San Francisco Recorded Sales Activity In January: Up 35.8% YOYFebruary 18, 2010
According to DataQuick, recorded home sales volume in San Francisco was up 35.8% on a year-over-year basis last month (311 recorded sales in January ’10 versus 229 sales in January ‘09) but down 37.7% compared to the month prior.
For context, January sales figures for San Francisco from 2004 to 2008 were 558 (2004), 469 (2005), 369 (2006), 402 (2007), and 293 (2008) while the average December to January sales volume drop from 2004 to 2009 was 34.1%.
San Francisco’s median sales price in January was $629,000, up 11.9% compared to January ’09 ($562,000) but down 3.2% compared to the month prior.
For the greater Bay Area, recorded sales volume in January was down 3.9% on a year-over-year basis and down 38.0% from the month prior (4,853 recorded sales in January ’10 versus 5,050 in January ’09 and 7,828 in December ’09), while the recorded median sales price rose 16.7% on a year-over-year basis, down 7.9% compared to the month prior. Continue to think mix (and seasonality).
Last month’s median dipped more sharply from December as the portion of sales involving foreclosures and homes in lower-cost areas rose relative to December. However, the median remained higher than in January 2009 because a year ago low-cost foreclosures were far more plentiful, lower-cost inland areas represented a substantially larger portion of total sales, and high-end sales were extremely slow. All of that made for an unusually low January 2009 median of $300,000.
Financing has flowed more freely for low- to mid-priced homes. Federally-insured, low-down-payment FHA loans, a popular choice among first-time buyers, made up 25.6 percent of Bay Area purchase loans last month. That was up from 25.1 percent in December, 24.7 percent a year ago and 0.7 percent two years ago.
While San Francisco recorded the greatest Bay Area year-over-year increase in January sales volume (a gain of 82 transactions), Sonoma recorded a 21.2% decline in sales volume (a loss of 90 transactions) on a 8.4% increase 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).
Comments from Plugged-In Readers
home sales volume in San Francisco was up 35.8% on a year-over-year basis last month (311 recorded sales in January ’10 versus 299 sales in January ‘09)
I think there may be a math or data error.
(311-299)/299 = +4%.
the Month to Month drops are partially explained by the initial expiration date of the First Time Homebuyer Credit among other things.
MOM data is volatile anyway and thus I rarely use it, especially non-seasonally adjusted data (regardless if it goes up or down). I prefer YOY.
I largely ignore all this winter noise, and eagerly anticipate April and May’s numbers (which will come out this summer), for a few reasons
1) it will be prime selling season
2) the first time homebuyer credit will be expired
3) the Treasury purchases by the Fed will have ceased
4) the MBS purchases by the Fed will have ceased
of course, some of these programs have a high likelihood of being renewed, especially if housing tanks this spring/summer
There is intense speculation in the financial sphere about Mortgage rates after cessation of Fed purchases of Treasuries and Mortgage Backed Serucities. Most believe rates will go up by 0.3 to 1%. I personally have felt (and still feel) that the Fed still has no exit strategy. So I think that the Fed will either not stop purchasing, or they will stop and restart quickly. Less likely is that they’ll stop and then use opaque and backhanded ways to get mortgage rates down. (specifically Fannie and Freddie and FHA… hence the Xmas eve change to their loss caps).
[Editor’s Note: Good catch and our appologies for the distraction, the “299” in the prose was a typo and should have been 229 as reflected in the math (35.8% gain) and graph.]
Well if the long term trend holds of January being the low point for sales then we might have turned a corner. Of course in order to actually start trending back up we will need to see gains during the spring/summer peaks which have been declinging for the last 5 years.
Nice to see the 12 month moving average increasing for both sales and medians now which hasn’t happened for the last 6 years or more.
also I think the third(?) consecutive month there has been an increase in both sales and medians.
At this point it’s a just an assumption that the homebuyer credit will actually end in the near future.
It’s going to be extended as long as demand and prices remain weak.
Its going to be extended as long as we have dumb politicians.
“Nothing is so permanent as a temporary government program” – Milton Friedman
Fed purchases of MBS to keep mortgage rates down has been a much bigger factor in SF than the buyer credit, which very few SF buyers qualify for. MBS purchases are ending. Rates will quickly rise, maybe 45-50 bps, maybe more. That will have a pretty immediate effect on volume, then on prices shortly after.
@ A.T.: I totally agree that the homebuyer’s credit doesn’t mean much to SF proper. As for the impact of MBS buybacks on mortgage rates, the impact is debatable. Many think that this program has a neglible impact on rates, and that’s likely why the government is willing to let it expire for a while. If all hell breaks loose, you’ll probably see it reinstated. I really don’t know what’s going to happen when the MBS buybacks expire, but I still maintain that in normally functioning financial markets – we wouldn’t really need any of this anyways. We’ll find out just how normal the markets really are fairly soon though I suppose. BTW, I’ve linked to a piece of research on the impact (or lack there of) of MBS buybacks which you can get to by clicking on my name.
So you’re saying that if the MBS purchases end, and if mortgage rates rise 45-50bps, to ~5.5, that will have a serious effect on housing pricing in SF?
It’s still a great rate historically. In the last 30 years it was that low only in 2003-4, then the last year.
“So you’re saying that if the MBS purchases end, and if mortgage rates rise 45-50bps, to ~5.5, that will have a serious effect on housing pricing in SF?”
Depends on your definition of significant, for one thing. If $720K is the maximum loan someone can afford to pay at 5%, then that person will not be able to afford a $720K loan at 5.5% or 6%.
$720,000 loaned at 5.0% = $3865/mo
$680,732 loaned at 5.5% = $3865/mo
$644,670 loaned at 6.0% = $3865/mo
A higher interest rate would put some downward pressure on the housing market by affecting affordability. To some extent, the new “conforming jumbo” limit and the new FHA limits are affordability products in disguise because they help lower the risk premium for certain types of loans that previously had higher risk premiums. These two types of loans have buoyed prices in the $500K-$1M range (vs. the prior $417K conforming limit) because houses in that range are suddenly more affordable. And the Treasury and Fed MBS buys are helping with the affordability in general by creating a secondary market, which again, lowers risk premiums.
Imagine a person who is only able to buy a $929K place because he/she has $200K saved up and can get a cheap $729K loan that he/she can afford but just barely. If that person suddenly can’t afford that $729K loan because of a higher interest rate, his/her buying ability drops from $929K to something lower. In the aggregate, this puts downward pressure on pricing.
Submitted without comment …
“Core Inflation Declines for the first time since 1982
Owners’ equivalent rent (OER) declined 0.1% in January, and is declining at about a 1% annualized rate. OER has declined for five consecutive months (a record) and is important because it is the largest component of CPI.
Based on reports of falling rents – and a near record high apartment vacancy rate, OER will probably decline for some time, keeping core CPI low and possibly negative this year. Also – falling rents will push up the price-to-rent ratio, and put additional pressure on house prices.”
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