CFAH

San Francisco Listed Housing Inventory: 3/01/10 (www.SocketSite.com)
Inventory of Active listed single-family homes, condos, and TICs in San Francisco is up 10% over the past two weeks. Current inventory levels are down 19% on a year-over-year basis, up 34% as compared to 2006, and up 8% versus the average of the past four years for this time of year (up 19% if you exclude 2009).
27% of active listings in San Francisco have undergone at least one price reduction with the percentage of active listings that are either already bank owned (59) or seeking a short sale (115) falling to 14% on an absolute drop of 2% (4 listings) 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: 2/16/10 [SocketSite.com]

Comments from Plugged-In Readers

  1. Posted by J

    Wow, thought we’d have to wait a few more weeks to cross the orange line. The green line will be surpassed in April if the trend holds.
    We are probably seeing people encouraged by the waning effects of MBS purchases and realtors just dying for a listing.

  2. Posted by anonn

    Did you J? Did the big bad orange line’s orangeness keep you up nights? Well take that orange line! 1228 with a big black dot right on your smarmy orangy self! Let’s make this chart look like Halloween! Right J?

  3. Posted by J

    What? It might have in fact kept me up at night if I had an adjustable rate mortgage that was recasting soon…
    But no, I am not over leveraged.

  4. Posted by tipster

    Gotta love the slope of that line!
    It will be interesting to see what unfolds as the current homeowners, stuck in their homes, get “unstuck” as the government programs shift from a focus on keeping stupid underwater homeowners paying for an asset that they should logically walk away from, to a focus on encouraging short sales.
    It doesn’t take a recast to convince someone to walk away. A little push from the bank may be all that is necessary. The two year credit hit is nothing compared with paying hundreds of thousands of dollars over the life of a loan.

  5. Posted by anonn

    So the 300 odd number between the current year and a past peak year is much, much more significant than the 300 or so between it and the post-market shift year?
    More like this chart is currently depicting three completly different markets.

  6. Posted by SFRE

    I think the chart is misleading, since it lumps all the housing together.
    Single Family Homes, Condos, and TICs represent 3 different types of buyers.
    I wish the chart had just condos, just Single Families, and just TICs.
    I bet if you did that, you will see the inventory of condos (specifically 2/2s) is relatively low.

  7. Posted by anonn

    as the government programs shift from a focus on keeping stupid underwater homeowners paying for an asset that they should logically walk away from, to a focus on encouraging short sales
    What do you know that enables you to make a statement such as that? The government is currently increasing its efforts to keep people in homes.

  8. Posted by anon

    HAFA? It doesn’t start until April 5.
    http://www.realtor.org/government_affairs/short_sales_hafa
    Note that it’s on realtor.org, so take things with a grain of salt. 🙂

  9. Posted by Pablo

    As I posted last month, the 2010 line will blow past 2009 by April/May. There are a lot of properties that were listed last year and didn’t sell that will be re-listed!
    South of market/South Beach condo market is a train wreck that will see a lot of short sales/foreclosures.
    Financing remains tough – you will see an increasing number of deals falling out of contract.
    And finally prices are still too high in SF.

  10. Posted by diemos

    Well you know what they say.
    HAFA short sale program is better than no short sale program at all.

  11. Posted by tipster

    What do you know that enables you to make a statement such as that?
    Apparently, based on the above link, more than you do.
    HAFA was released three months ago, and HAMP isn’t working.
    Prepare for the next leg DOWN. Severely, DOWN.
    Anyone buying now will regret losing their life’s savings, when a few month wait will save them a lot of money. Could there be anyone that dumb?

  12. Posted by J

    “you will see an increasing number of deals falling out of contract”
    Yeah, I have seen a lot of short sales go into contract… I bet most of them will fall through if the bank doesn’t give a response by the end of April.

