Inventory of Active listed single-family homes, condos, and TICs in San Francisco continues to climb having increased 3% over the past two weeks versus an average 2% decline for the same two weeks over the past four years.
Current inventory levels are now up 10% on a year-over-year basis and up 23% versus the average of the past four years (up 27% if you exclude 2009) and up 48% as compared to a 2006/2007 average.
The inventory of single-family homes for sale in San Francisco is up 16% on a year-over-year basis versus a 6% increase for condos. Once again, inventory would be dropping if new demand was increasing faster than new supply although the converse is not necessarily true as listings can simply be withdrawn.
38% of active listings in San Francisco have undergone at least one price reduction and the percentage of active listings that are either already bank owned (87) or seeking a short sale (164) is holding at 14% (up 6% on an absolute basis).
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: 6/14/10 [SocketSite]
∙ Will Pent-Up Demand Outstrip Pent-Up Supply? [SocketSite]
Comments from Plugged-In Readers
I now suspect the federal and state tax credits had a bigger impact in SF than either I or the CW believed. It’s looking increasingly likely that demand was pushed forward, lifting sales in the first half of the year at the expense of sales in the second half.
The levels of distressed inventory also seem to be steadily on the rise, not an avalanche but nevertheless a continually growing force. That one was predictable and predicted. More sellers, fewer buyers. Hence, a hair’s-breadth under the 5-year high in active listings. The various government efforts were pretty effective in moderating the market decline for about a year. Now, we’re basically (not completely) back to the laws of supply and demand.
Take a look at the “Market Action Index” (second chart) here:
It looks like prices are still going down. This is actually a good thing in the long run.
Prices are going down compared to what?
I think there was talk on this site on some other thread about looking at inventory in terms of “months of supply.” Has anyone looked at how a month of supply metric has been trending. The macro-economic outlook continues to deteriorate. There is an anticipated surge in people re-entrants to the job market as extended unemployment benefits end, likely to push the official unemployment rate back up to 10.5%. The ECRI, supposedly a good leading indicator of downturns has dropped massively. This summer should confirm if any actual recovery took place, or if all we’ve seen is the result of massive (and unsustainable) government interventions.
I now suspect the federal and state tax credits had a bigger impact in SF than either I or the CW believed
Possible. I have never agreed with the so called “common wisdom” that the tax credits were immaterial to SF. I believe that the tax credits helped prop up the cheapest segment of the market, and the cheapest segment of the market helps to hold up the middle and high end segments.
All that said, another possible explanation for our chart is that the “green shoots!” mantra has been progressively eroded. not long ago IMO a lot of people believed the fantasy that the economy was really getting significantly better, that we were at the end of recession, and that we could have a “V” shaped recovery. Stocks up 70% in a year and all that.
the last few months have given the green shoots crowd reason to pause, they are finally starting to realize that this is going to be a long drawn out process.
we had a fun time with the bear market rally as the various governments took over the liabilities of the private sector. But now the bill is starting to come due and the indigestion starts to set in. The debt was not cleared, it was transferred to the taxpayer. it now sits there like a disgusting infected boil.
we didn’t fix the economy, we papered over the problems and actually increased many of the structural problems in the economy.
people buy less housing in uncertain times. we have re-entered uncertain times.
on a side note: don’t be surprised going forward if we see new overt or covert govt housing support. our fearless leaders have hitched their horse to the “support housing at all costs” wagon.
I count 1759 active MLS listings of residential units as of a minute or two ago. I had to go back to Feb 23rd to find 1761 sales. So if the pace of sales keeps up, we have roughly 4 months worth of inventory.
So inventory is high – but don’t hold your breath for price capitulation by sellers any time soon.
Meanwhile, I’ll repeat that tax credits had little to no effect in SF. The stock market holds a much tighter correlation IMHO – albeit not a simple correlation.
Look at 2009 – stock market plunges in March. Yet that’s the ’09 peak of inventory. That looks to me like sellers thought it was the worst possible time to sell. Inventory should have sky rocketed – after all, from Jan-June ’09 there were “only” 1625 residential sales in SF vs. 2180 for the same time period this year. So how could inventory drop when sales were low? And now increase when sales are up by 1/3???
