CFAH

San Francisco Listed Housing Inventory: 7/12/10 (www.SocketSite.com)
Inventory of Active listed single-family homes, condos, and TICs in San Francisco has continued to climb over the past two weeks having increased 1% versus an average increase of 2.4% for the same two weeks over the past four years.
Current inventory levels are now up 15% on a year-over-year basis and up 22% versus the average of the past four years (up 25% if you exclude 2009) and up 40% as compared to an average of 2006 and 2007.
The inventory of single-family homes for sale in San Francisco is up 19% on a year-over-year basis versus a 12% 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demand was increasing faster than new supply although the converse is not necessarily true as listings can simply be withdrawn.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 (88) or seeking a short sale (164) is holding at 14%.
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: 6/28/10 [SocketSite]
Will Pent-Up Demand Outstrip Pent-Up Supply? [SocketSite]

Comments from Plugged-In Readers

  1. Posted by lol

    That’s consistent with my visit of open houses from yesterday. In one condo, a Realtor’s first question to me was “and what do you think about the price?”
    I was about to say: “well, overpriced”. But at 2 months+ doing open houses each and every sunday, I figured she knew that already.
    Lower them and you will sell.

  2. Posted by badlydrawnbear

    Welcome to the next leg down.

  3. Posted by Q

    Last week I wondered when the record would be broken. We now have our answer. Highest listings in the history of SocketSite.

  4. Posted by Denis

    I’ve said this in other threads, but an unusual number of homes have been dumped on the market during the summer, which, as we all, know is one of the slowest times of the year. I’m not sure what the rationale is behind this. Are realtors and sellers expecting a flood of new inventory this fall and are desperately trying to stay ahead? The stock market has been predictably unstable which I still feel has frozen up the top end of the market. Look at the 2+ million dollar listings: of 158 SFRs and condos in that range on the mls, only 12.6% are in some stage of contract. That’s just 20 properties.

  5. Posted by rr

    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.
    So, basically, withdrawn listings don’t count as a decrease in supply. If that is true, why do re-listed properties, which would be counted in the chart above, count as an increase in supply?
    If demand is increasing quickly, but the only new listings are from the existing inventory/supply of withdrawn listings (which we’ve already not excluded from supply when they were withdrawn, and, thus, cannot recount them as supply), demand would be increasing and supply would not, making the sentence I quoted from the summary incorrect. (And less extreme cases can also cause increased inventory with demand rising faster than supply, too)
    Basically, either withdrawn listings decrease supply and relists increase, or both of them don’t change supply. To make one affect supply and the other not is intellectually dishonest.

  6. Posted by badlydrawnbear

    “… an unusual number of homes have been dumped on the market during the summer…”
    Could the cause possibly be related to the massive wave of mortgage resets/recasts as predicted by the Credit Suisse chart that was published in 2007 (and updated several times since then)?
    http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html
    This wave of inventory shouldn’t be a surprise as the +70% of creative mortgage owners in CA suddenly have to pay the piper and the double digit annual appreciation that they planned on to get them out from under the massive debt the took on with ‘stated income’, ‘low doc/no doc’, NINJA, I/O, Option ARM loans didn’t appear like their mortgage broker/real estate agented promised them?

  7. Posted by lyqwyd

    @rr
    “withdrawn listings don’t count as a decrease in supply.”
    They do: if a listing is withdrawn, the count of available properties goes down.
    What they are saying is that if demand were growing faster than supply, inventory would be dropping, while on the other hand dropping inventory does not necessarily mean growing demand, as inventory can drop for reasons other than growing demand.

  8. Posted by A.T.

    Here is some pretty comprehensive historical data I happened across — cannot vouch for its accuracy, but the site operator sure seems to have a nice-sized real estate practice.
    http://www.andrewlamont.com/Nav.aspx/Page=%2fPageManager%2fDefault.aspx%2fPageID%3d1953256

  9. Posted by anon

    Now lets see if prices will follow.