  13. Posted by ex SF-er

    I personally don’t expect 2010 inventory to surpass 2009, although I also don’t rule it out.
    However, there are a few factors that will affect inventory numbers: the FTHB credit expires April 31 (recently I thought it was March 31 but I was wrong). Thus, most homes will need to go into contract in early to mid March to close by April 31. Thus, sellers need to get their properties out now so that buyers can qualify for it.
    Yes, I know that FTHB credit isn’t a huge driving force for the SF SFH and high end condo market, but it is somewhat important for the lower end condo market (IMO).
    also, savvy homebuyers/sellers know that we may see some signinficant increases in mortgage rates later this summer. Thus, many sellers want to get their homes out there now, because a buyer’s purchasing power is higher at lower rates of interest.
    I’m still of the opinion that interest rates on mortgages will rise 0.5 to 1% later this year, depending on Washington Politics of course. thus, if I were in the mood to sell I’d get my property out there ASAP. Regardless, it’s not as though mortgage rates are going to drop appreciably.
    I think we’ll see a rapid increase in inventory the next month or two, and then it’ll plateau, just like what happened in 2009.
    just my $0.02.

  14. Posted by anonn

    HAFA is closely tied to HAMP, and I know all about it. My question stands. Regardless of your perception, the government is currently doing the opposite of what you posit.

  15. Posted by ex SF-er

    oops: a caveat:
    inventory could rise significantly if sales numbers fall (duh).
    if interest rates rise appreciably, we could see a collapse in sales numbers like we did last year. this could push 2010’s inventory numbers higher than 2009’s. (not due to increase in supply, but due to decrease in sales).
    Pablo: homes falling out of escrow and foreclosures will affect the above graph if they are listed. are most foreclosures/short sales/etc in SF typically listed or not listed?

  16. Posted by Southbeach_now?

    Well for what its worth I think prices are on the rise in South of market, south of market and rincon hill, the amount of 2/2 available is minimal now below $800K, I fell I have missed the bottom, I so hope I haven’t and would love to hear from people that think that prices have yet to fall and why they think this. I will buy in the city and not from the area in fact I am from Europe but live in the east bay area. I plan on buying in SF because the city is know all over the world. But its is also so expensive. I really hope that I haven’t missed bottom but feel I have, I have been on sidelines now for almost 2 years, oh and I do feel sorry for people that have lost esp people that felt they were doing right thing and put money down.

  17. Posted by steve

    Anyone buying now will regret losing their life’s savings, when a few month wait will save them a lot of money.
    Care to offer a more specific prediction? Sounds like you are calling for C-S at least 20% lower by summer of this year — or am I reading “Prepare for the next leg DOWN. Severely, DOWN” and a few months the wrong way?

  18. Posted by anonn

    Again with the interest rates eventuality thing. For a change, can you guys maybe at least wait a few weeks after Bernanke says he’ll keep rates low? It has only been five days since he told Congress that.

  19. Posted by tipster

    Care to offer a more specific prediction?
    The politically acceptable decline appears to put SF at a 6-7% drop per year. They will manage rates and programs to that level.
    The equilibrium point is even lower, so look to see declining prices for at least two years. If they were to rip the band aid off, around 20% would be a reasonable minimum, but they didn’t do that in Japan and I don’t suspect they’ll do that here either. So far, there really hasn’t been much difference of political will between Japan and the U.S.
    It is very scary that, with all the people currently trapped in their homes, that the inventory level is still shooting up. 2008 had a slight decline in prices, and we are at the same inventory level with a somewhat more difficult loan situation, and a much worse job situation (indicating that prices will trend down at maybe a 5% rate), but with a slope that could put it much higher.
    The 2009 inventory level caused 10-15% declines. If we jump up to the level of true sellers of 2009 (not the 200-250 wishful thinkers that added to the inventory but had no real effect because their expectations were way too unrealistically high), with a worse job situation, (though not a worse loan situation) all bets are off.
    I’d put the level of true 2009 sellers at around 1450-1500 for next months graph, the rest had no real intention of selling and so they didn’t really affect the market. If we hit that, it’s going to be bad. The loan situation is about the same, but employment levels are down and some of the re-employed are taking offers at a lower pay. So price declines will be worse than 2009 if we hit those levels. I’m not expecting the government will allow that to happen, though.
    When HAFA gets going this summer, there will be a further hit.