Answer – sellers rightly feel now is a better time to sell. The stock market off the bottom & interest rates at record lows and sure enough there are 1/3 more sales than last year. The problem is that lots of Sellers have made the same decision at the same time to sell now.
Meanwhile, I’ve over heard more than one agent say “there is no inventory” and more than one buyer say “there’s nothing worth looking at on the market”. Since this chart says otherwise it means sellers haven’t come down all that much in price. We’ve got a bit of a stand off – and with “only” 4 months of inventory the stand off could last a while.
But…. what’s to come this summer?
It’s hard to pull a listing when interest rates are so low. But summer is traditionally slow. So we might actually see our first summer of flat rather than declining listings. I highly doubt we will see any more increases. Whoever thought about putting their home on the market and doesn’t “need” has already done it.
And what happens after that? I think it will depend on the stock market – which to me is an indicator of people’s perception of the economy – especially SFers. If it crashes, that’s going to be bad for SF prices and sales. If there’s another rally – I think more buyers will buy. If it’s relatively flat – we’ll have a continued stand off.
As mentioned above, now is considered a better time to sell than the last few years so more folks are putting their places on the market. I do think that the SFH owners have been sitting on the sidelines for a while waiting for something like this which might account for the increase in SFH’s compared to condo’s (which have seen more price cuts).
It looks pretty clear that we’re long past the point where buyers and sellers were at a “stand-off.” Almost 40% of active inventory has at least one reduction. 14% (and climbing) of active inventory is an REO or short sale. Inventory is rising and sales are slowing. I’m sure it is true that buyers are saying “there’s nothing worth looking at on the market” — but that is just a different way of saying “I’m not buying at these prices.” And since nobody else is buying either, sellers have to reduce prices. So that is what is happening. The line agents feed to each other with knowing nods that “there is no inventory” is utter malarkey. Offer something at a 2002 or 2003 price level and it sells quickly.
Ex SF-er got it right. Scads of free money from the government gave those buyers a push for the last 12-18 months, but that’s gone now. The only available buyer push left is lower prices, so that’s what we’re seeing and will continue to see. The law of supply and demand is awfully powerful.
Meanwhile, I’ve over heard more than one agent say “there is no inventory” and more than one buyer say “there’s nothing worth looking at on the market”.
Isn’t that just a translation for “prices are too high”?
FWIW, agree with ex SF-er that the tax credits definitely had an effect in SF, the indirect knock-on effect that he pointed out.
We still have plenty of overt government support by government-subsidized loans and the Fed propping up banks. Some of this used to be covert but is well known now. Perhaps the Fed is taking further covert actions now too.
Great time to start shopping around. Find a few decent places, keep them on the backburner and come back in 6 months to bid on whatever is left.
“There is an anticipated surge in people re-entrants to the job market as extended unemployment benefits end, likely to push the official unemployment rate back up to 10.5%.”
Yes, because unemployment is so high because of those pesky unemployment checks.
I agree that the official unemployment rate will likely go down, but only because unemployed people become “discouraged,” and, thus, fall off the statistical base.
We are only 6 properties from an all-time high for SocketSite. That’s scary.
The ratio of listed inventory at the end of June to listed June sales (“months of inventory”) over the past four years:
We’ll know the ratio for 2010 soon enough and wouldn’t discount the impact of tax credits shifting sales/closings in the San Francisco market.
Keep in mind sales volume typically starts declining in July.
“Great time to start shopping around. Find a few decent places, keep them on the backburner and come back in 6 months to bid on whatever is left.”
it looks to me like inventory will be significantly higher in 6 months than it is now, unless pricess take a dramatic plunge in that timeframe.
Prices will be lower in 6 months than now for sure.
precisely, and whatever will be stale will have a really tough competition from the new inventory.
Time to down the shadow inventory on the market. Let’s see if the numbers keep zooming up in July/August/September.
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