According to the November 2009 S&P/Case-Shiller Home Price Index, single-family home prices in the San Francisco MSA gained 0.6% from October ’09 to November ’09, up 1.0% year-over-year and the first year-over-year gain since September 2006, but still down 37.4% from a peak in May 2006.
For the broader 10-City composite (CSXR), home values fell a nominal 0.2% from October to November (the first slide in seven months) and remain down 30.0% from a peak in June 2006 (down 4.6% year-over-year).
“While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details.” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s.
“Only five of the markets saw price increases in November versus October. What is more interesting is that four of the markets – Charlotte, Las Vegas, Seattle and Tampa – posted new low index levels as measured by the past four years. In other words, any gains they might have seen in recent months have been erased and November is now considered their current trough value.
On the flip side, there are still some markets that continue to improve month-over-month. Los Angeles, Phoenix, San Diego and San Francisco have seen prices increase for at least six consecutive months.
On a month-over-month basis, San Francisco MSA single-family home prices rose across the bottom two price tiers but was unchanged at the top.
The bottom third (under $323,227 at the time of acquisition) gained 1.3% from October to November (down 8.8% YOY); the middle third gained 1.2% from October to November (down 0.8% YOY); and the top third (over $600,572 at the time of acquisition) was unchanged from October to November (down 6.5% YOY).
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA are back to August 2000 levels having fallen 58% from a peak in August 2006, the middle third is back to June 2002 levels having fallen 36% from a peak in May 2006, and the top third remains at March 2004 levels having fallen 24% from a peak in August 2007.
Condo values in the San Francisco MSA gained 0.3% from October ’09 to November ’09, down 6.9% on a year-over-year basis and down 27.3% from an November 2005 high.
Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).
∙ Mixed Messages in the Data According to the November S&P/Case-Shiller [S&P]
∙ October Case-Shiller: Up For SF MSA Houses, Down For Condos [SocketSite]
Its so funny to see the comments from 6 months ago when CS first started going up and denial reigned supreme on this board:
“UnWarrantedInLaw, I’ll be a man. I’ll put some money down. Let’s have some fun and see who’s right. I’ll put $50 on the top tier being lower by the end of the year. Maybe the socketsite editors can hold it in escrow?” Posted by: ZapBrannigan
“NewBuyer will eat those words when we see fall/winter data when nothing is selling and we’ll see this is a seasonal blip (I’ll even suggest that some of the seasonally adjusted prices will go up for June and maybe even July data)…Nothing to conclude here, move along.” Posted by: corntrollio
“I’m thinking prices will get back to the 1999/2000 range in a year or two, and then a couple more years for the market to adjust.” Posted by: ktdw
from newbuyer.
“(CS will not go below 110 from hereon-out is my prediction).”
Want to make a friendly wager? I bet CS index for SF MSA goes below 110 before march 31, 2010. Wager $250 to local charity? If I win, I choose charity. If you win, you choose.” Posted by: Spencer
“This is just some knife catchers getting in while they’re portfolios are temporarily up plus the standard bounce, and then the race to 1999 prices is back on and those that are “calling the bottom” will go back to figuring out how you can default on your loan in q4. There. I said it.” Posted by: wanker
“1 month stats do not indicate or imply a ‘TREND’…Sorry folks. We are still not out of the woods yet.” Posted by: Chad
BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!
Yes, and you forgot the biggest idiot, tipster:
CS SFRs will continue to rise until February.
This month’s condo numbers are a blip. Condos will rise next month too.
Posted by: tipster at December 29, 2009 10:59 AM
Oh wait. I guess he was dead on.
Top 1/3 is only 600,500 now? This might be the all time disconnect for the MSA, and why this isn’t accurate for the city. High 6’s to 850K SFRs is the strongest market in SF right now. Just take a glance at how many of the SFR sales daily are from the Sunset.
Hee hee, Talia, you funny. CS measures only the low end of the market. The govt PAID people $8000 to take a house with essentially nothing down at record low rates. And they clamped down on foreclosures to keep them off the market. And prices budged, barely. Yep, a couple trillion dollars kept prices at the very low end basically flat for about six months. Prices at the SF middle and higher end have continued to fall fast despite all these measures. Let’s see what happens when these massive supports are trimmed. All that has changed is the timing of the inevitable.
Now you are referring to your own pseudonym in the third person? and big upping your own accuracy? The first thought there is, “slippery slope.” Good luck. Boy Apple did lousy last quarter, huh?
a few thoughts:
-I am loathe to make much of winter data given the small numbers relative to the summer. Housing is just so seasonal. (even using seasonally adjusted numbers has its perils although I won’t get into that here). FWIW: I said this last winter during armageddon time when housing was “plummetting” too.