  20. Posted by J

    “Again with the interest rates eventuality thing. For a change, can you guys maybe at least wait a few weeks after Bernanke says he’ll keep rates low? It has only been five days since he told Congress that.”
    This just shows a lack of understanding of the factors currently affecting mortgage rates.
    http://www.calculatedriskblog.com/2009/09/impact-on-mortgage-rates-of-fed-buying.html
    I doubt the fed funds rate will go up any time soon, and so does the futures market:
    http://www.clevelandfed.org/Research/data/Fedfunds/index.cfm

  21. Posted by Outsider

    Southbeach-now? 10:32 – I bought a 1/1 at a very good price first quarter of ’09 and now deeply regret I did not have enough courage to take on a 2/2 which had been and still is my preference. Multiple large, new or near new 2/2 were available in the low to high 600s at the time in very desirable locations but the market was so bad I was hedging my bet a little and went for a 1/1 instead as they were selling the fastest at the time perhaps because conforming loans were more readily available. I have been actively looking at 2/2 in SOMA over the past 3 months and I can still find plenty of 2/2s but the price point has definitely changed, especially those that fit my criteria. On the other hand, loans are now far more available with conforming jumbo and even regular jumbo at very attractive rates for owner occupied properties. These were essentially non-existent a year ago. I am sure the bottom of 2009 is behind us but I am not convinced there is much risk of a runaway market or, for that matter, runaway interest rate. I have no desire in looking at short sells at this time but there are more regular resales showing up as confirmed by the above mentioned numbers. Patience, patience…

  22. Posted by anonn

    Is there a particular reason for your condescending attitude, J? Or are you just a one note blogger? Either way I think I’ll avoid interacting with you moving forward. But first I’ll point out that your link is opinion based, with admittedly limited data, and the bps change he predicts is hardly drastic. I was of course referring to an actual Congressional session with Treasury where the buying policies were outlined.

  23. Posted by EBGuy

    A local realtor tells me she is warning her clients that we are back to 2004 in terms of prices [for condos]. When discussing a new listing, she will show the homeowner an analysis of comparables with their prices six years ago in order to provide a reality check. From:
    http://www.sfgate.com/cgi-bin/blogs/ontheblock/detail?entry_id=58159&tsp=1

  24. Posted by SFHawkguy

    Flujie, you’re mixing up your interest rates.
    Mortgage interest rates are expected to rise.
    The fed’s fund rate will probably be kept low indefinitely.
    These are two different government-manipulated rates. The government has much greater control over the fed fund rates whereas it is much harder for central planners to set private mortgage rates. At least for now. Now that the taxpayers bought all these toxic loans from the crooks on Wall Street maybe it will be easier to bail out Wall Street and their drug dealers, the realtors and brokers, as well as their hopium addicted underwater victims/suckers.

  25. Posted by J

    “I’ll point out that your link is opinion based”
    Is there an opinion there that you disagree with? Now that you are a little more educated on the subject than just saying, let’s wait and see what happens with the fed funds rate?
    I’ve never heard of anyone credible implying that the primary factor in setting mortgage rates is the fed funds rate, ahead of 10 year treasury yield…

  26. Posted by ZapBrannigan

    anonn,
    I find it mildly amusing and ironic that you call J condescending while you write things like
    “Did you J? Did the big bad orange line’s orangeness keep you up nights? Well take that orange line! 1228 with a big black dot right on your smarmy orangy self! Let’s make this chart look like Halloween! Right J?”
    Pot…Kettle…Black…

  27. Posted by J

    “The overall point stands: http://www.businessweek.com/news/2010-03-01/bernanke-makes-two-year-treasury-notes-sweetest-spot-update2-.html
    And what is the overall point?
    “Deutsche Bank forecasts the curve will steepen to 3 percentage points as 10-year note yields climb to 4 percent by mid-year. Morgan Stanley expects 3.25 percentage points by the second quarter, with the 10-year note reaching 4.5 percent.”
    10 year treasury yields of 4-4.5% are likely to correlate with 6-6.5% 30 year mortgage rates…

  28. Posted by Rillion

    I prefer annon and j’s being condescending over tipsters out right name calling, “stupid” “dumb”.

  29. Posted by anonn

    That the fed will strive to keep a lid on mortgage rates. And don’ discount the GSE distortion, anyway, which will be ongoing it seem.
    ZapBrannigan, guilty as charged. But you can go look at some of the other comments from days past too if you like.

