Inventory of listed single-family homes, condos, and TICs in San Francisco fell 14.1% over the past two weeks to 1,408 active listings. On average, inventory has fallen 14.2% during the same two weeks over the past four years as end of year listing activity slows to a crawl and unsold listings are withdrawn from the MLS.
Current listed inventory remains up 25% on a year-over-year basis, up 20% versus the average of the past four years, and up 41% as compared to an average of 2006 and 2007 while listed sales this past November (325) were off by 17% year-over-year.
The inventory of single-family homes for sale in San Francisco is up 41% on a year-over-year basis at 577 while listed condo inventory is up 15% at 831.
Almost half (46%) of all active listings in San Francisco have undergone at least one price reduction while the percentage of active listings that are either already bank owned (100) or seeking a short sale (185) has ticked up to 20%, down 7% on an absolute basis 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 Listed San Francisco Inventory Report: 11/29/10 [SocketSite]
∙ Will Pent-Up Demand Outstrip Pent-Up Supply? [SocketSite]
Inventory falling like the leaves of the tree in front of my house. Freaking beautiful $#@%* dead leaves. Swiping them twice a day now.
Question for all of the experts on here: I’m looking to buy and obviously, inventory is completely dead at this time of year. When can I expect lots of new homes to start hitting the market…February? March?
Gigi, Hint: look at the LEFT side of the chart above. Because this year tracked 2008 pretty closely, I’d use the early part of 2009 as your guide.
When can I expect lots of new homes to start hitting the market…February? March?
After the Super Bowl.
One often sees listings come earlier than the Super Bowl if a market is weak and thus people like me use an early Spring surge in inventory to mean that the market is under pressure.
but regardless… you’ll have new listings by the Super Bowl.
=====
as for this chart… looks like the market is no worse than 2008 by this chart. housing has clearly been weakening over the 2nd half of this year…
but I’ve heard anecdotal stories of a small surge in buying around the country due to people trying to beat the rising mortgage rates. I haven’t seen good hard data to that effect yet though.
IMO the mortgage rate story is the one to watch now… can the Fed/Govt get those mortgage rates back down?
if not, housing will be under severe pressure. In these insane days 5-6% mortgages are considered “expensive”.
“looks like the market is no worse than 2008 by this chart.” How you get that?
Here’s what I see: inventory was way up. Sales were way down (32% according to redfin). So the numbers falling represent mostly withdrawn listings because the slope of 2010 is much steeper than it was in 2009. With sales down, it should be less steep.
So what you see here are massive numbers of dejected sellers pulling their homes off the market in a rage. They cannot afford to pay for a property they do not want, yet they are being forced to do just that for two more months before they can even LIST the property again, and then another couple of months before they can unload it onto the next sucker who will be holding it for the next leg down. They are going to be desperate this winter.
This is a much worse situation than we’ve ever seen because the inventory levels were so high.
Also, I’ve started to see a spike in craigslist rental listings for condos purchased after 2004 at absolutely insane asking rents. $1000 or more over market. The same layout of the same condo is listed for $X and has been sitting there for weeks, they list theirs for $X+1000 or more. Why? Because they just had a meeting with a realtor who told them their home cannot be sold for the balance, sorry, and the only option is to rent it. So they try to list it for a price that won’t cause them more of a monthly loss than they think they can take in spite of the fact that they will never get that price.
People who needed to sell held out for the past two or three years thinking the market would “come back”. Now it’s apparent that isn’t going to happen and the stampede for the exits is beginning. For a lot of people, the realization that their mortgage is going to get foreclosed is hitting them right in the forehead.
Meanwhile, mortgage rates continue to shoot up. It isn’t as though 5-6% is expensive as much as it is that 5-6% means people qualify for a lot less and so the same buyers have less money to spend. That causes prices to decline. If all your buyers have 30% less money to spend, you drop your prices by 30% or lose business. Here, the supply is INcreasing, so prices have to fall by more than interest rates have increased. Going from 4% to 5% is a 25% increase, and that’s 25% less buyers have to spend
So this winter should see a pretty big drop. Of course, the winter following 2008 had a pretty decent drop too.