-YOY comparisons continue to look good partly because last year everything was so dire. those comparisons will become more difficult as summer wears on
-govt intervention has possibly altered the seasonality of these numbers. for example, we all saw a surge in sales around the nation (not necessarily SF proper) when people thought that the first time home buyer credit would lapse. It is possible that this pulled demand forward from Spring sales into Winter sales.
-it has been impossible for some time to predict housing with any accuracy since it is essentially a government controlled market. therefore it’s prognosis is primarily related to politics and not economics, at least in the near to medium term (months to a few years).
overall, the govt got what it set out to do: slow and/or stabilize the housing fall, and bail out the banks. it took tremendous unprecedented resources to do it. My concern: it hardly seems that this can be sustained, and much of this support IN THEORY will go away this spring (end of first quarter).
bulls are hoping that private demand and private lending can step in to take the place of an exiting government.
bears fear that private demand/lending doesn’t have the ability to step in.
who’s right? I dunno. there is no precedence for this as far as I know. to my knowledge this exact scenario has never been tried before, but I could be wrong. there are somewhat similar cases in the past (like Japan circa 1980s) but they have important differences (such as the US being reserve currency, Japan being a creditor nation with strong savings, Japan having its downturn when the rest of world did ok, etc). Post Great Depression time also had important differences.
my gut feeling: the removal of govt support will not go well, and thus the got support will be reinstituted and other support will go more covert and complex (the public is tiring of overt bank bailouts, so they’ll simply become complicated and covert). the downturn has many years left in it IMO.
before all this began I thought Dec 2011. when I saw what govt was doing I revised to a double dip (and I revised to this during Armageddon time when others were predicting MadMax outcomes). I still foresee double dip recession in our future, but if this all continues I’ll likely need to extend my end date.
Regardless, I see little structural changes that would indicate a true strong recovery (by that I mean job growth) in our near term future (years).
Apparently there’s nothing government stimulus can’t do. Who knew? But if you think government stimulus means we have a healthy housing market, you’re wrong.
Apparently there’s nothing government stimulus can’t do. Who knew?
Is that a fair thing to say? The government money applies to the entire nation. The results are not even.
corntrollio: have you ever read any of my posts before? did you even read my post above?
is there anything in my post above that makes it seem like we have a healthy housing market?
Somehow you interpret me saying “my gut feeling: the removal of govt support will not go well” to somehow mean “the housing market is healthy”
or when I said “I see little structural changes that would indicate a true strong recovery” you somehow think I said “everything is great!”
your comprehension=FAIL.
as for this tripe:
“Apparently there’s nothing government stimulus can’t do”
Again, I said no such thing. I’ll turn it around on you. Is it your contention that government support has no role in the current housing upswing?
(also, I differentiate between govt stimulus that can be misconstrued as the Stimulus Package last year, and govt support which includes a myriad of support including changing accounting regulations, changing banking rules, supporting zombie companies, ZIRP, quantitative easing, etc).
I sure wouldn’t call it a healthy market, but certainly some of the metrics are much improved, e.g. the national total home for sale inventory has declined by 30% to 2005 levels.
“corntrollio: have you ever read any of my posts before? did you even read my post above?”
ex SF-er — I was responding to the snark from Talia, not to you. I read all of your posts in detail and agree with them. In fact, I don’t see how my statement isn’t consistent with what you said.
I agree with ex-sfer that the government will likely need to continue some of their programs for a while to keep national home sales moving. With that said, a lot of what the government is doing around housing specifically does not really apply to SF or other high cost markets. I don’t know very many people who would buy a house in SF for the sake of the getting an $8K tax credit. The more important factor at play in SF is having available credit at decent rates. As the credit market continues to stabilize, I think you’ll see less government help to the banking industry as frankly they won’t need it. I also suspect that the spread between fed rates and mortgage rates while tighten….especially in the jumbo market. If fed interest rates stay low, and I think they will for the next few years, that bodes relatively well for housing in SF proper. I wouldn’t be surprised to see prices trend up SLIGHTLY over the next two years.
Of course, there are a lot of factors that could ruin my theory, so I’ll have to just wait and see what really happens, but for the time being things are moving in that direction.
All this talk of government support but the fact is that banks are still not lending, they are not modifying loans, refinancing is not happening, and they are still foreclosing on properties. While the government money is supposedly there, it is not making it’s way to the housing market in SF in particular. An $8,000 tax credit does nothing for a $500K+ loan.
The market is really more reflective of true market forces than most here seem to think given that the trickle down is not really tricking down.
sorry corntrollio. my comprehension=FAIL.
🙂
The people who are suggesting that the $8K/$6.5K tax credit is the primary government stimulus don’t seem to be reading ex SF-er’s posts (both in this thread and other threads).
Government stimulus (Treasury + Fed) is keeping interest rates low right now. Government stimulus (FNMA/FHLMC — better known as Fannie Mae and Freddie Mac — and FHA) is providing conforming jumbos right now. Government stimulus is holding fed rates at 0.00-0.25% right now. Government has intermittently requested foreclosure moratoria and has stimulus plans that are meant to encourage loan renegotiation (however much those efforts are futile).