  30. Posted by SFHawkguy

    “That the fed will strive to keep a lid on mortgage rates. And don’ discount the GSE distortion, anyway, which will be ongoing it seem.”
    You are right anonn. There will be huge continuing distortions in the housing “market”–all designed to bailout the reckless and criminal speculators that caused the biggest depression in 75 years.
    The government is providing massive stimulus to make housing go up (the real reason is to fix the balance sheets of connected Banksters–not to help the reckless suckers that bought into the bubble).
    It’s a horrible policy that will probably permanently ruin America as a going concern. And no, I am not being hyperbolic. I firmly believe that you are taking part in the greatest theft in American history and the criminals and crooks are still in charge. What’s funny is that the people that crow about “free markets” are the ones that are pushing for massive amounts of welfare to thrown at one asset in order to keep it artificially inflated.
    The criminals and crooks that OWN our government spend almost 2 TRILLION dollars last year on propping up housing prices! At least. We don’t have an accurate accounting because, once again, our government is owned by the criminals. That’s about 1.3 Trillion for directly buying sketchy MBS (when the fed had never bought anything less safe than treasuries before). It also spent what, about 40 Billion on giving people a gosh darned check to buy a house! [please note–my numbers are from memory and may be off a bit] How much on bailing out the agencies? Another few hundred billion? How much revenue did the government not collect because of the mortgage interest deduction? That welfare program has been largely forgotten because we’ve been through almost 30 years of its pernicious influence and people just accept the market distortions as permanent.
    We could have provided Medicare for All for the amount of money we spent last year to prop up housing. We could have funded the military for 2 or 3 years. Instead, we gave more money to crooks and suckers.
    And all we have to show for it is more pom poms being waved in our faces this Spring as Bubble 2.0 get’s ready to take this country into a Real Depression.

  31. Posted by Mole Man

    Interest rates don’t have to go up. The aggregate data for mortgage resets shows 2010 through 2012 being significantly worse than 2009. There is also an expected spike in mortgage resets in 2011 of well over the $35 billion per month level which is the apparent critical point where large institutions crumbled last time. Even if nominal prices stay high continued reductions in real cost should be expected.
    Some of the anger in this thread seems to come from the differences between ways of seeing. From the perspective of those in the market watching individual transactions closely there are up and down moves and Bulls and Bears noting them. Others watching the market at a distance see intrinsic prices and bubble premiums performing a kind of dance. Both ways of seeing have limitations because neither Bull nor Bear can predict particularly far in the future and intrinsic value analysis is tricky and itself prone to flux. There is also more agreement than is usually admitted, for instance regarding San Francisco prices having been and likely to remain expensive relative to the rest of the US.

  32. Posted by Rillion

    Are those resets or recasts? I wish my loan had a reset in 2010, the sooner the better. Unfortunately the interest rate doesn’t reset until 2012, fortunately it doesn’t recast until 2017 at which point it amortizes over 20 years.
    I don’t expect Alt-A interest rate resets to cause that much of an issue while the 1-year LIBOR (the rate my loan is tied to at libor + 2.25) is at 0.84 and the 1-year treasury rate is 0.34 (another common benchmark for arm’s).

  33. Posted by Sambo

    Good comments as always on here.
    Just to throw in my quick two cents, as much of this conversation seems to centered around rates. We deal almost entirely in the $3M+ range, and the majority of our transactions are all cash deals. We have had a decent surge of business since the start of the year, with all three properties we have in escrow right now not involving any financing. This includes a listing we’ve had on for well over half a year.
    Obviously, this is not representative of the entire market, and the rates and credits play a big role for a lot of people. But they aren’t the only thing driving the market. I hate using this term, because it sounds like such typical Realtor fluff speak, but increased confidence is playing a part here.

