Inventory of Active listed single-family homes, condos, and TICs in San Francisco fell 4% over the past two weeks and is currently running 25% under 2008 levels on a year-over-year basis (down 30% for single-family homes and down 21% for condos/TICs) but is on par with the average listed inventory levels of 2006/2007.
39% of active listings in San Francisco have undergone at least one price reduction (versus 43% a year ago) while the percentage of active listings that are either already bank owned or seeking a short sale is now almost 12%.
The standard SocketSite Listed Inventory footnote: Keep in mind that our listed inventory count does not include listings in any stage of contract (even those which are simply contingent) nor does it include listings for multi-family properties (unless the units are individually listed).
∙ SocketSite’s San Francisco Listed Housing Inventory: 11/02/09 [SocketSite]
I say this EVERY winter, so here goes:
not sure I’d make too much of inventory/sales data again until next spring.
There are just too few transactions in the winter months, causing issues with statistical significance.
we’ll best be able to re-assess SF RE’s prospects in spring when the numbers of transactions rises again.
this of course doesn’t mean we shouldn’t track the data at all (thank you SS), just that we shouldn’t over interpret the data. all IMO of course.
agreed ex SF-er, but you know very well the over interpretation will endure! heh heh
Not surprised at all about the green line intersecting the blue lines…
The ‘n’ is big enough here to run statistics well beyond a 97% confidence interval. That’s not the issue. The issue is converting a large amount of unkown ‘market’ information into data to correlate to (like changes in buying/selling patterns from ‘normal’, unlisted data, governmental programs, blah blah).
But I too just like punting and agree we should just wait until spring. Or, maybe have a contenst over guessing what the color of the 2010 line will be? I guess brown.
Then again, SF units sold per month (condos & homes) has increased steadily throughout 2009.
Still waiting for the October numbers though.
Whatever “it” ultimately means, it’s good news for those who own SF RE. Certainly better than a boatload of inventory over previous years’ highs. The magic still continues with SF RE!
So inventory continues to fall during periods when it rose last year.
No doubt this will be interpreted as very bad news for SF RE!
Hee hee. I’m not sure whether the appropriate response is “Dream on” or “Nice, ironic post” 47yoh.
Socketsite’s chart leaves off all the inventory that is under contract, even if it is just contingent. So it is a valid picture but not a complete one.
Here is another view http://www.altosresearch.com/paragon/latest/paragon_market_update_zip_based_cmid_55_zipd_none.html
Note that SFH inventory levels rose throughout 2007 and into 2008 and have remained at about the same level ever since, with seasonal ups and downs. Condo inventory has risen steadily through 2007-2009. Price per sf has fallen steadily for both SFHs and condos. And the DOM trend line also has been steadily rising, again with seasonal peaks and valleys. The median has risen since Spring 2008, but given the $/sf chart I don’t see how one can read that to signify anything other than low sales at the higher end. One sees what one wants to see, but I don’t think one can fairly read these as indicating anything but continued and growing weakness, and this is despite all the efforts to pump money into housing.
Both the Socketsite and Altos charts leave off the “withdrawn” listings. I’d love to see that chart over time to round out the picture.
But I too just like punting and agree we should just wait until spring. Or, maybe have a contenst over guessing what the color of the 2010 line will be? I guess brown.
Agreed. And my money is on magenta.
How about red? Could be appropriate.
Anon, you said
“The median has risen since Spring 2008, but given the $/sf chart I don’t see how one can read that to signify anything other than low sales at the higher end.”
I don’t follow your reasoning here.
surely if $/sf falls but median rises, you should be saying
“I don’t see how one can read that to signify anything other than low sales at the LOWER end”?
Or
“I don’t see how one can read that to signify anything other than HIGH sales at the higher end”?
But, as you said, one sees what he wants to see…
I have said it once before and I will say it again:
This time last year, sellers were sideswiped. Many people placed their homes on the market before they KNEW the economy was in a mess–before anyone realized there would be less sales. This year, you have sellers who are more savvy.
I think this data does tell us that SF RE is in at least okay shape (the bottom has fallen, sellers are desperate, etc..). Let’s see what the spring will bring.
There remains a very large shadow inventory and many owners-tobe-sellers are waiting and praying for more stabilization and recovery. Prices will likely remain flat at best IMO.
Inventory shows you lots of things: how hopeful vs realistic sellers are is one of them.