All of these factors, among other things, affect San Francisco. Plenty of houses in SF (and in expensive East Bay, Marin, and Peninsula/South Bay areas, for that matter) can be bought with $729K + a down payment. And the low interest rates, foreclosure moratoria, and government-led loan renegotiations benefit all portions of the housing market, including San Francisco. And anything that happens in lower-priced markets certainly affects the San Francisco City and County housing market.
In any case, as I’ve mentioned before, it takes a long time for housing busts to work through the system, even if there’s a lot less government stimulus than we have now (see roughly 1989 to 1996, for an example). Add government stimulus, and you’re just spreading out the pain over a longer period. While there’s usually a sharp drop in nominal prices at the beginning of a housing bust, prices are typically nominally close to flat (maybe a plus or minus here or there) for a long time, but real prices drop in a slow grind. I don’t see why it should be any different this time around.
The market is really more reflective of true market forces than most here seem to think given that the trickle down is not really tricking down.
I disagree. The $8k tax credit is the least of the support that housing is getting.
More important is the Zero interest rate policy. this allows the banks to get a huge spread, while keeping housing mortgage rates relatively low. We still have near 5% mortgages, in a time of extremely tight credit and sky high mortgage losses. why do you think that is? Mortgages would be much higher if the Fed Funds Rate were at 2% or 4% as example.
also, there is the Fed repurchasing of Mortgage Backed Securities. this is estimated to have lowered mortgage rates by around 0.5-1%.
also: there is the Quantitative easing where the fed is buying Treasuries. this keeps prices high and Yields low. Many investors invest in both Treasuries and Mortgages. the Fed dropping Treasury yields pushes more investors into Mortgages, dropping the mortgage rates again (maybe 10-50 more bps)
Then there is FHA and Fannie and Freddie “modernization”. this is CLEARLY impacting SF. Look at what housing in SF did when Jumbos couldn’t be had in SF. THen look what happened when Fannie/Freddie increased the conforming limit, and created the Jumbo Conforming category. Also look at what happened in SF with FHA loans (once were 0% of the market, then suddenly in 2009 there were hundreds of FHA loans).
then let’s look at all the “liquidity” measures taken by the Fed. the end result was to increase movement of mortgages.
all of this SUBSTANTIALLY impacted housing around the nation and also in SF.
there is a reason why all of a sudden you saw a sea change in housing last year. and it wasn’t a suddenly-improved economy.
you can dismiss the $8k tax credit as much as you want, it was the LEAST of the support given to housing in the last year.
one could estimate that mortgages today are 1% and maybe 2-3% LOWER than where they would be without all the above intervention.
how do you think housing today would do in SF if mortgages were 8%, minimum 20% down?
what if the cheaper housing was 7%, minimum 20% down (no FHA)?
====
on a side note: this is why I started predicting an end of recession in Q3 or Q4 2009 back in late 2008, because I saw the signs of massive govt intervention under GWB and Paulson, and knew it would continue under whatever new Prez was coronated. it is also why I predicted and still predict double dip recession, because I have not seen evidence that the private sector is willing or able to replace the recent public splurge.
Not only is the private sector unwilling to replace the public splurge, the private sector is willing to vote the public sector out for said splurge.
I suspect that’s going to crimp a few senator’s spending styles, and I suspect that’s going to crimp HAMP II from what was being planned only a few weeks ago.
All this talk of government support but the fact is that banks are still not lending, they are not modifying loans, refinancing is not happening, and they are still foreclosing on properties. While the government money is supposedly there, it is not making it’s way to the housing market in SF in particular. An $8,000 tax credit does nothing for a $500K+ loan
There are loans and jumbo loans being made by banks, but they require 20 to 25% down. (Or more, if you’re not an owner occupier.)
Loan mods are indeed happening.
The 729.3K superconforming FHA loan is very much a fixture in the current SF market.
They’re still foreclosing, true.
An $8000 credit is nice for a new homebuyer but I don’t think the prospect of it disappearing effected this market all that much either.
I’m going to preempt REpornaddict. Seasonally adjusted (month-to-month) Ess Eff is up 1.5%.
Talia – funny isnt it. I cant wait til the govt controls are removed and maybe the prices get back down close to their former lows, and then we can get back to all the doomers who (at the lows) were saying “we have a looooong way to go”.
Denial – served up fresh daily by the permabears courtesy of socketsite
the zero interest rates impact the entire economy and don’t just subsidize housing, so it isn’t a government policy that is specific to the housing market. Where would the banks be and better yet, where would the economy be if we did’nt have zero fed rate? Housing would not be the only thing that would have a lower price.