I think tipster’s probably got it about right on the sellers and potential sellers, but we can all debate how desperate 2003-2008 buyers are to unload their financial albatross.
But the key undisputed fact in this post is “listed sales this past November (325) were off by 17% year-over-year.” Demand continues to be terribly light, even compared to recent years which already had slack demand. And this is despite recent record-low borrowing costs. With few buyers and lots of sellers, prices fall. The pressures on owners/sellers to stanch the bleeding that tipster talks about only adds to it.
Look for even more short sales in 2011 as the crown tipster discusses throws in the towel, and look for long-term owners (who can still sell and do OK) to continue to drive the market prices down as they have now realized they will only do worse by holding on.
People who needed to sell held out for the past two or three years thinking the market would “come back”.
Needed to sell — -> held out?
Your conclusions continue to be interior monologues perhaps best left unwritten.
I hope you guys are right. What I see is a 3-tier market:
1 – people who bought 10 or more years ago with plenty of wiggle room to move their property. This is where most of the good deals are for now.
2 – people with no room for reduction, or simply under water, stuck indefinitely. I have seen a few when I was hunting for a place.
3 – the lucky few sellers in very desirable locations that can move their property at a good price
#1 and #3 are making the market but in pretty low volume. #2 is not moving but could be the key factor if the market doesn’t lift them back up to positive equity. There are so many months one can wait losing a few Ks each-and-every-month compared to rental.
I love this market more and more.
“long-term owners (who can still sell and do OK) to continue to drive the market prices down as they have now realized they will only do worse by holding on”
I doubt it. Most long term owners will hold in that situation.
I think lol is right on with that assessment.
“Most long term owners will hold in that situation.”
Most certainly will. But many — a growing number — will sell. Many will just hold forever, true. But many investors look at two factors, rent stream vs. sale proceeds and potential for appreciation (in home price or rents). On the first factor alone, holding just about any property in SF made no financial sense in the last 10 years as you could sell for far more than the future rental profits. But it made sense to continue to hold anyway because of perceived future appreciation. Now that latter value is gone, and the awareness it is gone is becoming the rule. With that out of the equation, there is no financial justification to holding. We’ll continue to see price discounting led by long-term owners getting out while the gettin’ is good. Once selling prices are back in line with rents (and they will get there), it will again make sense to hold onto properties.
When you start talking about driving the market down I took it as implied that it’s a significant number. And you’re using both “most” and “many” here. “Many,” I doubt. More like “some” from the group, which is “most.” And “some” is not enough to do what you said, which was “long-term owners (who can still sell and do OK) to continue to drive the market prices down.” IMO.
The point lol made is right, though. That’s where the deals are. However, and this is important and I baked in that lol knows this, these are by and large off-market deals you’ll need to either do your own legwork on, or have someone else bring to you gift wrapped. They’re not a significant portion of the market as a whole. Logically they wouldn’t be. Why would a large number of that demographic sell into a weaker market when they can choose to wait indefinitely?
Here is a months of inventory update. November’s trailing 3 months inventory of 5.6 months is extremely high compared to 3.6 in November ’07 and 3.5 in November ’09. It is exactly the same as in November ’08, but that winter ’08-’09 selling season does not look like the rest of the years except for its March-April overall peak.
Columns are month, MLS inventory as reported by SocketSite closest to mid-month, MLS sales as reported on rereport.com, months of inventory, and trailing 3 months of inventory. November often tends to be a relative peak for trailing 3 months of inventory, before the overall peak of trailing 3 months inventory which tends to be in March-April.