  10. Posted by Snowball

    Zip Realty’s website shows 11,470 Miami Florida listings. San Francisco population 808,960 (July 2008), Miami population 373,984 (2009 estimate).
    Disclosure: My wife and I left Oakland (Rockridge)June 2007 because we felt housing prices were unsustainable. While prices have declined in San Francisco, they haven’t declined as much as we expected. It is possible the lack of significant inventory will keep prices high.
    Snowball

  11. Posted by marko1332

    “Now lets see if prices will follow.”
    The value of a commodity is inversely related to supply and directly related to demand.
    Prices will follow, wonder how many will panic and put their house on the market when they realize prices are heading down? The cracks are widening.

  12. Posted by Smiling Millionaire

    Back to economics 101 to learn about the direct relationship between supply and demand.

  13. Posted by justme

    I’m not sure what the rationale is behind this.

    There might be a whiff of desperation in the wind.
    Re: Miami, I don’t think a direct comparison is going to be very illustrative. Florida, and Miami in particular, has been hit harder than SF by the housing bust. I’ve heard some stories out of South Florida that were just appalling. The Bay Area has nowhere near the problems they do.
    Of course, pricing is likely to reflect this too. How many of those Miami listings do you think are asking $1k a foot? The first page of zip’s shows homes in the $60k-$400k range, $50-$150 a foot. Just a bit different than here.
    So, yeah. Inventory is still tighter here than at mortgage default ground zero. Surprise, surprise. It’s also a lot higher than it has been here, and we can probably expect to see some further adjustments in prices because of it. 20% above average strikes me as “significant.” I don’t expect to see Miami prices any time soon, but I don’t suppose there’s much confusion as to which direction the wind is blowing.

  14. Posted by sanfrantim

    So the consensus here is that the CSI price index for SF will start heading south again? It had been heading pretty sharply upward lately.

  15. Posted by A.T.

    sanfrantim, I can’t speak to the consensus, but I have two cents to chip in. CSI is heavily weighted to lower-end places, by SF standards, even for the “top tier.” The market for under-$750k, and especially under-$500k, was really lit up from about June 2009 until a month or two ago by all the tax breaks. It was basically back to no-money-down for a huge percentage of sales, so another $50,000 on the price really did not matter that much. The various moratoria on foreclosures and HAMP efforts also kept people in their places, even if they were not paying, keeping supply off the market. Those are also over. The big stock market run-up certainly helped, and that is also over (it appears).
    o yeah, I think CSI did rise because of these largely artificial stimuli, and since those are gone, CSI will start heading south again in a few months for the SF MSA, but not necessarily for the broader trends more significantly affecting SF proper. I don’t think SF prices ever really stopped their fall, except perhaps at the very low end, and with the cushioning now gone the SF price decline will just pick up steam. Loan re-casts, weak stock market, poor economy (particularly re employment and wages), people cutting losses, etc. are all having an effect. We do have really low rates, although loans are not easy to get once you hit jumbo territory. Is there anything else material cutting the other direction? I can’t think of anything.

  16. Posted by anonymous

    ” ..ever really stopped their fall”
    The numbers don’t look like that YoY for SF. Take 875K sales and up. Meaning maxed out 20% down on superconforming 729.3K, and up.
    SFRs 1/1/10 – 7/12/10: 443 sales, 3 br 2.5Ba 1800 ft 1.31M median
    SFRs 1/1/09 – 7/12/09: 315 sales, 3 br 2.5ba 1862 sq ft 1.3M median
    So nearly 41% more sales in the top range, a very San Francisco-centric range, and higher median values.
    Per the MLS the YoY looks like a price tick up, and a volume spike.

  17. Posted by eddy

    There are definitely more people that need/want to sell their home. The increase in summer sales seems to be from people looking to get an early look, but I think many of these homes were coming regardless. Prices will drop / follow. They always do. I’m just happy to see a more healthy market. Buyers have lots of choices and this is good. The chart only goes to 2006 which is basically around the time SS was founded to highlight these market trends. Supply has been markedly low and demand was supporting this as well. I’d be curious to see how these inventory volumes of SFHs compares to the prior 10 years when the markets resembled a more normal supply/demand curve than what we’ve seen in the past 6. It’s all relatative, IMO.
    But Buyers are out there and the best properties are selling, and developers / flippers are being opportunistic. A little SFH project on Clay just sold for 20%+ over asking. So the market isn’t dead, but this is not a great time to be on the market and historically, sellers waited until peak seasons to list their home. I expect the inventory will continue to rise.