There are still foreclosures even with a so called moratorium. People still have to put down 20%, regardless of the interest rates, so buyers can afford these prices, they aren’t getting free money for the down payment. Loan modifications are around 81,000 compared to the over 1,000,000 that the program was supposed to help, so that is pretty ineffective. FHA just got more expensive, and regardless of the limits, buyers still have to be able to afford the payment, which on a $729,000 loan are still above what the average salary in the bay area can support. I don’t see how an $8,000 credit changes that. True, there was a surge to buy, but not in SF, that was a national statistic.
The implication that government stimulus extends the inevitable is not necessarily true. It may hold up the economy while the underlying forces build up to support it and act as a helping hand. It does not mean that once the goverment support ends, the economy collapses, same could be said for housing, and I don’t think any of this even applies to SF since it’s still pretty damned expensive here and people are still buying. The haves still have.
I still think some of you are puttin all your arguments on the effect of ineffective goverment programs.
The best thing that can happen is for congress to become republicans. That way we have gridlock and the free-market is left to the free-market. Although we are close to that now given how impotent the dems have proven to be.
blah blah “free market” — the term “free market” is such a meaningless phrase. The thing we truly want is a *competitive* market. That’s why regulation is necessary — regulation prevents things like monopolies and rent-seeking, which make the market anti-competitive.
In any case, last I checked, we had a Republican president and a Democratic Congress not too long ago, and there was still tons of bailing out going on. I’m not sure what grumpy is getting at with that last part, but people usually hurt the quality of their posts by trying to inject politics and talking about the “free market,” and this was no different.
Loan modifications are around 81,000 compared to the over 1,000,000 that the program was supposed to help, so that is pretty ineffective.
Which program? There are I think three government programs now, and each bank that needs one has a few of its own. The problem with loan mods is gridlock. I was told yesterday, by a lawyer who specializes in loan mods, that there is a 3 to 6 month backlog.
There is no argument on my part that government involvement in the credit markets and the fed’s low interest rates are helping housing. What I’m arguing is that this is NOT housing specific intervention. The primary government intervention as it specifically relates to housing is the homebuyer’s tax credit. The buyback of MBS, low interest rates, etc. are much more endemic of a massive recession that’s rattled the credit markets. If that had been largely caused by speculative lending on gold or anything else other than real estate for that matter, then you’d still see heavy government intervention. Yes, it has a positive impact on housing but also on anything else that relies on the credit markets. That doesn’t make it housing specific intervention. It also is unlikely to go away as long as the economy and financial markets are f*%ked. When the economy is not so f*%ked, then the feds will start pulling back, as you won’t really need it as much. I’m actually surprised that so many people have a hard time with that one. And frankly, the consequences in my opinion are far more manageable than “just letting it run it’s course”. We tried that once, and it didn’t work out so well.
BTW, Ex-sfer brings up good points about the impact of the fed measures on mortgage rates. Conversely however, the spread on jumbo mortage rates is still around 75 bps higher than they historically have been. My point being that you don’t need a lot of this stuff in a normal economy with normal credit markets. My guess is that we’re a few years from that, but that’s when I’d expect to see the intervention ending. Again, this is just a guess though.
anon e. what about the other points? besides, what is so magical about competitive market, it’s just another equally superfulous adjective. Why not use efficient market, at least that is more academic and in line with “monopolies” and other textbook economic terms.
The Clinton years were full of gridlock and that was a blessing, that’s what I was referring to, not the two years of democratically controlled congress, which was even more impotent. And how can you ignore politics when the goverment policies being discussed here are just that? They don’t weaken the argument but frame it.
The gridlock in the loan modifications basically amounts to a none functioning program, and that is why I don’t buy into the idea that this program or any other one has been effective in proping up real estate prices. Even the law firms that handle modifications charge up-front fees and don’t necessarily deliver on the promise.
Again, I still believe these programs are ineffective and consequently impact the real estate prices in San Fransisco only in spirit.
People still have to put down 20%, regardless of the interest rates
not with FHA loans, which have become a sizable proportion of loans around the country (not in SF proper though although they are growing in SF county). FHA loans only require 3% down.
the zero interest rates impact the entire economy and don’t just subsidize housing, so it isn’t a government policy that is specific to the housing market.
doesn’t matter if it’s specific to housing or not. It affects housing in a substantial way nonetheless. For instance, there are many people who have ARMs whose payments went DOWN because of ZIRP, or who were able to refinance into 30 year fixed due to ZIRP. This helps lower foreclosures. It also makes a monthly payment go further, propping up housing prices.
as an example
The AMT wasn’t specifically aimed at me, but I still am significantly impacted by it anyway.
or
I might try to blow up a building. if you are in that building I might not be specifically targeting you, but you’re still significantly impacted.
“Conversely however, the spread on jumbo mortage rates is still around 75 bps higher than they historically have been.”
Higher risk = higher risk premium. But I wouldn’t necessarily look at historical rates to determine what the proper risk premium is. Historical rates probably underestimated the true risk, given what happened. It might be that 75 bps is closer to what the spread should be.