2008 was an odd year: lots of flippers rushing for the exits at peak pricing they paid the year before. A disproportionately high number didn’t sell and got rented. Was it really inventory when someone was asking a price they wouldn’t see again in their lifetime, and could simply rent out at a small loss if it didn’t sell for such an unrealistic price? No.
I suspect this number is a bit of a fluke, and you’ll see it trend below 2006 for the rest of the year. At some point, the sideline sellers just give up and take their lumps. They see the market isn’t going to come roaring back, and are tired of losing $500-$1000 per month renting the place out. But I don’t think that’s going to happen in any big way until next year.
REpornaddict, this is an inventory chart, not a sales chart. Fewer high-end sales means they are sticking around in inventory longer. This would translate to a higher median among the listings. You can see this by the DOM numbers, the $/sf numbers, and the lower sales numbers at the higher end (the latter are not reflected on these charts but elsewhere).
Arggh..you’re right, anon sorry…
Still not entirely sure its as clear as you say, though. There is some evidence that high end sales are actually increasing as a proportion of the total..
https://socketsite.com/archives/2009/11/medians_are_up_but_dont_confuse_that_with_increasing_pr.html#comments
Could even argue this..
Wisdom here is that inventory is down because people simply can’t afford to sell, and are trapped in their homes.
But if there’s much more higher end stuff on the inventory that must mean that less higher end owners are trapped than those at the lower end.
So less evidence that the alleged forthcoming foreclosure wave is going to hit those homes at the higher end.
I found this interesting
Annual Sales in SF
(Data from blackstone-sanfrancisco.com)
Year…..SFR….Condo..Total
1998…..3,387..1,928..5,315
1999…..3,455..2,162..5,617
2000…..3,106..1,831..4,937
2001…..2,694..1,634..4,328
2002…..3,099..2,462..5,561
2003…..3,392..2,886..6,278
2004…..3,288..3,208..6,496
2005…..3,027..2,886..5,913
2006…..2,664..2,477..5,141
2007…..2,305..2,336..4,641
2008…..2,132..1,845..3,977
11/13/09.1,813..1,397..3,2105K sales, or remain at
The HTML monster ate the last part of my post.
my question was:
Do we return to over 5K sales, or remain at under 4k?
The following graph shows sales over the last 10 years in San Francisco, Bayview and Outer Mission.
http://tinyurl.com/ye9mt7q
Sales in San Francisco are at the lowest point in the last decade consistent with HappyRenter’s numbers above.
In the Bayview sales are higher than after the last recession indicating that sales have recovered.
In the higher priced Outer Mission area sales have to increase about 25% to reach the numbers during the last recession form 2001 to 2003
In the last few years, it seems like there are a decent number of places that first got listed around 23-26 months since the last sale (i.e. flippers trying to take advantage of the capital gains exemption with a 24 mo. holding period). I’ve always wondered what portion of inventory and sales for the last few years that this category has composed.
No idea how this factor would have affected 2008 inventory/sales, but just a thought. Presumably 2006-buying flippers got a rude awakening, and the 2007-buying flippers who hadn’t seen the writing on the wall got it worse.
Several of you are using volume and price interchangeably, posing hypothetical questions about individual property performance. It doesn’t make sense to do that.
Nobody’s using them interchangeably. You either don’t understand the discussion or you’re deliberately mischaracterizing it. A steep drop in sales is a clear indicator of falling demand, which correlates with lower prices as elementary economic has shown.
A steep drop in sales is a clear indicator of falling demand, which correlates with lower prices as elementary economic has shown
Right. Like I said, you are using them interchangeably. (And “Elementary economic has shown” means nothing.)
It is not true on a micro level. You have been spoon fed this truth again and again in this space and probably elsewhere.
Ahh, anonn, you’re using the ol’ “it’s all very micro bro” line again, huh? That’s your code for “Just because prices are falling rapidly all over the place doesn’t mean prices are also lower for any particular property.” But you’re wrong. The flaw is your premise is that every single property is its own market and sellers don’t have to compete with one another for the shrinking pool of buyers.
You’ve been spoon fed this faulty line of argument by every single realtor organization there is (“All it takes is one buyer.”)
It’s not a line. The evidence is on this site all the time. Last week I showed the relative price stability of the 1M and up Bernal market, despite quite a shift in volume.