  34. Posted by ex SF-er

    anonn:
    I think j already pointed this out, but your thought process is a little confused.
    As I said above, most(?) people anticipate about a 0.5% up to a 1% increase in MORTGAGE rates. (I should have clarified fixed mortgage rates). This will likely happen because the spread between the 10 year treasury and mortgage rates will likely go up about 0-1%, and the 10 Year Treasury will likely move up as well the coming year (due to cessation of Fed buying, and also increased major supply given the Govt spending… more supply and lower buying means lower prices and thus higher yields)
    FWIW: Calculated risk anticipates an increase of 0.35% in the SPREAD between the 10 year treasury and mortgage rates, which may very well correspond to the 0.5 to 1% rise in mortgage rates. I have for the last few months anticipated a 0.5% rise in mortgage rates. So those views are not incompatible.
    predictions on the 10 year treasury rates are all over the place.
    the Fed Funds Rate (what BenB was talking about) is an entirely different matter. that’s not going anywhere, but is unrelated to the other 2 issues (Mortgage rates and spread between Treasuries and Mortgage rates)
    The mechanism for the Fed to control the Fed Funds Rate is DIFFERENT than that used to control the longer term Treasury rates which is different than that used to control Mortgage rate spreads.
    The Fed has dropped Mortgage rates in several ways
    1) They are directly affecting the Treasury market by buying longer dated Treauries. Buying treasuries raises the price which lowers the yield. In other words, the Fed has lowered Treasury Rates by buying Treasuries. This is what we call “Quantitative Easing”.
    Lowering the 10 Year Treasury rate also lowers the Fixed Mortgage Rates because many Fixed mortgage rates are set as a spread above the 10 year treasury. so lowering 10 year treasury = lowering fixed rate mortgages. This program is supposed to go away in Q1 2010, as announced already by Ben Bernanke.
    2) they have directly bought Mortgage Backed Securities. This raises their price again, which lowers yields (in other words, it lowers mortgage interest rates directly). This is a way of targeting both Fixed rate and also Adjustable Rate mortgages. This program is supposed to go away in Q1 2010, as announced already by Ben Bernanke. I think it is the more important program of the two.
    3) Ben B has signalled that he will keep the Fed Funds Rate at ZIRP for the foreseeable future (and I don’t see them chaning that anytime soon, prolly not until 2011 at the earliest). The FFR mainly affects some adjustable mortgage rates, but not so much fixed mortgage rates. (there is a link but it is more tenuous). This program is staying for the foreseeable future.
    4) the govt (not Fed) is also affecting mortgage rates using Fannie and Freddie and FHA. They are stuffing as much toxic crap into those entities as possible. This is also not going away anytime soon… but there are major cracks showing and so I’m not sure how much longer they’ll be able to keep doing this. the losses are impressive, and starting to mount. this is why there was the xmas eve raise in the Fannie/Freddie cap from $500 Billion to “unlimited”. expect more to be stuffed into them.
    so you see, I don’t need to wait for Ben B to talk about raising mortgage rates… he already has telegraphed this. (as he has said several times, he will stop buying Treasuries and MBS in Q1 2010). Thus, I anticipate mortgage stress in Q2 2010.
    FWIW: however, as I’ve said a bunch of times, I find it VERY unlikely that Ben B will be able to stop buying Treasuries/MBS as easily as he thinks he can. I believe he is trapped. The govt IS the mortgage market right now.
    Look at what happened last week when the Discount Rate (that has nothing to do with the Fed Funds Rate) was raised to 0.75% and then the Treasury announced it’s Supplemental Financing Progam (again). The market TANKED because people THOUGHT that maybe he was pulling back on Govt life support.
    Ben B had to rush to testify about how he wasn’t going to raise anything, to reassure the pigs that they still had Mama government’s teat to suck on.
    Ben B is the markets beyatch.
    This is why I doubt that the govt support will be withdrawn so easily. as the time comes near (end Q1 or early Q2 2010), mortgage rates will start to rise, people will get skittish, the market will be “volatile” and Ben B will rush in and say “oh nevermind, we’ll restart some MBS purchases”.
    Our economy is sick sick sick sick. It is no longer a market economy. It is an economy on govt life support. any attempts to remove said life support continue to cause severe dislocations. and it will remain this way until the UNDERLYING structural problems are addressed. But we aren’t addressing any of those problems. we’re simply papering them over with FREE MONEY! YAY!
    there is a reason that Japan has had 20 years of difficulty. and so far we are doing everything that they did way back then. (support zombie banks, hide losses, shovel money to connected interests, Quantitative easing, etc etc etc).
    ====
    Finally: to show you something about the relationship between Fed Funds Rate and 10 year Treasuries and mortgages:
    look at the 30 yr fixed Mortgage rates and the Fed Funds Rate and 10 year Treasuries from 2003 to 2006.
    You will see the Fed Funds Rate went up from 1% to 5.25% (or went up 4.25%)
    But the 10 year Treasury only went from about 4.35% to 5.15%, less than 1%!
    and thus, fixed Mortgage rates only moved modestly as well. (5.26 to 6.78%, or up about 1.5% only)
    That was Greenspan’s famous “conundrum”. (rising Fed Funds Rate didn’t affect the long term rates). We have the opposite conundrum now. They dropped the FFR to 0% (or -5.25%), the 10 year Treasury initially fell from 5.19% to 2.1% or so (memory is fuzzy), but then it ROSE up to nearly 3% % in March of 2009 so the fed had to start purchasing Treasuries, which slowed the rising Treasury yields. but now it’s 3.6% even with Fed Purchases.