Also, grumpy, if you find a lawyer charging upfront fees for a mortgage modification, please report that person to the state bar, because it’s not allowed:
http://www.law.com/jsp/article.jsp?id=1202434688157
There is a problem with FHA refinancing. The property still has to appraise at a decent ratio, and when you add in PMI (which just doubled) on a $500K+ property and the closing costs, the amount that needs to be refinanced is higher than the appraisal in many cases and the home-owner is not able to refinance. Does not help anyone that needs it basically.
I don’t disagree with FHA loans and that they only require 3.5% down, there is still PMI. I also don’t argue that this is more applicable to other parts of the country, and my main point is that SF is not impacted much, which you also point out.
In terms of the interest rate, of course it impacts housing, along with everything else. Without it, everything else would also cost less. But it’s main goal is to stimulate the economy. That is one of the few tricks the feds can do, aside from buying and selling securities. The impact on housing is incidental.
Without losing too much perspective, my main point was that goverment intervention designed to prop up housing is ineffective and since the zero interest rate effects everything, I don’t see it as housing specific goverment intervention but part of the macro-economic picture. Consequently, I also don’t believe that once these programs expire that the housing market will collapse, at least not in SF anymore than it would by say employement or lack thereof.
ex SF-er already mentioned the 3.5% discrepancy for FHA. Also, not all lenders are requiring 20% down by any means. Friend of a friend just bought a place in the city with far less than 20% down (not FHA — but jumbo conforming at/near the top end of the limit).
“the zero interest rates impact the entire economy and don’t just subsidize housing, so it isn’t a government policy that is specific to the housing market.”
That seems irrelevant though. Are you telling me that the people who take out a $700K loan at 5% are necessarily going to be willing and able to take out that $700K loan at 7%? It would be nice if that were true, but many many people stretch to buy a house.
The jumbo conforming limit shouldn’t even be at $729K as far as I’m concerned, but this was a huge and seemingly permanent or quasi-permanent change in housing.
“Consequently, I also don’t believe that once these programs expire that the housing market will collapse, at least not in SF anymore than it would by say employement or lack thereof.”
I don’t know what “collapse” means, but I think we’d see a quick nominal decrease in housing values if interest rates suddenly shot up a point or two. If jumbo conforming were to disappear, we would see rates shoot up for that category too, and maybe some nominal decrease. Loan affordability makes a big difference in bidding price.
That seems irrelevant though. Are you telling me that the people who take out a $700K loan at 5% are necessarily going to be willing and able to take out that $700K loan at 7%? It would be nice if that were true, but many many people stretch to buy a house.
Isn’t this the dynamic behind interest only adjustable mortgages that got us in this mess to begin with?
The gridlock in the loan modifications basically amounts to a none functioning program, and that is why I don’t buy into the idea that this program or any other one has been effective in proping up real estate prices. Even the law firms that handle modifications charge up-front fees and don’t necessarily deliver on the promise.
Loan mods are meant to keep borrowers in place, so that banks don’t swallow larger losses. If banks were working in concert I guess I could see the point about propping up prices. But it’s not that. It’s usually that the banks already acknowledge the house is somewhat underwater. Better to keep the borrower in place and slowly regain whatever hit they when their creditors came around.
But yes, definitely be careful who you go with if you attempt a loan mod.
Loan affordability makes a big difference in bidding price.
Of course it does, however, interest rates are not the only factor. After all, interest rates are supposed to reflect economic well being and with good employment they become less important. During the dot-com years, home appreciation was still quite steep and it was based on high employment. Greenspan kept raising them due to fears of inflation. Again, that was during the Clinton-Republican years.
“Grumpy said…I still think some of you are puttin all your arguments on the effect of ineffective goverment programs”
OF COURSE WE ARE!!! News flash, its all we permabears have left. Dont take that away from us too with your far too rational logic…
I’m going to preempt REpornaddict. Seasonally adjusted (month-to-month) Ess Eff is up 1.5%.
thanks EBGuy..another really strong month!
Yes, and you forgot the biggest idiot, tipster:
CS SFRs will continue to rise until February.
This month’s condo numbers are a blip. Condos will rise next month too.
Posted by: tipster at December 29, 2009 10:59 AM
Oh wait. I guess he was dead on.
actually tipster, the original poster referred to predicitions made six months ago. back then you said that the CS would go up and down from then until the end of 09, so I don’t think you can claim dead on – quite the opposite in fact.
grumpy:
I think I see the disconnect between your logic and mine.
I do no think that the government interventions have been “ineffective”. they have helped to reflate the stock and commodities markets and also helped to slow the fall in housing, and even cause a slight rebound in some of the major markets.
what they haven’t done: improved the structural problems in our economy.