Think what you want. Keep your blinders on. I don’t care. But expect to be called out on mistakes when you misappropriate terms and try to relate them to individual property performance.
And please, save the world weary routine. Sitting on a computer going along with CW really isn’t that tiring, is it?
I think that each house is to some degree it’s own market and it really does only need one buyer. While condos are much more tied together. I also think that the buy/sell/repeat/retire crowd has left the market, and so has a bunch of the buy/remodel/sell crowd since construction loans are so hard to get.
What percentage of the steep drop in sales is from the lack of flipper and developer purchasing repeatedly, I wonder.
as always, sparly-b’s observations are insightful.
on a related point, I’d love to see a breakdown on reasons that condos/houses are held less than 5 years (something back in the old days that was recognized as a recipe for a big financial hit). I would think job loss would be a big part of it, but the houses I have been most interested in/done the most research on seem to have other stories. bought something else has come up as has executive relocation. in the latter cases, it seems that companies have deep pockets when it comes to both carry costs and absorbing sale loss. any tips for negotiating employment contracts like that? I didn’t realize that housing clauses were so common.
This is an area that I work in almost every day. When defining a market, two key concepts are substituitability and price discipline. Any homes that be considered reasonable substitutes for one another among the general buyer pool are in the same market. It is the exceedingly rare buyer that will only consider one specific type of home in one specific area. That is why — as I’ve often noted — you can’t silo homes into many, many individual “markets” and discuss them in a vacuum. Most buyers will consider either a condo or an SFR, depending on price, size and a host of other factors, and they’ll consider a variety of neighborhoods or towns, again depending on price and lots of other things. It is a continuum. This is why you would never see condo prices falling by 40% in SOMA have zero or negligible impact on SFR sales in, say Noe.
And any reasonable substitute for a given home that is on the market (or recently purchased) will “discipline” the price of any other reasonable substitute. That is why a lower price on an SFR in the Sunset will cause price pressure on SFRs in Noe. And why falling condo prices in SOMA will cause price pressure on Pac Heights condos. And why falling home prices in Walnut Creek will cause price pressure in SF.
Even on the most micro level, any single home, it is only in the rarest of exceptional cases that the home would be such that an individual buyer or the buyer pool as a home would not even consider other homes or neighborhoods, and thus those competing products discipline the price for the subject home. Realtors easily grasp this concept when prices are rising by pointing to high “comps” or increasing medians or $/sf, yet they like to pretend these principles do not exist when we have a falling market like the present.
“Last week I showed the relative price stability of the 1M and up Bernal market, despite quite a shift in volume.”
Umm, that would be quite a claim, considering that the number of $1M+ sales cratered. The few $1M+ sales in 2009 showed a strong decrease in $/sqft and were even in $/sqft vs. 2007, but again, since “everything is micro” that means nothing either. Can’t have it both ways, anonn, as Trip said.
Agree with Trip’s last paragraph at 4:19.
Re: what steve said (“any tips for negotiating employment contracts like that?”). A buddy of mine with an overpriced condo (bought with a non-conforming jumbo and decent size second mortgage in another city) in his relo package received brokerage fees of up to 7% (might include paying transfer fee, etc.). Of course, he’s way upside down on the mortgage, so he’ll lose more than the amount of brokerage fees probably if and when it sells (has already been a few months). Don’t know if I’d describe him as an “executive,” but the company did want him to move, and they might have chipped in a little for an overpriced corporate rental in his new city.
Volume drop precedes price drop in markets 101.
I made my case, fronzigade. Funny how for that segment “volume shift precedes price drop” didn’t hold true for the calendar year of 2008. ( A year in which every single bear on this website had already internalized that price had dropped due to volume shift.) So which is it? Am I right, or are you wrong?
Keep on talking about volume and wondering about hypothetical individual price drops. What does it matter? You’re not anyone doing anything, so wondering about something that doesn’t exist is a perfectly fine thing for for you to do.
Pent up housing supply appears to have increased somewhat dramatically over the last two weeks. Currently, 1695 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is quite a jump from 1609 two weeks ago. Could be noise in the data, but if not, hang on for the ride. Typical increases in the late summer/fall seemed to be around 20 foreclosures every two weeks.
Spin it however you like, and argue about price following volume lock step if you like (even though this city is chock full of exceptions and you’ve all seen hundreds of them on this website by now). But do not take a volume chart and wonder about a hypothetical individual house in an area as if you are actually using price data. Why does it annoy you when someone points out that you’re using the wrong data? LOL.