Nov-10 1834 326 5.6 5.4
Oct-10 1936 372 5.2 5.0
Sep-10 1797 341 5.3 4.8
Aug-10 1594 360 4.4 4.3
Jul-10 1799 385 4.7 3.9
Jun-10 1697 446 3.8 3.9
May-10 1599 480 3.3 3.8
Apr-10 1491 317 4.7 4.2
Mar-10 1361 414 3.3 3.9
Feb-10 1116 247 4.5 3.8
Jan-10 909.5 226 4.0 3.4
Dec-09 1131 412 2.7 3.2
Nov-09 1346 395 3.4 3.5
Oct-09 1460 435 3.4 3.3
Sep-09 1448 392 3.7 3.3
Aug-09 1352 495 2.7 3.5
Jul-09 1569 452 3.5 4.3
Jun-09 1630 389 4.2 5.1
May-09 1685 328 5.1 6.0
Apr-09 1622 277 5.9 6.9
Mar-09 1648 238 6.9 7.7
Feb-09 1500 192 7.8 7.2
Jan-09 1189 141 8.4 7.1
Dec-08 1405 265 5.3 5.8
Nov-08 1788 241 7.4 5.6
Oct-08 1789 381 4.7 4.3
Sep-08 1544 332 4.7 3.8
Aug-08 1388 393 3.5 3.4
Jul-08 1470 478 3.1 3.2
Jun-08 1496 426 3.5 3.4
May-08 1491 478 3.1 3.6
Apr-08 1381 382 3.6 3.9
Mar-08 1329 318 4.2 4.3
Feb-08 1159 292 4.0 4.0
Jan-08 1053 215 4.9 3.8
Dec-07 1077 355 3.0 3.3
Nov-07 1393 408 3.4 3.6
Oct-07 1532 452 3.4 3.3
Sep-07 1408 346 4.1 3.0
Aug-07 1187 464 2.6 2.4
Jul-07 1157 470 2.5 2.3
Well, I think one thing about long term owners is that circumstances may dictate selling now. Perhaps they are retiring or simply moving for work. If this were perceived only as a dip, then many of those owners would hold on, either delaying their move, or renting the property for an interim period. IF the current depressed condition is perceived as status quo at best, then those same owners would be more inclined to simply sell now and realize their profits. I THINK that’s what LOL is saying.
What I have seen with one specific long term owner is that he was selling to buy something else in the city. In that case, even if he got 20% less than he would have 2 years ago, he is still fine as he makes it up on the buy side. The buyer got a decent price and everyone’s happy.
At the other end of the spectrum, I already talked about one guy I saw underwater in a group-loan TIC of underwater co-tenants. No easy way out and a lot of pain. Too bad, I loved his pad. I passed on it without submitting any lowball offer after I learned he is a manager in one of the big techs. The property is going rental. He’ll hold for as long as his ego allows it, as his checkbook can withstand almost anything. You won’t see this in Modesto where people have a quick fuse.
SF market is very inefficient that way.
>He’ll hold for as long as his ego allows it, as his checkbook can withstand almost anything. You won’t see this in Modesto where people have a quick fuse.
i believe the deep pockets and large egos in SF will prevent any price crash. it’ll be a slow market for many years.
I don’t like to draw any conclusions from one month’s of data myself, but here is Nov 10 versus Nov 09 pricing data for both SFR and Condos. Pricing looks to continue to be flat (+/- 5%) for SFR with both in-contract and closed sales. # closed sales are down in November YoY 17%, but in-contract are up about the same. Condos do show more pricing weakness with in-contract prices down and I believe lead by continuing weakness in SOMA condo tower projects with their larger % of distressed properties in this sub-market. We’ll see how the full Q4 data looks, but I definitely sense some softening in the market. I do love the hyperbole from tipster: “So what you see here are ***massive*** numbers of dejected sellers pulling their homes off the market in a ***rage***.” I guess we should look out for some seller’s going all postal on their RE agents…
SFR: In-Contract Sold
Med. # Med. #
11/10 729,000 215 781,750 172
11/09 749,000 177 796,444 206
% Chg -2.67% 21.47% -1.84% -16.50%
Condo: In-Contract Sold
Med. # Med. #
11/10 599,000 181 687,500 134
11/09 677,500 158 676,000 193
% Chg -11.59% 14.56% 1.70% -30.57%
I have been in the market for a SFH or 2 unit in San Francisco and have watched as many houses just haven’t sold. What tipster says is exactly right. Every so often an attractive house at a “bargain” price would be listed and trigger a quick close and multiple offer scenario but for the most part unless you were priced *way* below market and had very attractive marketing your house sat.