  35. Posted by SFHawkguy

    Thanks for the observations Sambo. I too feel like I’m seeing the upper crust get its confidence back.
    It’s interesting that there is almost no unemployment for the top 10%. And the top 1% are doing extremely well. The San Francisco real estate market is disproportionately influenced by these folks.
    But damage has been done to the bottom 90%, fatal in the case of many of the lower classes, and the pain is spreading upwards. But that’s a story for later . . . . like later this year.
    http://www.financialarmageddon.com/2010/02/why-do-these-clowns-still-have-jobs.html

  36. Posted by anonn

    FWIW: Calculated risk anticipates an increase of 0.35% in the SPREAD between the 10 year treasury and mortgage rates, which may very well correspond to the 0.5 to 1% rise in mortgage rates. I have for the last few months anticipated a 0.5% rise in mortgage rates. So those views are not incompatible
    The Calculated Risk prediction didn’t pan out to that degree. Look at the timestamp. That article is from September.
    And again, I will believe that the Fed will stop buying MBS when I see it. The

  37. Posted by Mole Man

    Are those resets or recasts?
    That was an attempt to summarize mortgage rate resets. Here is a popular article with an accompanying chart graphic from
    The Consumerist

  38. Posted by Legacy Dude

    Great post as always, ex. However, something that nobody has addressed yet is the possibility of an external event forcing rates up. Since we’re already on an interest rate tangent…
    We’re just one nation in a world of debtors and creditors. Granted, we are the largest economy, but we’re also the largest debtor. How quickly is our debt burden growing vs. our “real” economy? To paraphrase Larry Summers, how can the world’s biggest borrower remain the world’s most powerful nation? Not that I’m a fan of Larry Summers or his economic dealings, but a valid point nonetheless.
    For example, the Chinese economy is largely unmonitored and growing quickly through left pocket/right pocket dealings. In many respects, it’s at risk of its own bubble implosion in both equities and real estate. If that happens, you can bet their appetite for our debt will be affected should they have their own bailout to deal with (although I don’t think Mandarin lends itself well to catchy acronyms like TARP and HAMP). How does that affect our rates? And what if (when?) Spain becomes the next Greece? There are other exogenous factors at play, but you get the point: only so much global credit out there to burn in our new national pastime, the “pretend it’s still worth X” game.
    I don’t believe our benevolent central planners have the political will or financial leeway to try and steer our economy in a prudent and sustainable manner at this point. In short, none of the bailout schemata will be done away with, IMO, just renamed and/or reinstated. The sky never falls as long as we can borrow more sky. But there may be less sky to borrow at some point in the near future.

  39. Posted by ex SF-er

    And again, I will believe that the Fed will stop buying MBS when I see it.
    anonn: we agree here, with one qualifier and 2 caveats
    1 Qualifier: I also doubt the Fed will be able to stop buying MBS and have said so many times. **HOWEVER: Treasury may use its revamped Supplementary Financing Program to allow the Fed to covertly purchase more mortgage securities. If so then the Fed could claim to stop buying openly, but continue buying covertly (this supports your claim by the way, as covert fed purchases would help to keep mortgage rates low)
    the 2 caveats
    -even though the Fed will likely continue MBS purchases, it will ONLY happen IF the market pukes on the mortgage paper this spring/summer. thus, there will need to be at least a slightly painful transition period.
    If things go really well, then the Fed won’t need to restart the purchase program, and I find it unlikely the transition will go well.
    thus, even if the Fed restarts the purchasing program (overtly or covertly) there will likely be a few hiccups and mortgage rate pukes
    -even if everything goes smoothly there is no reason to expect that mortgage rates go DOWN from here. the best possible outcome would be for them to remain where they are.
    thus: back to the orginal thrust of my argument above:
    there is a very real chance that mortgage rates will rise appreciably through 2010 (0.5% to ?)
    there is a much smaller chance they’ll remain the same
    there is a negligible chance they will drop
    from a seller’s standpoint: higher interest rates = lower buyer purchasing power.
    thus, an intelligent seller would get their house out NOW to take advantage of these odds.
    this is why I foresee a quick ramp upward in inventory early in the year, and then a plateau.
    the one way my logic fails miserably would be if we see continued SIGNIFICANT improvement in the economy or jobs market. I’m not holding my breath for that one.
    the other way would be if the Fed were to be so dumb as to really stop the MBS/Treasury Purchases without having a covert bailout just in case (likely the Treasury SPF or Fannie/Freddie/FHA). in this case sales will crash and inventory will go up due to lack of sales. but Bernanke and Obama have shown time and time again that they are the lapdogs for the Banks, and thus they will jump when told to do so. SO I really don’t fear this. Bailout Nation is only in year 2.5… lots more where that came from.