It took $23 Trillion to do it. so yeah, you could say it wasn’t the most efficient of interventions.
and clearly this cannot go on forever. but it can go on a long time. The government blew a housing and credit bubble to get us out of the 2001 tech bust and that lasted for years. Now they are trying desperately to blow another bubble to get us out of our current downturn.
it is a multifaceted concerted effort that has worked very well IN THE SHORT TERM. I’m not sure why you so blithely ignore anything that wasn’t “specific” to housing. That line of thinking makes no sense.
but regardless, Fed purchases of Treasuries AND Fed purchases of Mortgage Backed Securities were both “Specific” to housing. If you think back, when introduced they were specifically created to try to reduce mortgage rates (to save the banks, not homeowners). In fact, the original stated goal was to try to bring 30 year fixed mortgages down to 4% (they were unable to do this).
also, there were many changes made to Fannie, Freddie, and FHA also “specific” to housing. There was also the tax credit “specific” to housing. and there were many credit facilities (remember the many 4 letter words?) some of them devised specifically to buy old mortgage backed securities.
again, much was “specific” to housing. it clearly had an impact.
major proof:
please look at the lending that happened in end 2008 early 2009. look at the volumes, the mortgage rates, and the terms. also look at the players
then compare today. specifically look at the share of FHA loans, Fannie loans, Freddie loans, Ginnie loans. notice a change?
look at the share of non-Fannie/freddie/FHA/GNMA loans. notice a change?
the government IS the housing market. The housing market IS the government. That is “specific”.
removal of this government support will have an effect. As I stated above, no human can know what the end effect will be, we’ll have to see. This is unprecedented.
the bulls hope that the private sector can take over. The bears feel this is not the case.
we’ll see soon enough.
Ex-SFer, you said, “(not in SF proper though although they are growing in SF county). ”
What does that mean? SF is its own county.
You were born and raised here, right? First you don’t know where Bolinas is, and then you don’t know SF is a county and a city both.
OK. I guess you’ve been away quite a while. That’s all.
anonn:
what are you talking about?
of course I know that SF and SF county are the same thing. Thus, one can use them INTERCHANGEABLY, which I did, I have done in the past, and will do again in the future.
A lot of RE data is reported based on MSA, by zip code, and by COUNTY.
for instance, go here:
http://www.dqnews.com/Charts/Monthly-Charts/SF-Chronicle-Charts/ZIPSFC.aspx
notice how it’s broken down by county and zip, but not city?
======
as for Bolinas: there are a lot of places within 50 miles of SF that I’ve never been to. Heck, I never went to Fisherman’s Wharf even one time while I was growing up in SF. I didn’t go until after I was back in Med School and I had visitors from out of town.
I guess I could try to reclaim my street cred and start calling SoMa “South of the Slot”?
The Fed will stop its MBS-purchase program on schedule. Probably result in a 50 BPS rise in mortgage rates or a bit more. If it rises much more than that they’ll likely step back in a bit. But the propping up has basically done its job and will now be eased back (certainly not ended, but scaled back, e.g. non-renewal of buyer credit). Won’t have a catastrophic impact on home prices, but the flattening out will now turn back to further long, slow declines. More pronounced at the higher-end, as it has been for the last year or so in SF. End of the bull market will probably have an even bigger impact on the declines at the higher-end.
I wonder if the SF Realtors have managed this very well. Surely when the market supports start to disappear, the volumes will decline.
In other cities, prices crashed and realtors made out like bandits as volumes soared. Although prices fell rapidly, the volumes more than made up for the falling prices, and so the net effect on incomes was that Realtors made more money in the cities in which prices fell fastest.
Meanwhile, in SF, realtors generally mismanaged expectations. How many listings in 2008 were simply sellers trying to get a 2007 price, only to withdraw their homes from the market. Sellers have very rarely priced their homes aggressively. So prices haven’t fallen as much as in other cities, but they did fall, and volumes also fell, meaning less money in Realtors pockets.
Without the supports, volumes will fall further this year. Only the prospect of sellers pricing aggressively will enable the realtors to bring in as much money this year as they did the year before. So incomes continue to sink, while Realtor friends in Phoenix and Las Vegas are having boom years. They aren’t sugarcoating the market for sellers: “price agressively or don’t waste my time”.
tipster is definitely right that all the local realtor talk that the worst is behind us, great time to buy, yada yada, has hurt their own pocketbooks by failing to bring unrealistic seller expectations in line with the greatly shifted demand curve. Quick calculations show about $303 million in total SF realtor commissions (assuming 5%) in 2005, down to $208 million in 2008 and continuing down to $178 million in 2009. A 41% decline, which is a massive hit. Realtors in other areas are doing well where seller expectations have been more realistically matched to what buyers are willing and able to pay. The laws of supply and demand are going to carry the day anyway, so the cheerleading and feeding of false hopes is simply perpetuating the mismatch between the two curves, resulting in fewer transactions and far less in realtor commissions. I suppose the goal has been to try to manipulate potential buyers, but that clearly has not worked in SF. Dreaming of a return to 2004-2005 is just not a smart business plan.