The majority of places got pulled off the market and most are expected to go back on in the spring with fingers crossed. It’s true about long term owners willing to accept a big cut – I have been offered them in private negotiations (“we’ll take X”). In many cases they have moved away or retired out in the countryside and have plenty of equity cushion to cut. I have also seen plenty of places where the owners are down $250k out of the box and still couldn’t get it sold. Not a good place to be in.
Here are a bit more data on current inventory:
http://www.altosresearch.com/paragon/latest/paragon_market_update_zip_based_cmid_55_zipd_none.html
$/sf appear to be at a new low (at least for the 5 years covered by the charts): $459 for SFRs and $582 for condos. Inventory is well above the levels this time of year last year and in 2008, particularly for SFRs. Lots of inventory out there, but nobody’s buying.
i also believe tipster and others here have some valid observations.
in addition to rising interest rates impacting the amount of purchasing power buyers have, i still believe that buyers’ shifting perceptions of real estate and the wisdom of purchasing (now or soon or at all) is a big unknown.
most of the analysis i’m reading seems to approach the market from the sellers’ or supply side, as if it’s just a matter of what buyers can afford and how much they have to choose from. as if all potential buyers who don’t own now really want to own and that’s an unchanging, constant given. as if it’s only a matter of income levels and price vs. rent. what if it’s not? or what if perceptions about what is affordable for a given income level change?
i think inherent demand may be shifting too. in my circle of family, friends and colleagues in the bay area, i sense a shift in people’s thinking about buying at all. these are people who have been saving and have some real money available and they’re watching it continue to grow. it is becoming more difficult to part with it in an environment like this. especially when we all know families who are going through hell underwater and even walking away. some folks are starting to think that if it’s cheaper to rent and they are saving the difference then they are not throwing money away. just the opposite.
everyone has their price i suppose, but more potential buyers may decide to simply not pull the trigger at all until they see a much better deal – a deal that provides cushion for the risk of continuing price slides. talk about a potential vicious circle. or they may decide to wait until (they perceive) there is more certainty prices will not continue to slide. i don’t know – i’ve only been here 10 years – maybe sf and the bay area have so much pent up demand that mortgage affordability is the main component.
i do include myself in a shifting perception group btw. and i have the funds to buy – even without a mortgage. we’ve owned a condo for many years that we really love in phoenix. so maybe we feel less pressure to buy here. i don’t relish spending summers there though and would really love to have a place in sf or the bay area too.
but i’m beginning to wonder if it doesn’t make more sense to buy a few properties outright now in a city like phoenix. nice, rentable places in good locations that would provide a decent income, with no worries about debt and what mortgages are doing, and the chance for some appreciation later at some point. i get no tax benefits from mortgages on investment properties anyway.
i am not in the trenches. i have never owned sf real estate. i have no idea where the bottom is. i do not understand economics or derivatives or half of what satchel used to say (miss him though). i am a cs engineer so i guess i may be more anal than the average buyer about the numbers. but i am not alone. and i think – maybe – more and more people are starting to view things differently.
“i get no tax benefits from mortgages on investment properties anyway.”
what about offsetting income with interest payments? what about depreciation?
i think you may be right tho about the changing perceptions. people would be smart to ignore the impulse to buy places like minerva at even half its current price. but its a small town (real sf, that is) and several demographics want to be here.
I am special. Lady wanna date me, bro wanna be me.
“what about offsetting income with interest payments? what about depreciation?”
There are caps on that for anyone who isn’t a professional real estate investor under the guidelines. The passive income rules make the tax benefits relatively low if you make $150K or above. You might get some minimal tax benefits, but you pay way too much for way too little benefit.