  18. Posted by eddy

    @anonymous, good stats. Thanks.

  19. Posted by HappyRenter

    @A.T.
    Don’t forget that the CSI deals with prices at the time of acquisition, not resale.

  20. Posted by A.T.

    anonymous (aka fluj), the uptick in volume at the higher end YOY is certainly not surprising since 2009 had a freeze in the early part of the year (I’m surprised the increase in sales was so modest, truth be told). I wouldn’t bet on that continuing through the second half. But you know as well as I do that you can’t compare “medians” that way and get anything useful. Prices could be down across the board 25% and you could get that exact same result.

  21. Posted by anon

    “So the consensus here is that the CSI price index for SF will start heading south again? It had been heading pretty sharply upward lately.”
    Go Econ101. One possible explanation is that sellers saw sales prices trending up, or increase in demand, and decided to finally cash out.

  22. Posted by pacific

    In addition to the option-ARM fiasco that may be coming, don’t forget that capital gains tax goes up at the end of this year, so that could be motivating long-time owners to put their properties up for sale.

  23. Posted by anonee

    @pacific,
    where do you think cap gains tax levels going? from 15% to 20% or all the way back to 28%?

  24. Posted by triplemao

    “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.”
    Editor – would breaking up that sentence make it clearer?
    “Inventory shrinks when demand outstrips supply. But inventory doesn’t necessarily grow if supply outstrips demand, because listings can simply be withdrawn.”

  25. Posted by pacific

    I think initially we’re going to 20% for 2011, but I could see it going to 28% in the following years if the Dems stay in power in Congress.

  26. Posted by ex SF-er

    As I’ve said for some time, I think that predicting future price trends is nearly impossible in this climate.
    There is too much governmental intervention to try to use “econ 101”.
    for example, I still think it likely we’ll see First Time Homeowner Credit part III, and I think it will be expanded yet again. (each stimulus needs to be progressively bigger to have an effect, this is common in deleveraging periods)
    We may also see other housing support such as a change in tax policy or perhaps a return of Fed purchases of Mortgage Backed Securities and Treasuries as well as more covert housing support.
    One must always factor the political winds into any future price forecast. At this time housing is still a favored entity. to know the future of our markets one must know the minds of Obama, Geithner, Summers, Bernanke, and Hu.
    obviously, SF/national RE faces serious headwinds, and will for years to go. thus, it is highly unlikely we’ll see meaningful increase in valuations any time soon. But I’m not willing to call NOMINAL price drops given governmental intervention. We could very well slog around here for many years or just grind lower over many years instead of an obvious drop in prices.
    as many are finally figuring out, the mid 2000’s were an anomaly never seen before in contemporary times, a worldwide credit bubble of epic proportions. That was not “normal” and thus “getting back to normal” does not mean going back to the hoo-haw of 2006. The governments of the world continue to try to reblow a credit bubble with all their might, and they may be successful one more time although that will also end in disaster if they succeed.
    we are 2+ years into this crisis, and our leaders (political and financial) have only covered the problem over in accounting gimmicks and pretending. Our structural economic problems are still present and they are bigger in many ways today than they were in 2008.

  27. Posted by anon

    Large, 300+ sample sets with a targeted range is the best use of median in real estate.

  28. Posted by J

    ^ Not this tired, pseudo math again!
    Median is nothing more than an indication of mix. It may or may not move in the same direction as the overall market. Mean is also misleading in terms of actual values for obvious reasons.

