CFAH

San Francisco Listed Housing Inventory: 2/16/10 (www.SocketSite.com)
Inventory of Active listed single-family homes, condos, and TICs in San Francisco is up 9.1% over the past two weeks, once again driven by both new and refreshed listings. Current inventory levels are down 25.6% on a year-over-year basis, up 36.2% as compared to 2006, and up 3% versus the average of the past four years for this time of year (up 16% if you exclude 2009).
27% of active listings in San Francisco have undergone at least one price reduction while the percentage of active listings that are either already bank owned (69) or seeking a short sale (109) remains at 16% (the absolute number increased by 11% over the past two weeks).
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: 2/01/10 [SocketSite]

Comments from Plugged-In Readers

  1. Posted by anonn

    (up 16% if you exclude 2009).
    Why would you do that? Odd.

  2. Posted by curmudgeon

    cause late 2008/early 2009 is perceived as an “outlier” because nothing sold for a while after the crash. Makes sense to me….when you look at the graphs without those periods there is alot of consistency.

  3. Posted by sparky-b

    “because nothing sold for a while after the crash”…I bought something then.

  4. Posted by anonn

    I disagree. Looking at that chart 2010 is beneath two and above two. Disregarding any one makes no sense, particularly a watershed year. Each plays a part.

  5. Posted by EBGuy

    I bought something then.
    Two days after the NOTS was filed (now that’s a property in distress), nice! (An intrepid SS poster even noted the sale on another thread). I am not even going to ask how you bought this, as, it took a while to find…

  6. Posted by Lance

    I agree with anonn. Using that logic, we’d also throw 2006 out since it’s the oldest data point and relative to this dataset is also an outlier.

  7. Posted by tipster

    First half of 2008, slightly falling prices, almost no foreclosures or short sales.
    Last half of 2008 and first half of 2009: rapidly falling prices, almost no foreclosures or short sales.
    Now – inventory very similar to the first half of 2008, but somewhat higher foreclosures and short sales.
    The data is consistent with slow declines that we’ve been seeing while foreclosures and short sales have been delayed.
    Will there be more foreclosures and short sales in 2010 than there were in 2008? You can pretty much count on it.
    So with inventory around where it was with slow declines but few distress sales, and a higher proportion of distress sales predicted this year, you can pretty much see where this year is heading. It looks like a 6-7% fall in prices when you factor in the distress sales this year over the level of distress sales in 2008.
    On a 650K condo, you can expect to lose about $3500 per month, plus the $500 premium over the cost of renting, plus another $500 per month for realtor fees. So if you don’t mind paying about $4500 per month over what it will cost to rent, go ahead. If it makes you happy, it’s what you should do. Buy. Conversely, if you don’t feel the pride of ownership is worth $4500 per month and you own right now, you should sell if you can.
    Will the higher level distress sales not materialize while prices continue to fall and unemployment is higher than it was in 2008? That would be hard to imagine.

  8. Posted by SFisHOME

    Speaking of REO’s, have you seen 161 San Pablo? Bank got it on Feb 1 for $1.749M and it is already listed – for only $1.485. Sold in ’06 for $1.825M. Write up in the link below, and a video walk thru posted soon.

  9. Posted by anonn

    It looks like a 6-7% fall in prices when you factor in the distress sales this year over the level of distress sales in 2008
    This is an inventory chart. Not a price chart. So here you are just saying negative stuff apropos of your own navel gazing once again. March 2009 is the low point for price so far, and you didn’t even work that into your shpiel. Give it a rest.

  10. Posted by EBGuy

    Pent up housing supply continues to hover around all time highs. Currently, 1705 homes are in some state of foreclosure (NODs, NOTS, bank owned)in Ess Eff. Two weeks ago we were at 1711. Standard disclosure about noise in the data, you know the drill.

  11. Posted by anonn

    NODs are not necessarily any sort of inventory or supply, shadow, pent up, or otherwise. Why you keep on saying they are is not known.

  12. Posted by tipster

    ha ha anonn,
    Keep up the good fight!

  13. Posted by rr

    @tipster:
    are you really advocating a short-term trading strategy for primary residences? San Francisco is one of the least liquid and most inefficient housing markets around, and on average they are already fairly extreme.
    I suppose if you had added the caveat: “if you were thinking of selling in the next year”, but you blanket advocated that every homeowner sell. That would certainly make for an interesting inventory chart.

  14. Posted by EBGuy

    Oh, NODs matter. Let’s check back in 6 months on 1387 Sanchez. I think they’ll go the distance.