Lots of good points here and rationally presented. Another factor impacting this scenario are the intra-city sellers / buyers that used to flip up to a new home. This game has stopped and a lot of homes on the market are these folks. Lack of 1 sale impacts 1 less buy. So 2 transactions in SF do not happen as a result. It’s almost impossible to get, but I’d love to see data on ‘new to SF’ buyers, and ‘SF to elsewhere’ sellers. What I’m sensing more an more is that the ‘first time buyer’ market is really dead, but it is still keeping those
In an environment where interest rates are dropping every week, and the stock market is going up every week, there is no financial incentive to buy. Waiting is FAR more profitable.
And during your wait you see price drop after price drop and/or the home you like sitting forever without selling, you have further incentive to wait.
While most of you point to sellers waiting – you forget teh building buyer pool. A couple of commenters above included.
I’m not predicting what will happen next…. if you know what the larger economy will do, exactly what interest rates will do, and what the stock market is going to do – then go ahead and predict SF real estate. Good luck with that.
agreed Eddy – another missing point from above is that many would-be Sellers WANT TO BUY. There always seems to be this slant on SS that the market at large agrees with the sentiment promoted here – ie, that prices are dropping and/or will continue to drop. That is largely not what most SF home owners think – if they did they would be aggressively pricing their homes and there would be MANY more on the market.
Instead they see what they think are great prices on other homes and so they put up their home with what they think is a reasonable price and can’t wait to sell so they can buy intra-SF or at least intra-Bay Area. The market isn’t as good as they thought, so they stay. Hardly “in a rage” at all. Just disappointed that they have to wait “a few more months” or “a few more years” as most seem to believe. Sure, there is a segment that tipster points out – the bought a new SOMA condo in 2004 crowd – and that’s why those are down 40% from peak. But there is still a large market where perceptions are not changing at any where near the pace of volume described by many above.
@A.T.: The data you referenced is for listed inventory, not sold, and also is a single snapshot in time, not an average over a month, or better yet, over a quarter. While interesting, I don’t believe it is enough data to be of significance especially as December is a month where lots of properties are taken off the market.
In any case, here are the sold and in contract $/SF prices for both SFR and Condos November 2010 versus 2009. Square footage (SF) prices have held relatively steady YOY.
SFR-In-Contract
# Avg $ Avg SF $/SF
11/10 215 1,033,405 1,794 528
11/09 177 897,125 1,619 493
% Chg 21% 15% 111% 7%
SFR-Sold
# Avg $ Avg SF $/SF
11/10 172 1,040,491 1,840 565
11/09 206 1,002,047 1,647 608
% Chg -17% 4% 12% -7%
Condo-In-Contract
# Avg $ Avg SF $/SF
11/10 181 712,049 1,152 609
11/09 158 734,761 1,222 609
% Chg 15% -3% -6% 0%
Condo-Sold
# Avg $ Avg SF $/SF
11/10 134 784,788 1,265 620
11/09 193 792,402 1,233 643
% Chg -31% -1% 3% -3%
@Skirunman, are you referring to the link A.T. posted? If so, it seems you missed the graphs below the table which show $/sf going back to 2007, and they are definitely at a low point, and have been trending downward for about a month or two, although prior to that it was fairly flat.
Yes, I saw the 3+ year chart, but I still read that as listed pricing, not sold pricing, which I usually don’t pay all that much attention to anyway. Also, my assumption (could be wrong on both points) on this data is that it is taken at a single point in time and is not a weekly or monthly or quarterly average or moving average.
Here are monthly averages for both SFR and Condos at listed prices for last 13 months through November. Listed prices are down 3-4% YOY or basically flat (+/- 5%). December and all of Q4 may tell a different story, but I don’t think the data is there yet.