  29. Posted by A.T.

    fluj/anonymous/anon, as J points out, your median pseudo-stats largely reflect mix. In particular, sales at the very high end just abut froze in early 2009, so there are many more in the mix in the 2010 comparison. Also, your “targeted range” further distorts things because it misses properties moving from one “range” to another. In your example, if a home sold for $900,000 in 2009 it would show up in your 2009 stat, but if the same place sold for $750,000 in 2010 it would not appear in your 2010 stat. Surprise — prices haven’t changed! Nice try, but you miss by a mile on this one.

  30. Posted by anonymous

    I am neither of those posters. But it’s understood that you do not want to see or use median stats in this forum, moderator.

  31. Posted by anonymous

    Last year 900. This year 750. Hypothetical example used to dismiss, quite rudely. “nice try” is right.

  32. Posted by J

    If you are going to make fragmented, eccentric posts, at least make them into a haiku.

  33. Posted by anonymous

    hard to follow j?
    bears moderate every
    thread on this site now

  34. Posted by hangemhi

    anonymous pick a name already so that you aren’t accused of being fluj/annon
    as for this chart – in 2 of the years depicted listings went up during this time period, in 2 they went down. why haven’t the uber bears pointed this out when describing this as an unusual period of new listings hitting the market? afterall it was 50/50 that listings might go up this week, right?
    the fact is BOTH sales AND listings are up over last year. Clearly listings are outpacing sales. but the stabbed at but still unanswered questions are “why so many listings” and “why now”? Answer – interest rates are so bloody low that it feels foolish to take your home off the market when you normally would (since everyone knows summer is slow). afterall, that buyer could just be around the corner so why de-list and wait until Sept? And why hold off on a new listing now and wait until Sept?
    In the next month or two – if interest rates keep dropping – that nagging sense of “it just has to sell” or “what if I miss that buyer” will remain and listings numbers will stay unusually high. exSFer is right – govt intervention seems to see no bounds. what happens if we get to 3% interest rates??????
    lastly – as for this being a listings record – bah humbug. This is ONLY 4.5 years of data. it also doesn’t reflect something i suspect – that in the go-go days new construction projects did not use the MLS at all, or only put up a few listings in 300+/- unit buildings. Today – there are fewer of those projects, and those around are using the MLS far more than ever. That alone could easily explain a couple hundred or more listings. yeah, yeah – that’s an opinion i won’t be doing fact checking on. But it would serve those of you well who really care to know the true nature of our market to consider that there’s more here than meets the eye.

  35. Posted by J

    “there are fewer of those projects, and those around are using the MLS far more than ever.”
    How about Blu, One Rincon, Millenium tower, or One Hawthorne to name a few? It sucks that we can’t include their inventory in these statistics, but it would seem they still have a lot of inventory. Oh yeah, don’t forget Cubix.
    Another distortion: “our listed inventory count does not include listings in any stage of contract”. Doesn’t this include all the short sales that are waiting for approval from the lenders. It seems to me that many of those are highly likely to return to the market.

  36. Posted by tipster

    @hangemhi:
    it also doesn’t reflect something i suspect – that in the go-go days new construction projects did not use the MLS at all, or only put up a few listings in 300+/- unit buildings.
    But those multiple units didn’t represent individual parties competing against one another for the ever decreasing attention of fewer and fewer buyers. These do.
    And if One Rincon didn’t sell a unit this month, well, they could just sell it next month for 1% more. So they certainly were not going to deal just because they had inventory. Prices were increasing faster than interest rates, so they had no incentive to do anything but sit on the inventory and let it appreciate once their cash flow needs were met. And that was about the listed inventory.
    So that argument doesn’t hold.

  37. Posted by lyqwyd

    @hangemhi
    “lastly – as for this being a listings record – bah humbug. This is ONLY 4.5 years of data”
    If you go further back in time it’s likely that the inventory right now will seem even more exceptional. I was a real estate agent from 2002-2006, and before 2006 inventory was even tighter, with properties taking less than a month to go in contract, on average. There were very few available properties, especially during the summer.
    The peak in inventory right now is very unusual, the summer was always a very slow time, with very few properties, many of my coworkers took the summer off for vacation because there were so few buyers, and so few properties to show it wasn’t worth the time.

