According to DataQuick, recorded home sales volume in San Francisco jumped 17% on a year-over-year basis last month (536 recorded sales in September ’09 versus 458 sales in September ‘08) and rose 2.4% compared to the month prior. The difference between recorded and listed sales activity continues to be driven by unlisted new construction sales.
San Francisco’s median sales price in September was $650,000, down 3.7% compared to September ’08 ($675,000) but up 2.4% compared to the month prior.
For the greater Bay Area, recorded sales volume in September was up 4.8% on a year-over-year basis and up 4.8% from the month prior (7,879 recorded sales in September ’09 versus 7,271 in August ’08 and 7,518 in August ’09), while the recorded median sales price fell 8.8% on a year-over-year basis, up 1.4% compared to the month prior.
“This market may be closer to normal than it was a half year ago, but it’s still out of kilter, fueled in large part by incentives and the processing of distressed properties. The sales mix is still lopsided, tilting toward the low end, and lending institutions are only making really safe mortgage loans. For those who can buy, there are some very attractive opportunities. But it still looks like a lot of normal supply-and-demand activity has been put on hold until the economy comes back,” said John Walsh, MDA DataQuick president.
At the extremes, San Mateo recorded a 35.1% year-over-year increase in sales volume (a gain of 162 transactions) on a 5.5% drop in median sales price while Solano recorded a 5.0% year-over-year increase in sales volume (a gain of 32 transactions) on a 24.5% drop in median sales price.
As always, keep in mind that DataQuick reports recorded 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).
∙ Slight uptick in Bay Area home sales and prices [DQnews]
∙ San Francisco Recorded Sales Activity In August: Down 2.8% YOY [SocketSite]
∙ Listed San Francisco Single-Family Home September Sales: Down 4% [SocketSite]
First thought: This isn’t surprising. September 2008 saw the sea change, and very little activity.
at least we know that the current decrease in listings isn’t (entirely, for tipster’s benefit) due to greedy but furstrated sellers pulling their properties.
I remember hearing stories about house dropping out of contract left and right in Oct of 2008, but did this happen for those slated to close in September? I would have thought the most of the folks who placed offers in July and Oct would have gone on to complete the transaction.
So what were the September MLS sales figures, medians, etc. anyway? We’re halfway through October already!
Scratch that last question. I see this is now posted here:
http://www.rereport.com/sf/
[Editor’s Note: Keep in mind that according to sanfranciscoschtuff there were 184 listed single-family home sales in September of 2008 (for a 4% decline in SFH sales) versus the 174 (and 0.6% gain) rereport reports. It could be methodology, or one of the sources is wrong.
That being said, assuming the rereport is correct for the sake of this comment, listed sales matched recorded sales performance in September, up 18% YOY. And the most significant gain in condo volume occurred in District 9, up 20 transactions (47%) on a 12% decline in median price.
The percentage of unlisted sales this past September (26.9%) was relatively unchanged from September 2008 (27.5%) as the number of unlisted sales increased 14%.]
“First thought: This isn’t surprising. September 2008 saw the sea change, and very little activity.”
Not entirely sure – I think it really affected figures in october more.
September sales for past few years:
09: 536
08: 458
07: 469
06: 567
So we are much closer to 06 sales than 07, or 08.
That surprised me.
As for median, it still holds up, despite the much heralded movement towards lower priced sales in the mix, which would clearly pull it down (although we could debate by how much).
However, I see no evidence that prices have decreased this calendar year in SF at all so far.
Which perhaps shouldnt be surprising given the rapidly decreasing inventory levels compared to the last 3 years, and Case-Shiller showing prices rising again nationwide and within the SF MSA.
When was the last time sales increased in SF between August and September?!
^ around the last time billions of dollars in stimulus funds in the form of state and federal tax incentives were about to expire for buying homes?
REpornaddict, well said and, yes, surprising.
When was the last time sales increased in SF between August and September?!
Pent up demand for jumbos!
Just before cash for clunkers expired, demand for GM cars went up and inventory went down. I’m sure some of the posters here would say that proves GM had turned the corner, and sales would be heading up, up, up!
I doubt the tax incentives expiring and FHA announced tightening, along with yet another effective foreclosure moratoria, had anything to do with this.
Ugh, how many times does it have to be explained!?!?!?
Medians are NOT prices!!!
The median only tells you how much buyers are SPENDING. It tells you nothing about PRICES or VALUE (aka how much home buyers are getting for their dollars).
Yeah!
Although, increasing volume by way of declining median price doesn’t exactly paint a pretty picture…
I’ve historically agreed with most everything you’ve posted, tipster, but I’m no longer sure. Tax incentives can be made permanent, moratoria extended, the FHA bailed out or replaced with some other acronym. I’m starting to think the market may just continue to trend sideways for the next decade in a state of suspended animation. Whether directly or inadvertantly through zombification, our government has proven that it’s willing to do everything possible to prevent a true mark-to-market for real estate.