  15. Posted by anonn

    You’re laughing at me, Tipster? That’s rich. It’s not exactly “fighting” when all I’m doing is pointing out obvious reasons why a lot of what you say is baloney. More like tiddlywinks than fisticuffs. Do you honestly think anybody thinks your prognostications of price shifts based upon your own private interpretation of an inventory chart is worth anything? I doubt even you do. But on you blather. Good fight. Ha. You’re the one waging a campaign of sorts.
    And EBGuy, NODs might “matter” as a general economic sign. What they’re not, necessarily, is inventory. You know as well as anyone that a lot of them get righted or are people in the midst of getting loan mods. Pointing to one in response is of course neither here nor there. I’d ask that you parse how many tend to become NOTs and apply a multiplier instead of lumping them into a flat number, but I know that’s too much effort.

  16. Posted by curmudgeon

    EBayguy uses NOD as an INDICATOR, and I think we’ve (almost) all thanked him for his diligence. Of course not all NOD’s become foreclosures. But more NOD’s certainly suggests more foreclosures will come in the future, and that’s the metric that is illuminating.

  17. Posted by J

    Muy interesante Senor EB.
    So it was listed as a short sale for 7 months…
    Wonder when they stopped making payments?

  18. Posted by sparky-b

    ^^^But it was on the MLS so it was active supply and not pent up supply, right?

  19. Posted by Pablo

    By April/May of 2010 the number of listings will have blown past 2009!

  20. Posted by anonn

    More NODs means more foreclosures coming? Not necessarily. It could also mean a whole lot of people in the midst of loan mods skipped a few payments on purpose. And it isn’t even more, actually. It’s nominally less.

  21. Posted by EBGuy

    J said: Wonder when they stopped making payments?
    Hard to say because it doesn’t appear that a NOD was filed, but a NOTS hit the books on July 8, 2009. The HOA filed an assessment on August 12. My guess is that this was an ‘investment’ unit as the owner appears to live elsewhere.

  22. Posted by anon

    “It could also mean a whole lot of people in the midst of loan mods skipped a few payments on purpose.”
    Is this the new “European and Chinese buyers will save the SF housing market!”?
    In any case, we’ve moved from, what a few months ago was a number clustered around 1600 to a number clustered around 1700, right?

  23. Posted by Mole Man

    A massive and unprecedented spike in foreclosures clearly indicates increased financial distress. Whether that results in more foreclosures or short sales or whatever isn’t necessarily even all that interesting. What matters is that the market is clearly still under stress.

  24. Posted by anonn

    No, “Chinese and European buyers” is nothing much … nothing much more than you caring more about being arch than saying anything of merit, precisely. Say real things. Pick a name. Or don’t respond to my language. OK?

  25. Posted by A.T.

    Hee hee. Yeah, that’s it! The large and growing number of NODs is the result of scads of people skipping payments they could afford to make because they want a loan mod. It couldn’t be that they bought places that are more expensive than they could afford, or toxic loan re-casts, or unemployment, or anything related to economic distress in any way. Man, this is just Baghdad-Bob talk.
    The only thing wrong with tipster’s prediction of 6-7% declines in 2010 is it is too conservative.

  26. Posted by J

    Haha, good Bagdad Bob reference!
    Seriously, if you strategically miss payments, you know very well which way things could end up.
    If I was underwater by $100k+, I guess I’d string the bank along as long as I could, to take advantage of the free rent. I’d say I wanted a loan mod, or that I’m trying to find a buyer…

  27. Posted by J

    As I was walking around the Beacon this evening, I was just thinking about all the people that bought condos there right at the peak of the market. Their values are all down by six figures, their HOA fees are ratcheting up ridiculously, and over the next year or two, many of their adjustable loans will be recasting.
    Surely, many of the residents are in complete denial of the market. In order to refinance an exploding ARM, they would presumably need to come up with a HUGE lump sum, or try to pay the higher house payment. How long can people go on like that? Especially when the only motivation is pride, not economics.

  28. Posted by wow

    I don’t know what to make of this data.
    Sure we shouldn’t dismiss this spike or the increase of NODs. This is pretty relevant. Neither should we claim a second deeper bottom is coming from this data. Remember springs are usually where most of the business is decided.
    RE is highly seasonal plus some of the incentives are wearing off. This market is likely to surprise us all more than we think. It already has, for both bears and bulls.

  29. Posted by tipster

    “This is an inventory chart. Not a price chart.”
    The inventory is consistent with an inventory level that, in the past, resulted in falling prices. It’s tracking early 2008, though it looks like it’s about to surpass it. In early 2008, prices fell a bit, but loans were easier to get, jobs were more plentiful and paid more, and the number of distress sales was essentially nil. So instead of the 2-3% declines of early 2008, when inventory levels were about the same as they are now, I’m expecting 6-7%.
    Each of those lines shows an inventory level, and each of the inventory levels map to price changes. 2005 and 2006 had increases with their low inventory. 2008 and 2009 had decreases with their high inventory.
    There isn’t any need to remove an outlier, but using averages from different years is silly. Just look at the inventory level, identify whether prices rose or fell the last time inventory was at that level, adjust for jobs, the availability of loans without documentation, and distress sales, and you can pretty much see what’s going to happen.
    The slope of this year’s line is steepening, but that can turn around just as quickly.
    Interest rates rising could add a meaningful 5-10% ADDITIONAL decline, but at this point, that’s pretty speculative. If we track japan, and I think we are, they won’t allow rates to rise. I think they need to manage this with 5% declines in real estate prices every year for at least the next few years. The market forces alone will drop it that much: they won’t have the will to raise rates because the decline in real estate prices will be at the high end of acceptable. But if the prices don’t decline, they’ll raise rates. Either way, I think a 6-7% decline is almost guaranteed.