I don’t see how reading “not in SF proper though although they are growing in SF county” as a differentiation is a mistake. Not a big deal, tho.
Oh, now you’re on about volumes being what lines realtors pockets. Last week it was individual properties needed to be manipulated in order for realtors to make the big dough. Volumes are already low, Tipster. Do you read the charts that are displayed here on this website? And properties weren’t priced aggressively in 2007? How can anyone say what you say and be taken seriously? It begs the question. Then of course, someone did. LOL.
anonn,
Any insight on how the lower volume has been translated on an individual level? Are well established professionals better off than recently minted ones?
A client of mine has an offer out on a property now. I’ve written four offers for various clients in the last month. Two for one developer attempting to buy something uninhabitable for under list price. One for another developer doing the same. Now I have an offer out on a fixer for an end user. Supposedly interest is quite high. We’ll see. I doubt there are all that many recently minted realtors at this particular moment in time.
anonn:
like I said, I use SF, SF county, SF proper interchangeably.
you could change my sentence to say
“not in SF proper though although they are growing in SF county”
or
“not in SF proper though although they are growing in SF proper”
or
“not in SF proper though although they are growing in SF”
and it all means the same thing.
I use SF, SF proper, and SF county to differentiate from the Bay Area, and in my post above to differentiate it from the rest of the nation.
Whatever you say man. It read how it read, tho.
For chrissake anonn, more of this? Just man up and admit “Oh, sorry, I see now what you meant.” ex SF-er is one smart guy, and he grew up here. And you fight with him over whether he knew that SF was both a city and county? Predicable behavior from you, and boring.
anonn, you sound busy. And it sounds like people are trying to catch the good deals.
I doubt there are all that many recently minted realtors at this particular moment in time.
I should have precised my time frame. I was thinking the ones that came into this business during the 2004-2007 heyday. A friend went from the tech sales industry to selling houses in 2005. He’s back to his old job now.
“anon,” it would be better if you don’t talk to me. I mean, really. You’re always talking to me when I query others who say things that don’t make any sense. I know you don’t like me. You don’t need to say it every day. I get it.
anonn:
perhaps my statement didn’t make sense because you cut it funny?
here was my statement:
not with FHA loans, which have become a sizable proportion of loans around the country (not in SF proper though although they are growing in SF county).
this means
1) FHA loans are becoming a sizable proportion of loans around the country
2) but not in SF
3) although they are growing in SF.
perhaps you were confused because I used “SF proper” the first time and “SF county” the second time? Like I said, they’re interchangeable and I use them as such.
Kind of like the way I could say
“I’ve always loved living in SF, it’s great coming from the City by the Bay”.
or
“those SoMa bars suck, sometimes you gotta go south of the Slot”
I guess i can see why you got confused because I used two different words for the same thing, and you then thought that I thought that they were different things and I was trying to differentiate, when I was not.
who knows. But in the end, was that all you really had to contribute?
and by the way, I never said I didn’t know where Bolinas was. I said I’d never been there before and that I didn’t know much about it, and it was unclear to me what was going on with that lake vs marsh vs grass.
This might surprise you, but many San Franciscans haven’t been to every square inch of the Bay Area. And many are quite ignorant of places that are quite near to the city. SFers are provincal you know.
Other places I don’t think I’ve ever been to that are near (or even in) the city:
Fremont, CA
Dublin
Woodacre
Several streets in Bayview/Hunters Point
Bayshore.
Colma (but I like the musical)
just to name a few. (maybe I’ve driven through some of these but I’m not sure)
I guess I just didn’t have the ability to get to Bolinas as a poor inner-city kid living in the projects of the Tenderloin. I didn’t realize Bolinas was top on the “to do” list for kids in the projects.
Nor did I have much time when I was working 80-100 hours and doing research at UCSF
Easy backin up man. Methinks the [dude] doth protest too much. My inital query was civil, and I was only joshing you. If you’re honestly wondering whether two separate wordings in the same clause might make anyone read distinction I don’t have anything more to add. As for my contributions to this discussion I’ve made several. I will remember not to kid you again. OK? In the meantime do keep your sycophants at bay when they post absurdities whilst spit polishing your loafers.
Bolinas is hard to find since they really do take down the signs. I’ve gotten lost trying to find the damned place, but they do have the biggest abudolon tree I have ever seen.
Talia, you are right, and everyone else was wrong. SF housing has remained inflated.
You can now send thank you cards to
me: A tax payer
Obama
Geithner
Bernanke
Chris Dodd, Barney Frank
And all the lobbyists at KB Homes, the NAR, Freddie Mac, Fannie Mae, FHA, Goldman Sachs, AIG, and countless others.
You were correct, and you really have these people to thank.
Don’t forget to send me the tax payer a card!