“Whether directly or inadvertantly through zombification, our government has proven that it’s willing to do everything possible to prevent a true mark-to-market for real estate.”
I think that has been the point of a lot of what has been done. The government is working overtime to try to keep paying on their home loan, to prop up housing prices, and prevent the banks from having to recognize the full extent of the losses from R/E. This allows the banks time to try to generate some income to offset the losses.
I do not believe the market is goign to go shooting back up anytime soon and there is a lot of effort going into preventing any more sharp declines, so you might be right about trending sideways for a good long while.
Tax incentives can be made permanent
There are only so many qualified (first time) buyers.
The government throwing a trillion dollars down a ten trillion dollar hole isn’t going to change the median reversion process except by drawing it out a bit. This isn’t a dynamic balance tipping game. All the conjured capital is going to get flushed away. That this might take more than a decade could turn out to be a good thing.
“Ugh, how many times does it have to be explained!?!?!?
Medians are NOT prices!!!”
Ugh, who said they were?????
“There are only so many qualified (first time) buyers.”
So they expand it to anyone buying a home. And then introduce 2% down, 2% mortgages with 50-year amort. It’ll be part of the new Keeping Homeownership Achievable Act or whatever the next iteration turns out to be.
The way I see it, there’s a parallel universe out there where the system was allowed to self-correct. There were trillions in losses in just a few years. Nice places in Noe Valley go for $600K, and mortgages carry 14% coupons and require sterling credit plus 30% down minimum. Only a handful of banks are willing to provide them, so those that qualify under those terms consider themselves very lucky.
But that didn’t happen here. In our universe, those trillions of losses were magically transformed into debt that our kids will have to pay off.
So they expand it to anyone buying a home. And then introduce 2% down, 2% mortgages with 50-year amort.
There are many things that would prevent this:
-Rising unemployment
-Declining rents -> lowers incentive to own
-Competing investments that pay more than 2% over 10,15,30,50 years with less risk.
-Political and economic realities that will prevent never ending debt expansion. We are already approaching national debt = GDP. That has been a pretty hard limit. And it doesn’t help that income tax revenue is declining…
Patience, LD:
Even the socialists running the government right now are showing signs of strain in spending. The understand that the public is mad as hell at all of the deficit spending and it appears to have reached a limit. The $250 per senior citizen vote buying giveaway now being discussed is only being looked at in the context of taking money from another stimulus program. They appear to get the idea that the public isn’t going to let the spending continue unchecked. The tax credit is seen as a very expensive way to prop up housing. They may extend it, but probably not for long and I doubt they’ll expand it. If they do, fine, the money will run out sooner.
Many of the modified home loans are failing, fast. The vast majority of people either don’t qualify or qualify and then default. All it did was cause a delay to wait to see if people qualified. Even if they did, the default rates are huge and within only a few months. By February, it will become apparent that this helped some, but not much. But what it does not is put every defaulting homeowner in a state of suspended animation while they wait to see if they even qualify. That’s coming to an end.
And the modified loans just wrap the unpaid payments into the balance, drop the interest rate for a few years and then ratchet it back up again. People who are hanging on for the next two years will default in year three. So this spreads the pain out and makes sure the foreclosure rate stays above average for years. Housing prices aren’t going higher for a good long time, so you can afford to take a wait and see attitude.
“There are only so many qualified (first time) buyers.”
So they expand it to anyone buying a home. And then introduce 2% down, 2% mortgages with 50-year amort. It’ll be part of the new Keeping Homeownership Achievable Act or whatever the next iteration turns out to be.
The way I see it, there’s a parallel universe out there where the system was allowed to self-correct. There were trillions in losses in just a few years. Nice places in Noe Valley go for $600K, and mortgages carry 14% coupons and require sterling credit plus 30% down minimum. Only a handful of banks are willing to provide them, so those that qualify under those terms consider themselves very lucky.
But that didn’t happen here. In our universe, those trillions of losses were magically transformed into debt that our kids will have to pay off.
Well said, LD. well said.
Sure, the trillions that have been flooded into the system have made it so a 3-4 year correction will now stretch to 6-8 years or longer, depending on when they shut off the spigot. That’s the apparent goal, and it seems to be working pretty well. But the bottom will be the same bottom.