  38. Posted by ex SF-er

    “why so many listings” and “why now”? Answer – interest rates are so bloody low that it feels foolish to take your home off the market when you normally would (since everyone knows summer is slow).
    I think this is one aspect of this. another could be change of perspective. In the past if you tried to sell and didn’t get a bite, you’d just take your property off the market and relist it when things were a little better. I think more sellers have the idea (erroneous or not) that things might NOT be better anytime soon, and thus if they want/need to sell they better just keep it listed.
    another possibility is that more people NEED to sell compared to last year. some may have lost their job or taken a pay cut, some may be nearing the recast/reset date on their adjustable mortgage, some may need to move out of state, etc… this is all more problematic as the recession wears on. recessions in general cause selling pressure.
    lastly – as for this being a listings record – bah humbug. This is ONLY 4.5 years of data
    I agree. It’d be interesting to compare this data to non-boom years like 1997 or 2002-2004.
    new construction projects did not use the MLS at all, or only put up a few listings in 300+/- unit buildings. Today – there are fewer of those projects, and those around are using the MLS far more than ever
    I agree that this needs to be taken into consideration. It would be interesting to work through the raw data to see what (and how strong an) effect this has.

  39. Posted by Robl

    Here’s my 2 cents. The city of SF, similar to NY (Which is now finally taking a RE beating-but still overpriced) has been fairly resilient compared to the rest of Calif/country. I believe this is mostly due to 3 factors. 1. The wealth being produced by many of the tech and start up Co’s. 2. It’s a great place to live (Duh). 3.The parent/family reserve. This is rarely discussed but I would bet that many of the buysers here have access to other funds (Family). A friend of mine bought into a 6 unit TIC over 8 years ago (luckily sold out early- Nightmare). I was curious to see how the other members afforded the place since 4 of them were either unemployed/underemployed or working very part time. Each of them except for maybe 2 received parental assistance/ (Downpayment and mortage payments) from parents. Not saying this is the norm, but I would bet that it plays a part.
    However, that boat can only sail so long. When that well starts drying up and I’m sure it has for many. You’ll start seeing more places on the market. As far as the continued increase in inventory, I’m sure many of the places on the market have been listed before and then delisted, then listed again. These places will eventually remain on the market as access to outside funds begins to drain and borrowing costs remain cheap.

  40. Posted by A.T.

    fluj/anonymous, here is a nice 2009-2010 apple for you to compare against your medians:
    http://www.redfin.com/CA/San-Francisco/890-Chestnut-St-94133/home/21966287
    Down 14% in the last year for what appears to be a very nice place in a great area. It sold pretty quickly in ’09, and while they tried to get out in 2010 with just a small loss after selling costs, it couldn’t be done. I’ve been saying the higher-end places, whose prices are supported neither by fundamentals nor government efforts (as much), will continue to lead the way down in SF.

  41. Posted by Snowball

    @Just me,
    I don’t mean to compare Miami to SF in any manner other than to illustrate how much more inventory sits on the market in Miami. Adjusted for population that’s ten times the inventory. If you lived here you would understand the difference in topography and zoning make for very different levels of potential inventory. In SF there is room for limited new construction, zoning is long and arduous, and neighborhood groups have political influence. In Miami, those factors are limited or nonexistent.
    Because SF prices frequently exceed $1K/sqft., I expected residential prices to decline as much as they have here in Miami. They have not. Therefore, my simple explanation is lack of inventory.
    Snowball

  42. Posted by John

    I remember in 07 and 08 (peak of the bubble), SS was very into including the new constructions in the inventory number.
    Can we see the total inventory number, with new constructions included?

  43. Posted by Pumpkin Patch

    What is interesting is that the inventory is actually slightly different. For the most part, flippers are out of the market and many more homes for sale need a little work. Realtors used to tell potential sellers to remodel the kitchen/baths if they want to have a much higher selling price. From the looks of the homes on the market today, I wonder if that advice is given. And, there is a cost to the buyer when it is not.

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