SFR – Listed Price
Month # Avg $ Avg SF $/SF
Nov-10 1,014 1,168,822 1,868 557
Oct-10 1,144 1,160,303 1,862 554
Sep-10 1,151 1,100,161 1,840 527
Aug-10 997 1,030,511 1,796 512
Jul-10 1,044 1,089,871 1,848 522
Jun-10 1,035 1,128,656 1,883 528
May-10 981 1,175,065 1,911 536
Apr-10 1,034 1,142,953 1,861 529
Mar-10 914 1,160,252 1,844 528
Feb-10 782 1,143,922 1,829 526
Jan-10 692 1,268,631 1,868 583
Dec-09 684 1,290,092 1,903 574
Nov-09 811 1,309,044 1,952 580
%D-YoY 25% -11% -4% -4%
Condos – Listed Price
Month # Avg $ Avg SF $/SF
Nov-10 1,099 776,157 1,220 635
Oct-10 1,238 808,246 1,246 648
Sep-10 1,209 801,941 1,250 644
Aug-10 1,074 778,964 1,216 644
Jul-10 1,183 777,900 1,212 645
Jun-10 1,186 782,916 1,222 643
May-10 1,108 801,528 1,242 653
Apr-10 1,130 797,786 1,234 653
Mar-10 1,033 809,834 1,243 650
Feb-10 900 810,341 1,212 662
Jan-10 809 798,085 1,208 647
Dec-09 785 795,942 1,201 658
Nov-09 939 819,260 1,234 654
%D-YoY 17% -5% -1% -3%
I posted some incorrect data (spreadsheet error when copying). Here is corrected MLS data:
SFR – Sold $/SF
11/10 539
11/09 553
% Chg -3% (not -7% YOY)
Condo – Sold $/SF
11/10 620
11/09 613
% Chg 1% (not -3% YOY)
Conclusion for me is same, pricing flat YOY.
Pent up supply inched down the past two weeks. Currently, 1500 homes are in some state of foreclosure (NODs, NOTS, bank owned) in Ess Eff. This is compared to 1525 homes two weeks ago. Standard disclosures about noise in the data; information deemed reliable but not guaranteed.
While I agree that on an individual basis list price is pretty much useless, in aggregate I feel it provides useful information, especially when used in conjunction with LP/SP ratio, though I certainly agree that sold price is more useful.
For the record, I have checked and
Skirunman
is NOT the distinguished architect of a similar name. Even if he owns ski runs, he should pick a different pseudonym on a SF property like socketsite.
Here is some more info on SF foreclosures for data junkies (can’t vouch for its accuracy but I have no reason to doubt it). Apologies to EBGuy for stepping on his territory:
http://www.foreclosureradar.com/california/san-francisco-county/san-francisco-foreclosures
I don’t know this “distinguished” architect, but for the record, I have checked and
Conifer
is NOT the distinguished cone bearing evergreen of a similar name. Even if he drops his pine cones once a year, he should pick a different pseudonym on a SF property website like SS.
The distinguished architect is Andrew Skurman, and I think you should use a different name than skirunman because several readers have made the error of assuming that you are he.
Conifer is a modern synonym for my name in Old English.
You have now been unmasked, Mr Wondertree…
Conifer, you’re out of line. Skirunman has never pretended to be an architect. He obviously likes skiing though.
Anyone noticed the action on the 10-Y T-note? Interest rates are starting to go north of 5% as opposed to the low-4s just a few weeks ago. That’s gonna mess up current deals as well as future sales.
Bankrate says: Average interest rates are now at 5%. Up from 4.21%. 0.79 increase!! 0.79/4.21= 18.76%!
Someone who qualified for a million dollars a month ago can now only get $812K. All the same people who were looking a month ago are now qualified for nearly 20% less than they were then.
Just in time for the sellers to come roaring back to a market with few buyers.
Should be quite the bloodbath this winter.
LOL,
Are you the distinguished architect Frank Lolyed Wright? 🙂
No bloodbath this winter, I think, but a very nervous waiting game. The bloodbath should happen early-mid summer when the February-May hopeful sellers start being too closely acquainted with the realities of buyer’s financing shrinkage.
I am already advising a friend who’s had an offer on the back-burner to call his bank and then his realtor to work his way to a lower price. More news soon!
New Cal. law governing short sales goes into effect 1/1/11 that’s going to result in fewer lender approvals of short sales. So one avenue for clearing inventory will now also be choked off (a bit, not entirely).