day.
In the housing market, there are only those 7200 sales per year that set the market. It requires a much smaller number of transactions to influence those 7200.
That’s why, having 600 foreclosures in one year in SF, to give a hypothetical, would be significant — because that would be 1/12 of the normal market setting events. Similarly, if 5% of the sales in SF this year were distressed sales, those 5% would have a big effect, even though they compose only 360/350,000 or 0.1% of the housing market. Only the houses being sold matter.

Corntrollio,
Thank you for your insight..
I came up with monthly sales volume 600 based on SF Median sales Price and Volume graph provided by SS. See the link of graph below;
https://socketsite.com/archives/2009/09/san_francisco_recorded_sales_activity_in_august_down_xx.html
Since 2004,monthly sales volume has been as high as over 900 and as low as below 400.
I just eyeballed the graph and came up with number 600.

wet feet,
what are you (maybe) buying?

Also, please correct me or add more info. if my calculation above is mistaken or wrong….
go back to your original quote:
“From 2004 to 2008, almost one-fifth of all mortgages, for both home purchases and refinancing, in the San Francisco and San Jose metro areas were option ARMs.”
you forgot refinancings in your calculations. I don’t have any idea what that data would be, but it is likely quite sizeable. (refinancings were very common across the country in that time frame).
thus, you’d have your 7200 homes PLUS the people who are now way underwater because they refinanced and spent their equity (on renovations, cars, boats, etc)
—-
but there is another way to look at the data too. From 2004 to 2008, 1/5th of all people took out Option ARMs. the data on the Option ARMs shows that a disproportionate number of them (95% or more I believe?) chose the minimum payment. it is a clear signal that a significant number of those people couldn’t really afford SF housing without using the Option ARM.
now that the Option ARMs are much more difficult to get, it means that you have up to 1/5th of the prospective homebuyers priced out of the market.
prices typically adjust significantly when you remove up to 20% of the demand.
this also of course ignores the other 50% of the SF population (if old data is to be trusted) that used Interest-Only mortgages.
Now of course many will argue that the lion’s share of SF Option ARM holders use them as cashflow tools and they are really quite affluent, thus the Option ARMs aren’t a big deal. we’ll just have to wait and see if those Option ARMers are people who stretched too far to buy a home (as I surmise) or a cash-management tool of the wealthy (as others surmise). it’ll be obvious if the defaults continue to come in.

“I am purchasing in escrow to purchase a loft unit in San Francisco.”
I would bail and wait a year or two…but that’s just my opinion and you asked.

@Wet feet.
There is an old Asian ancient saying that “Buy a land/house at knee price and sell it at shoulder price.” In today’s economy, same rule applies to buying stock.
They are considered 20-60-20 players in 21st century western world and we call them “The most successful professional investors”
Most of those who buy house or stock at a toe price and sell it at top of head price are simply lucky. This can not be calculated.
Are we at the foot, waist, or top of head in today’s housing market? Nobody knows.
How long is it going to take until we see the bottom of feet? Nobody knows especially when government is deeply involved in the market.
I bought a condo a couple of months ago not because I am a professional investor or hope to be purely lucky. I bought it because I needed an extra bed room and my mortgage payment will not be much different from apt. rent. My saving was spent to make down payment and there will be other extra costs such as property tax. But the amount of extra cost justifies owning. (This is my subjective point of view)
What I find very interesting from this website is that, for the last few years, people have predicted future housing market with an assumption that the market is going to play itself without any government intervention. But government has constantly come up with new policies to keep housing market from crashing. However, until today, people still make future prediction with an assumption that there will be no more government involving in the free market.
Those people who tell you to wait 12-18months right now may have been the people who said that there would be a huge housing inventory bursting out last summer.
A lot of prediction made in this site have turned out to be wrong not because they are stupid but because market doesn’t work like it is supposed to.
Plus, be aware that a lot of people who come to this site are renters with hope that, someday, they want to own a property so some of them tend to overreact to certain news.
The article about options ARMs and this month unemployment rate are in fact very very alarming and seems to create a good deal of fear among ordinary people and fear is the most effective tool for government to control people and country. I wonder what additional program government will come up with this time which they usually do.
Do your own math.
Do you really need a condo right now?
If you give up owning right now, how easy is it going to be to find similar or better unit in the future?
If you buy it right now, how much risk can you take in case market tanks or goes up in the future?
How much extra cost is worthwhile to own versus rent?
I can imagine what goes through your mind right now.
It is indeed an emotional roller coaster. Hope you find a peace with searching for a dream home. Good luck!

If it’s one of the many new construction lofts built in early 2000’s, there will always be some of these on the market in most locations and prices. They will always have turnover. You should negotiate for a better price (which always makes you feel good about your purchase), or wait.
If it’s an actual warehouse conversion or something special and more “one of a kind” this may be your only chance to get it and the price is certainly lower than it would have been for last few years. Special and unique places will hold their value better.

SFGate just posted the weekly foreclosure auction data, and we have a definite candidate for “Foreclosure of the Week.” It’s a textbook example of using your condo as an ATM and leaving the banks holding the bag. Unit 601 (662 sq.ft.) at 2999 California St. was purchased for $370k in June of 2004. Near 100% financing (one percent down, what could go wrong?) with a $296k variable first and a $70.3k fixed second (Wells Fargo, for those of you tracking their second lien portfolio). Here’s the best part, in 2007 another $123k was extracted courtesy of Chase. Sold at auction for $316k on September 3.