I encourage people to ignore anonn in this discussion. Even if we were to take anonn’s “it’s all micro, bro” sentiments at face value (which we shouldn’t), I haven’t seen a single individual property mentioned in this thread. People have been discussing the SF market in the aggregate, and everyone else has been very polite about it.
I’m actually surprised to see anonn admit that this website has shown properties that are “exceptions,” considering his usual complaint is that SocketSite doesn’t show properties that are against its supposed bear-viewpoint.
People are wondering about neighborhoods volume and correlating price. Talking about stuck flippers. Is that not reducing volume to individual property performance? Talking about Markets 101, Econ 101 … as if those courses offer instruction concerning government subsidizing of a pricepoint that closely mirrors price.
Subsidized it is. Stabilized it is not.
Even on the most micro level, any single home, it is only in the rarest of exceptional cases that the home would be such that an individual buyer or the buyer pool as a home would not even consider other homes or neighborhoods, and thus those competing products discipline the price for the subject home.
Only in the rarest of exceptions? In San Francisco? And you would be qualified to speak on this subject, how, precisely?
Subsidized it is. Stabilized it is not.
Really? I think if you look at SFRs since March in neighborhoods that lend themselves to superconforming loan usage you’ll pretty much see stability.
“Only in the rarest of exceptions? In San Francisco?”
Anonn, give us 20 examples of homes sold in the last few years that fit the description you are claiming is not rare at all “in San Francisco.” If it is not so rare, that should be easy for you. My guess is you won’t take up this challenge because you do nothing other than say “no, wrong” to the thoughtful posts of others. It’s kind of fun to point out how 99% of what you spout is absolute crap, but it’s so easy that it gets boring.
So come on. Give us 20 examples. Let’s see if they hold up.
SFRs since March in neighborhoods that lend themselves to superconforming loan usage you’ll pretty much see stability
That’s a lot of conditions. This probably explains the low volume. Only the best product sells at a good price I guess.
You honestly think it is rare when people in this town only want to live in, or will only consider, certain neighborhoods? You require evidence of that? Words cannot express how out of touch you are with what actually goes on in the marketplace.
in the latter cases, it seems that companies have deep pockets when it comes to both carry costs and absorbing sale loss. any tips for negotiating employment contracts like that? I didn’t realize that housing clauses were so common.
although it never hurts to ask for relocation expenses, I don’t know that I agree with your statement. We are (just recovering?) from a doozy of a recession, with high unemployment and low employment utilization (meaning that there is a lot of available labor out there)
Although it clearly can and will happen, it is unlikely that many companies will bend over backwards too much for their employees right now. Most companies can simply say “move or you’re done”. and the people will move (if they can). if they can’t, they can be relatively easily replaced.
there are of course exceptions. If you are a Wall Street Banker with political connections you can get quite the relocation bonus I’m sure. But if you’re a typical employee or a non-executive suite manager I’d guess it’d be unlikely.
Just a quick addition to the macroeconomic discussion
1)
please remember that the various local RE markets are very inefficient with information assymetry. Thus, it is not uncommon to see problems with valuation. This partially explains why “econ 101” won’t always work when describing the market.
2)
There are also 2 relatively unique aspects to RE.
First: it is “sticky”. So although increased supply does tend to cause downward pressure on prices, it will do so with quite a lag. which is why you may see explosions of inventory without a corresponding price drop.
second: it is highly leveraged. (yes, even in SF). This high leverage affects RE in particular compared to other markets given the level of leverage allowed compared to the borrower’s financial ability. This causes distortions BOTH on the upside and the downside.
if you try to jump in and analyze RE as though it is any other good you may fall into some pitfalls if you fail to recognize the above.
as for anonn’s repetitive statement “it’s all micro, dude”, it has a certain truth to it that fails in its sum.
Yes, all RE is to an extent micro. But it is HEAVILY influenced by macro issues. This is why anonn totally missed the RE downturn (IMO, he may debate that he missed it).
it’s not ALL micro. that said, it’s also not ALL macro. it is a combination.
to make an example:
let’s pretend there is a SF unique property out there. let’s pretend there is a billionaire who ONLY wants that property. s/he will pay more for said property. In a boom time (macro event) the billionaire will have to pay more for that property. in a bust time (macro event) they likely can pick up the property for less. they will still overpay for THAT property (micro issue), but the overall sale will depend in part by macro events. (as example, if the macro event is severe enough, it reduces the numbers of billionaires willing to bid on THAT particular property, reducing competition).