  30. Posted by diemos

    “If we track japan”
    They are net creditors and exporters, we are net debtors and importers.

  31. Posted by J

    “They are net creditors and exporters, we are net debtors and importers.”
    Look at the big picture. Japan’s debt:GDP ratio is twice that of the USA.
    http://krugman.blogs.nytimes.com/2010/02/05/the-spanish-tragedy/

  32. Posted by anon

    “their HOA fees are ratcheting up ridiculously”
    I would storongly disagree on this. Any new quality building has thorough budgeting by a professional 3rd party firm that specializes in such and the building is not going to see significant fee increases over the first five years, at least. The only exception is unless the residents decide to do a ton of capital improvements like adding more staff or a ton of hi-def security cameras.
    All the breakable stuff is under warranty and the developer is responsible of fixing problems that were design-related. My HOA went up 4.5% total over a four year period. Look at HOAs in SF now vs seven years ago an they are pretty much flat.

  33. Posted by anonn

    I see. You backed up and said “Japan” instead of “pets.com” this time. Nice one.
    As far as, “scads of people strategically missing blah blah blah” … well, as I said initially, that’s only one aspect of why you shouldn’t include NOD as an actual part of any inventory. (Of course, the haters seized upon it, proving they never read the dozens of links to reputable sources fleshing out the loan mod situation — including Treasury reports — the last time we went over this territory.) But there are many other scenarios. The main thing is that most people who get NODs are scrambling to try to salvage their mortgage. We’ve been over this fact before too. All hee hee hee’s, Baghdad Bob’s pets.com, Japan and other detracting anonymous buzzwords notwithstanding.

  34. Posted by pricesheadedup

    If you factor in that nothing is going to come out of the ground for the next three years we should see the number of units begin to decline at the end of this year.
    The federal tax credit will expire in April and interest rates are already heading up. That’s going to create a sense of urgency on the part of some to get in before rates rise higher. Rent to own price ratio is almost even. The pressure is going to build on those sitting on the sidelines to buy.
    By this time next year there will certainly be less to buy and price increases.

  35. Posted by Seriously?

    And if you factor in all the people who are currently waiting for the recovery to put their property on the market, I’d say we will see high inventory for the next few years.
    – Think retirees scaling down: the stock market has gored them but they still have plenty of equity in their houses to be a little flexible.
    – Think flippers in condo towers who had no intention of ever moving in and who have been bleeding cash for 2 years.
    – Think people who had to sell for whatever reason in the past 2 years but couldn’t because they were upside down.
    There’s pent-up supply out there. The 2 Infinity resale attempts posted by SS gives us an example of delusion at work among people who thought they could wait it out after topping the bubble.

  36. Posted by EBGuy

    The federal tax credit will expire in April and interest rates are already heading up. That’s going to create a sense of urgency on the part of some to get inout before rates rise higher. Rent to own price ratio is almost even, but rents are falling. The pressure is going to build on those sitting on the sidelines to buysell.
    By this time next year there will certainly be lessmore to buy and price indecreases.

  37. Posted by J

    Rent to own ratio is no where near even in SF though, nationally yes.

  38. Posted by sparky-b

    Dearest Editor and Staff,
    these charts used to have a line that broke out single family from condos, I liked that and would appreciate if that could be re-inserted.

  39. Posted by joh

    The federal tax credit will expire in April and interest rates are already heading up. That’s going to create a sense of urgency on the part of some to get in before rates rise higher.
    There will be a lot of ARMs resetting in the coming years, as many properties were purchased with such mortgages between 2005 and 2008. How will rising interest rates affect these already underwater homeowners?

  40. Posted by Jeremy R

    The federal tax credit will not end if the Feds believe that national prices are still at risk.
    The fed will not stop printing money if they think RE prices will drop more than 5% as a result.
    The homeowner rescue legislation will be expanded if ARMS and foreclosures get much worse.
    The government has shown that they can and will remain in the market, forever if need be.
    The government has also shown how effective they can be at elevating the SF market. They might not be able to fix Stockton or Detroit, but depending on how much they intervene, they can certainly maintain high prices in Manhattan, West LA, and SF.
    Don’t assume anything. Just take it month by month. If you can afford a home that suits your needs, and it is reasonably priced (e.g. not bid up 150k over last months asking prices), then I say buy it.

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