  40. Posted by J

    “If that happens, you can bet their appetite for our debt”
    They didn’t necessarily ever have an appetite for our debt. It is more about keeping their currency weak, and hurts the competitiveness of our exports.

  41. Posted by Southbeach_now?

    @ outsider 11:33, thanks for message, well again for what its worth I think your purcahes in first Q-09 wasn’t a bad investment you seemed to time bottom well, I like you was looking at 1/1 and 2/1 at that time and was tempted but feared the risk, now all I look at is 2/2, but again not as much choice in my price range. I did see a short sale in The Metropolitan that was listed for a long time 2/2 $599K that sold for $510K and felt that was the best deal and that I missed it in 2009 !! Infinity had good deals too, and SFBLU also had some great deals for a period during 2009, but these seem wella nd truely behind us. Iam waiting for One Hawthorn ?? anyone know when their sales and prices will be out ?? Mellinium seems liek a building for the rich, Bridge view seems nice but not many 2/2 in $650K price, also Baycrest seems a lil old and well small sq/ft and storage and bigger have high price range, the beacon with all its problems and high HOA is again starting to look a bit better in my opinion because the prices are low..ish. Why do you not look at short sales ?? Where did you buy ?? wish there was a way that one could swap contact info, as I really need a contact of someone thats not a realtor that lives in the city. Thanks again.

  42. Posted by condoshopper

    southbeach_now: i don’t think you’ve missed any kind of bottom yet, as i haven’t noticed any substantial “rebound” in prices for the soma condo market. Outsider might have gotten a good deal but it would more likely be due to his acumen and diligence rather than a market timing issue.

  43. Posted by SFRE

    @condoshopper: I think southbeach_now is referring to the fact that pricing in buildings such as Blu/Infinity, etc., have actually “increased”. Let me explain…you could buy a reasonable 2/2 at the Infinity in the low $700k range last year, and you could have definitely bought a “B” or “C” model at Blu for the mid-$600 range during the same time period. If you see what the pricing is now for Blu, for example, its much, much higher. There is no inventory at the Infinity that fits the description. [Note: I posted the pricing for all of the sold Blu units in a different post, and they were in that range]. Part of this had to do with the buildings trying to get to a certain % sold, and partially because there were less buyers out there.
    In fact, even condo’s in the less desirable Berry Street, are actually selling above where they did in early/mid 2009.
    199 New Montgomery #1001 is under contract now around $749k, for about 950 sqft, yet the penthouse level in the same stack #1601 sold for under $700k last year.
    So if you truly look at strictly the 2/2 inventory out there, and do a search to see what the units in the same building sold for last year, then you will see the vast majority have sold at lower prices in 2009 than what they are currently selling for today. The buildings I am referring to, are Blu, Infinity, 199 New Montgomery, 246 2nd Street, 310 Townsend, 235/255 Berry, 188 King/170 Off-Third, and similar buildings.
    You cant get into those places at early-mid 2009 prices for a 2/2, and that’s where he is coming from.

  44. Posted by tipster

    ^That’s because most of the people in those places are trapped in their homes in the short term, and in the short term, inventory is low as even people in deep trouble can delay the day of reckoning via HAMP.
    Come April, that will start to change. By September, the world will be a very different place. It would be foolish to buy right now in that environment. We’re in a sort of sweet spot for owners right now. People who should be selling can’t. It won’t last, but for now, there is a little bump up. I’ve been saying that will happen for months. It was obvious it would happen and it did.
    It won’t last. Anyone who feels the need to buy when foreclosures and short sales are all but off the table, when the next up plan is one encouraging short sales, is a fool.