I don’t think anyone here disagrees with what you’re saying ex SF-er — housing is definitely sticky and inefficient compared to the stock market because there are few liquidity events. But many of us are also talking about over a period of years which accounts for the stickiness. Some of the real estate bulls here like to shorten the time period over which this occurs and say, “well, obviously prices didn’t drop 40% in 18 months like X said.” Previous peak-to-trough periods (e.g. 1989-1991 to 1996) have been longer than that and, in the later stages, usually show flat nominal prices with dropping real prices, which some folks here would call stability.
You honestly think it is rare when people in this town only want to live in, or will only consider, certain neighborhoods? You require evidence of that? Words cannot express how out of touch you are with what actually goes on in the marketplace.
I’m one of those non-rare types who will only consider certain neighborhoods. For a variety of personal reasons, I’m interested in SOMA/South Beach, the Mission, and Nob Hill. But if you believe that the recent price reductions in SOMA haven’t affected my thinking about Nob Hill, then maybe you’re the one who’s out of touch…
ex SF-er,
I disagree with you that anonn “totally missed the real estate downturn”. As an actually client of his I can tell you he called the bubble very well.
Also, despite what you say and Trip calculates it really is all micro. My wife want to move to a bigger house. The parameter are West Portal or SFW. I don’t care what a condo in SOMA penthouse costs, or a Marina house. They could both drop to the values out here and I wouldn’t look at them. Ditto Noe. Most people are like that.
sparky-b: Have you checked out 170 Vasquez?
But sparky-b, don’t you think a drop in Marina housing prices would affect West Portal or SFW prices in the aggregate? If the Marina dropped 30% in real price, don’t you think that price change would affect West Portal and SFW? That’s all anyone is saying.
But if you believe that the recent price reductions in SOMA
You’re interested in a flat or a condo then, correct?
That too is micro.
Ex-SFer, you of all people should know that I said a correction was likely many times. But that I disputed the severity which a lot of the fallen Socketsite heroes predicted.
Sparky-b, of course many or most people have preferred neighborhoods. But let’s take an extreme example to illustrate the relevant point. Assume that 3 BR homes are going for $10 million in West Portal and St. Francis Wood, but identical homes are going for $100,000 in Monterey Heights or Forest Hill. Would you seriously still not even consider buying in one of those neighborhoods instead? Or, more relevant, you can certainly see how the lower prices next door would put downward price pressure on homes in West Portal and St. Francis Wood. That’s how it works. It doesn’t really matter if some specific rare individual buyer is deadset on just one home or neighborhood no matter what the “comp” prices are. That’s why big price drops on SOMA condos cannot be viewed in a vacuum.
“well, obviously prices didn’t drop 40% in 18 months like X said
Fronzigade, it’s been far longer than 18 months for many of these people. (That’s why a lot of them have turned tail and left the site.)
It’s been 14 months since SF actually shifted! It’s been more like three years since some of these people began calling for apocalypse. Know that.
And “If the Marina dropped 30% in real price, don’t you think that price change would affect West Portal and SFW”
That’s a bit IF. Innit? Three years and counting. No 30% drop. Here and there a property still selling for peak too — also affecting perception.
Words cannot express how out of touch you are with what actually goes on in the marketplace.
High horse. Troll. Bye.
renegade,
First I think the prices here are still high. Second, the gap is big in general so it wouldn’t be a direct drop. More like:
Marina Price Drops on 10 for sale houses, 7 people move in from Cole Valley, 1 penninsula, 2 marin.
7 houses for sale in the Cole Valley, but only if the value didn’t drop as much there as it did in the marina or they wouldn’t move up. 3 inner Sunset houses go to buy it, 2 inner richmond, and 1 SFW. Again only if the value of their current house didn’t drop as much.
Of course these are all speculation, but really a sale in the Marina would only have a minimal drop here.
I love the extreme hypothetical examples. Thirty percent across the board in the Marina! 9.9M difference two blocks away!
Please. Don’t act as if the simple model is not understood.
But it is not what’s happening.