And anyone who thinks that any of these extreme actions were not at least secondarily intended to keep housing inflated is dillusional.
You can’t tell me that breaking up Freddie and Fannie, scaling back the FHA, not buying 1.25 trillion in MBS, not guarenteeing 100 cents on the dollar in phony Mortgage insurance paper, not changing mark to market accouting, not passing the help for homeowners act, and not passing tax credits would have resulted in the same inflated SF market that we see today.
Homeowners, I hope you enjoy your equity, I am paying for it!
Thank you very much JEremy R, I am enjoying my equity, you’re a swell chap.
Jeremy R, you forgot to remind these folks that they’re not allowed to bitch when taxes go up and/or government services get cut to pay for the bailouts. Then again, who needs good public schools or convenient mass transit when you have equity….
I think an overlooked fact by Jeremy R is that the stock market has been brought back from the abyss. Whether it is solid or fantasy, growth or bubble, hard cash or paper gain is not really the point. 401(k)s are doing better, the stock option crowd is back with cash, the finance world has a new balance with very wealthy survivors and RE looks attractive to them. It’s like nothing happened in 2008-2009.
We have to blame the bailout team: recklessness was rewarded and guess what people are doing now? No wonder the dems got kicked in the balls in Mass.: they went out of their way to reach out towards banks, Republicans and the Health Care industry. In the 3 instances they got the finger flashed at them. Ridiculous democrats. Welcome to the 1-year term.
Where do you get your $23T figure for the cost of the stimulus ex-SFer? That figure appears to be off by a factor of 10 or so.
$23T bailout…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM
http://www.politico.com/news/stories/0709/25164.html
Did you even read the articles you referenced satchelfan?
“The Treasury Department says less than $2 trillion has been spent so far.”
Like I said, the claim that the bailout has cost $23T is off by a factor of ten or so.
In some kind of imaginary universe where all the homes in the United States go to $0 then the theoretical cost of the bailout might go to $23T, but it has certainly not done that yet. And won’t either. That number has no credibility.
NVJ:
I didn’t make up the number, it came from official sources about a year ago or so.
that said, nobody can truly assess how much was spent or will be spent, in part because much of it has been done in secret (backdoor bailouts, Fed defying Freedom of Information Act and Fed refusing to be audited as examples).
As you state, much of the money hasn’t really been “spent” but it is committed by the govt/taxpayers nonetheless (e.g. bank guarantees, etc).
For instance:
I purchase a home for $1M at 5% interest on an IO loan.
After one year I have only made 12 monthly payments (let’s ignore insurance, taxes, HOA, etc). The question: Have I spent
a) $1 million
or
b) $50,000. (5% of $1M)
Barofsky was using the $1M amount (the amount you agreed to pay/put yourself in debt)
you are using the $50,000. (the actual payments to date).
you both are “right”. You’ve only disbursed $50k out of your bank account. But you still owe $1M. But that doesn’t mean that $1M will still come from your bank account in the future.
The US Govt has “only” spent a few Trillion dollars so far. But it has committed much much more than that. and a lot of this is how you decide to account for it.
But the actual number of $23T is immaterial to my argument anyway. Instead, my argument works fine enough if you say
“wow, the government sure has done an awful lot in the last year, and a lot of it really seems quite expensive. I wonder if this is sustainable long term? I wonder what happens when all this support is taken away? I wonder if there were more effective/efficient ways to resolve our situation?”
(I think people have become numb to what a Trillion dollars is. have you seen this?)
http://chadabshier.wordpress.com/2009/03/06/how-much-is-one-trillion-dollars-actually/
FYI, “wow,” my clients didn’t get the property. Apparently despite being a few points over asking and putting 45% down and being approved from a bank they were not in the top 20 offers of the 33 submitted. Oh well. Back to trying to get my clients a great deal I go. It’s tough out here for us non upseller types tho. Our clients read blogs and newspapers just like you do.
I don’t that this is a very good analogy ex SF-ef. The Federal government just formally started backstopping a bunch of debt, equaling $23T, most of which was already informally guaranteed as well.
It is more like your deadbeat uncle with a crappy credit rating needed you to cosign a $1M loan so he could refi. If you do, have you spent $1M? No, it all depends on the ability and willingness of your uncle to pay and on the value of the asset backing the loans.
The government has not nationalized the housing sector either, that is an odd way to think of it. There are millions of builders and other tradesmen who don’t work for the federal government. You could say that the government has greatly increased their involvement in home finance, which they already had a pretty big hand in. During financial crises, the government always ends up being the lender of last resort, this is nothing unusual about this, it has happened literally hundreds of times throughout history.
One positive thing that I had not noticed is that the Chinese are no longer financing our deficits, we are now borrowing almost exclusively from the American taxpayer. This is mostly a good thing, I think. Had you noticed that ex SFer? I have not had time to follow finance lately, with the new baby keeping me busy.