To badlydrawnbear’s point about medians, you just need to look at what you can get at a particular pricepoint today and compare it to what you could have bought in SF 2-3 years ago. For $500k-$550k, for example, you can now buy a 3BR house in Bernal, or a 2BR condo in SOMA/Mission Bay, or a decent TIC in Noe or the Marina, etc. in 2007 that would have bought you a dump in the Bayview or a studio condo. SF has not seen prices fall like in Vegas (although it has been close in a few neighborhoods in D9 and D10), but there has already been an epic fall and we are not even close to the end. The banks are still a mess despite the injection of trillions (see BofA, GE earnings); commercial real estate is a ticking bomb; unemployment is extremely high and rising; consumer spending is moribund. The mass infusions have averted a true catastrophe, which is great and some industries are clawing back, but the overall economy is still in the ICU.
It varies by neighborhood and type of home, but we’ve seen maybe 10% drops in 2008 in SF and 15% in 2009. And that is with all the market-juicing activity. Another couple of years of 10% drops is quite likely imho with the state of the economy, growing foreclosures, tight credit, etc. As I’ve mentioned a hundred times, we have two markets in SF now — the juiced market (under about a million) and the un-juiced segment (over a million). The un-juiced segment is still falling fast (duh, because it is un-juiced). I’m betting that 2010 sees the biggest drops yet in that segment. And tipster is right that at some not-too-distant point the govt will declare victory and start shutting the spigot, and then the lower-priced segment will continue its fall.
Lots of good reasons to buy a home, but anticipation of financial gain over the next several years is not one of them.
Sure, the trillions that have been flooded into the system have made it so a 3-4 year correction will now stretch to 6-8 years or longer, depending on when they shut off the spigot. That’s the apparent goal, and it seems to be working pretty well.
Yeah, just like with the auto-bailouts, the point is to not have every crisis climax at once.
Nice chart. The 12 month moving average really smooths the short term movements out, but even with them gone, I just don’t see any strong correlation between sales volume and prices. If anything, it looks like for a significant period covered by the chart, there’s an inverse correlation (ie. from O4 through 07, price trend was up while volume trend was down). Yet the real estate press often suggests that increasing volumes presage increasing prices. I’ve never seen it. I do see a strong (inverse) correlation between DOM and prices: http://www.pegasusventures.net/wordpressblog/2009/02/06/dom-roll-please/
[Editor’s Note: Keep in mind that movement in the median is not synonymous with movement in values (or “prices”).]
This is what happens when the spigot gets shut off…..
http://www.nytimes.com/2009/10/02/business/02auto.html
For $500k-$550k, for example, you can now buy a 3BR house in Bernal
I think you’re overstating it a bit, Trip. The 3BR average in Bernal is still over $800k and the median appears to be around $900k. The few that show up in the price band you mention are tiny (900 to 1400 sq ft) and on the border, close to the freeways or Mission street).
I agree with the general theme of your post though.
No, you cannot buy a 3BR house in Bernal for 500 to 550K, Trip. If by that you mean, “a house that maybe could be construed to have 3 bedrooms if two of its load bearing walls were not disintegrating, no garage, and either in the very southeastern corner, bank owned, and with a protected tenant int he basement” — then, maybe. Maybe not.
re loan mods: tipster’s characterization of the process now is correct, but changes are underway. USG is pressuring some banks to forgive delinquent balances and reduce principal because the foreclosure crisis is accelerating with the current HAMP program.
I’m aware that different banks have different rates of mods. Citibank, owned 86% by the USG, could become a policy tool just as Fannie and Freddie are.
Anecdotally I know of 2 houses next door to each other, one owned by BoA and one by Citi. The Citi owned (borrowers mistakenly believe they own the home) gets a juicy mod; BoA refuses to budge.
A debtor’s revolt brewing – more people discovering they can stay in “their” home for a year or more without getting a foreclosure notice. What is that old saying, If I owe you $10 it’s my problem, but if I owe you $10 million it’s your problem.
Ha ha! Reduce principal, that’s a good one. To do that, your accountants make you take an immediate writedown of the amount forgiven.
Kind of defeats the most important purpose of the whole program, which is to hide the fact that the banks are insolvent.
To do that, your accountants make you take an immediate writedown of the amount forgiven.
hahha? Most people would gladly pay the taxes on the difference, which will show up as a 1099 or similar, accountants or not. Why “ha ha?” You’re getting weirder man. Always, always stretching to hate on something. Don’t pull a muscle in your haterback.
I think tipster was referring to the banks’ accountants. The banks most certainly do not want to recognize on the books the fact that their loan portfolios are not worth face value, as is currently reflected, but 30% less (as is reality). They would then immediately get seized by the FDIC.
but 30% less (as is reality).
That goes along with the 3 bedroom Bernal house for 500 to 550K. Yeah, “reality” that is not.
for your delectation.
http://www.huffingtonpost.com/2009/10/01/loan-modification-banks-f_n_306133.html