No, your task is to show why that model applies here. Considering thatmuch, much smaller shifts have taken place over the past year plus, coupled with the occasional peak sale in all neighborhoods, plus government manipulation of mortgages — when 729,750 is very much a useful figure for all of areas 9, 2, parts of 1, 3, and even parts of 4 and 5.
170 vasquez is not for me.
They bought for $1.3M and spent a bunch of money from that point, and it’s on the wrong side of West Portal for us. No, it’s a big SFW total fixer for me, otherwise we are happy.
OK, now I know what you’re looking for.
High horse. Troll. Bye.
You promise? good. (But I don’t think you’re using “troll” correctly.)
Anonn, of course you’re not going to have a 9.9 million difference two blocks away. That’s because the market pressures would cause prices in the higher-priced area to drop long before the spread got so large, a point you implicitly agree with by your example even if you can’t wrap your mind around it. I just tried to dumb it down so you would understand this simple concept, but clearly it is still over your head. I’m fairly certain that others can understand the point however.
But sparky-b, imagine what you’re saying happening *in the aggregate*. You don’t think the relative price differences between neighborhoods will stay roughly the same over a longer period of time? Some people at SocketSite have suggested that the fundamentals for Noe have changed, but is there any suggestion that the relative price difference between the Marina and West Portal/SFW will be different going forward? If so, based on what?
Alternatively, imagine the reverse. It has the same effect the other way, whether it’s top-leading-bottom or bottom-leading-top. I’m not clear on why people would think that the relative price differences between neighborhoods will change significantly without a significant change in the character of those neighborhoods.
Certainly, it’s noticeable that in some neighborhoods people have improved the quality of aging SF housing stock, but that doesn’t cause a significant change in the character of a neighborhood, but rather a change in the character of a particular house.
Over my head? Please. Don’t act like what you’re saying isn’t simple. It’s quite simple. I explained what you need to factor into your model. You’re welcome to engage in a real discussion.
How silly the discussion above is. People who will only buy in certain nabes do so at the relative prices to other nabes. When someone says they have to live in nabe X, what they are saying is that the differential prices of other nabes are not worth it to them, up or down. Over time, as the differentials change, people become more willing to look elsewhere. Although some have hard and fast reasons for a particular place, proximity to family members, jobs etc., if people could buy homes in Forest Hill for $1, enough people would switch to make homes across the city cheaper.
The discussion does bring up an important point: the market fall is causing neighborhood differentials to be constantly changing. It might make sense for stupid people who feel they need to buy in the midst of a downturn to take a quick look in other areas that they might not have considered, if only because there might be lots of others who aren’t considering those areas also, and so you can drive a harder bargain and only lose half of your life’s savings rather than all of it by buying in one of the last areas to fall. Of course, if you are smart enough to do this, you are probably too smart to buy right now, so it’s all academic.
Sure, neighborhood strata will remain. But why the logical leap that 30 percent will be 30 percent times X across the board? You are at this point assuming enormous change at a very late date.
But, if everything is down then people don’t “move up” as I noted in my scenario. So, one area has to be down without the others being down to cause the move up chain.
if people could buy homes in Forest Hill for $1, enough people would switch to make homes across the city cheaper.
Every one of you love this example worded one way or another!
Answer this, for SFRs. (I am tacitly acknowledging that SOMA condos have created a conundrum for condo buyers who thought they only might want certain neighborhoods. However, don’t discount supply-demand effect for that sector. Where did the bulk of SF’s construction occur 2001-2007?)
Answer this, what neighborhoods have bled over at this point? Exampl,e has Noe become more affordable to Bernal/GP buyers? No. Not close. In fact, Glen Park has taken on a life of its own, oddly.
Has the mid Sunset buyer been able to afford mid Richmond? no, not particularly close.
Has a Marina buyer been able to afford Cow Hollow? No.
So on, and so forth. In practical terms you are all saying, “Just wait and see.”
I’ve been hearing that for a long, long time on here. And it’s now over a year past 9/2008, post March’s markets nadir, a great many gov housing initiatives are running full steam, etc etc.
Flatly saying, “Econ 101. People will move to the suburbs” — sorry. That really doesn’t cut it.
Tipster you say how silly this discussion is and follow up with a buy a house for $1 example. Who is silly?