  45. Posted by SFRE

    @tipster: Are you suggesting that the late spring/summer will be the best time to buy, and therefore suggest waiting until then?
    PS: Glad to see that you recognize that there has been an increase (i.e. bump) in pricing.

  46. Posted by condoshopper

    SFRE: thanks for the clarification along with the extra market insight. i’ve been tracking 1/1’s only so i was unaware of the 2/2 recent selling prices. it seems because the soma condo’s were sold at or near the peak of the market, a lot of the sellers, when they sell, are understandably trying to fetch similar prices so as to not take a loss, and it’s causing a lot of the inventory to not move because buyers no longer want to pay 500k for a 1/1. this might be keeping otherwise would-be sellers from listing their units also. either that or everyone loves their units and can still afford the payments. looks like a large portion of sales that move are bank owned as they are listed about 10% the regular sales.

  47. Posted by tipster

    I’ve been saying this for months. When things looked like they might be falling again at the end of the year I flat out said it was a fluke and wouldn’t last. At 10:33 here https://socketsite.com/archives/2009/11/socketsites_san_francisco_listed_housing_inventory_1117.html
    Even pets.com stock did not head straight down. But down it went.
    As for best time to buy this spring? Nope. The decline is being managed like it was in Japan and will last for years. No one is going to let things drop to their natural point right before the mid term elections. That would be just plain politically stupid.
    But now is a bad time to buy: people who want to sell CANNOT sell, and there are programs in place preventing them from doing anything at all. Supply of things that were overwhelmingly bought during the bubble years (like Soma condos) is low, especially for anyone who can stand sticking around. 1/1s are still dropping because even if someone offers you a HAMP mod, (which just lowers the interest rate for 5 years and then you’re right back where you started) you don’t see staying there long term and so you bail anyway.
    For 2/2s, it’s easier to ride out, so you think about at least trying a HAMP mod if someone will lower your payments for 5 years – you might be willing to roll the dice. But VERY few people qualify, so you just have to wait for the shakeout. That will happen. It isn’t happening now. If you can’t wait, you’re a fool or very irresponsible with your money and you deserve what is going to happen to you.
    This is like being a pretty girl and deciding to go out to the bar in your small town the weekend the cheerleading competition is in town. Just don’t bother, you’re wasting your time and they’ll be gone soon. What you’ll get won’t be worth the effort so clean your kitchen or something and go out next weekend.

  48. Posted by EBGuy

    Pent up housing supply appears to be at an all time highs. Currently, 1755 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. Two weeks ago we were at 1705. Standard disclosure about noise in the data, you know the drill.

  49. Posted by Southbeach_now?

    @condoshopper yes you got what i was saying,I can’t help but feel I missed the bottom, trust me I hope I didn’t. A lil over two years ago Iremember looking at 1/1 and considered paying hight $600K for same, so glad I didn’t esp when last year just after superbowl you could get 2/2 for that price in same buildings.
    @tipster You really seem to have your homework done, I clearly haven’t enough as I don’t even know what HAMP is all about ( please explain in simple language for me like a sentence or two). I will goggle it anyway I think !! I like that you say wait, and that I haven’t seen a true bottom, at least I think thats what your saying, but when will you think is the right time, say a person has the 20% or more down and has exelent credit score, won’t prices go up over summer again and if inventory goes down, only new place I have heard of is one hawthorn and even that isn’t on sale yet i think. Thanks tipster for link also to your post at the end of last year.

  50. Posted by Southbeach_now?

    @tipster LOL at your euphemism about the pretty girl, but when can she go out, how long should she wait, won’t she get old and miss out on what happens at the bar ?? She won’t be a pretty girl for ever !! Or are you talking a few weeks or a few years of this pretty girls life ?

  51. Posted by Southbeach_now?

    @tipster just did a real quick down and dirty review of HAMP making home affordable, and what i make of it and i might be wrong, isn’t this just delaying prices of homes getting to where they should be, delaying a real bottom,How many will it help and for how long ?? Or am i to believe that the government hopes prices start to go up again in real estate soon and then these people below water will be above surface and able to sell ??

  52. Posted by REpornaddict

    I suspect that during a cheerleading competition weekend there will be alot of buying going on!
    Multiple bids, overbids, all cash offers, not to mention all the open houses and dropping of contingencies..

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