But after you make your silly comment, you agree with me that “some have hard and fast reasons for a particular place, proximity to family members, jobs etc.”. My point exactly. I’m not looking in those hood at a 30% drop, I would at a $1 (but that is just silly). In fact, I’d pay a huge premium over that number and pay up to $10,000 for anything in town. But, I wouldn’t move it.
I think that tipster’s $1 choice was not an intent to be realistic but rather to use such an extreme case to highlight that there is a cross-market effect, even for people who think that they would only consider a single neighborhood.
The idea being that such effects are always in play though the magnitude of the effect depends on the magnitude of price difference. The interdependencies are always there and there is a smooth continuum from extreme cases like tipster’s $1 example and the reality that we have today.
If homes cost $1,000,000 in a buyer’s preferred market, but $1 in a market that wasn’t (yet) on the buyer’s radar screen, would it attract the buyer’s attention ? You bet it would.
If the prices were $1,000,000 and $999,000 instead ? The cross market attraction effect is probably so small to be negligible.
But $1,000,000 and $850,000 ? Now there’s likely a significant effect. $150K is a lot of cash. And that is a more realistic situation today.
I don’t dispute that there are buyers interested in only one neighborhood. Heck, there are buyers only interested in one *block*. But prices and comps are set by the aggregate market which includes buyers with more flexibility.
I also don’t dispute that there are singular unique properties that have high demand. Those are rare exceptions and can command a higher sales price because buyers know that it might be their only chance in their lifetime to own such a property, no matter how much money they have. Those properties are clearly market outliers.
Yes, MOD, you’ve framed it properly in real terrms. Now factor in the superconforming limit loans effect upon whether a 1M to 850K neighborhood shift can actually occur in the real world.
Prices have fallen substantially in numerous neighborhoods in the city, throughout the bay area, across the state, and around the country, where the prices both before and after the fall were within the conforming mortgage limits. That has nothing to do with anything relevant to this discussion. Conforming limits provide no “floor” whatsoever beneath which prices won’t fall.
Milkshake has it right and what others have said is consistent with what Milkshake said.
anon — I’m not so sure about that. The government is working hard to subsidize homebuying, probably so that banksters don’t have to recognize more losses in their portfolios. Superconforming limits are keeping mortgages cheaper and more available, which is propping up prices between approximately $500K and $1M. I’m not sure why the government needs to prop up this price range, except for the fact that banksters want them to do so. The Fed seems to have no interest in raising rates, but rising mortgage rates would bring prices down more quickly.
Prices have fallen substantially in numerous neighborhoods in the city, throughout the bay area, across the state, and around the country, where the prices both before and after the fall were within the conforming mortgage limits. That has nothing to do with anything relevant to this discussion. Conforming limits provide no “floor” whatsoever beneath which prices won’t fall.
In the context of one target neighborhood now being more affordable than previously thought? Show how your statement applies. Or don’t. And wait until someone with the same name as you lobs an insult. It doesn’t matter.
Also, “this discussion” is ostensibly about low inventory. So, please, tell everyone how that lends itself to “substantially” falling prices. That’s what I wanted to know in the first place.
sfrenegade, anonn posited that no neighborhood would or could fall from a million dollar area to an $850k area if you “factor in the superconforming limit loans effect.” I was just pointing out how absurd that notion is. Prices are certainly being supported by all the government measures, yet prices continue to fall at all price levels, in SF and elsewhere. Conforming loan limits have nothing to do with the discussion here regarding the relative impact of falling prices across neighborhoods and cities. Heck, if anything, falling from above the superconforming limit, or $1 million, to within the limit, $850k with 20% down, is MORE likely these days given the fact that government policy is driving everything.
Heck, if anything, falling from above the superconforming limit, or $1 million, to within the limit, $850k with 20% down, is MORE likely these days given the fact that government policy is driving everything
You aren’t informed, and you’re resistant to learning. Have it your way.
Just for fun, I invite anybody who has looked at a past chart for a month that showed rising inventory, say like last fall, and concluded that the end was near to explain why they felt that way. Also, this goes out to any of the same people who looked at this month’s chart — one showing low inventory — yet pretty much said the same thing. Enlighten the board with the statistical gymnastics required for opposite graphics from the same chart to suggest the same conclusion. Thanks in advance.
explain why they felt that way
Steadily increasing pent up supply. I really thought we’d be flat again this week; heck, I was ready to concede we could be approaching the beginning of the end (which could still take a long time to play out). At any rate, will be interesting to see where we’re at in another two weeks.