S&P/Case-Shiller Index Change: May 2012 (www.SocketSite.com)
According to the May 2012 S&P/Case-Shiller Home Price Index, single-family home prices in the San Francisco MSA rose 3.9% from April to May 2012, down 38.1% from a May 2006 peak but up 0.6% year-over-year, the first year-over-year gain in eighteen (18) months.
For the broader 10-City composite (CSXR), home values rose 2.3% from April to May, down 1.2% year-over-year, down 32.9% from a June 2006 peak.

Both Composites and 17 of the 20 MSAs saw increases in annual returns in May compared to April. Boston, Charlotte and Detroit were the three cities that saw their annual returns worsen in May, with annual rates of -0.1%, +0.9% and +0.6%, respectively. Atlanta continues to be the only city posting a double-digit negative annual return with -14.5%. However, this is an improvement over the -17.0% annual decline recorded in April 2012. All 20 cities and both Composites posted positive monthly returns.

Taking a closer look at the cities, Phoenix again posted the best annual return. Average home prices in that region were up 11.5% versus May 2011. It was one of the hardest hit cities in the collapse, and prices are still more than 50% below their June 2006 peak, but the past five months have been positive for that market.

Miami and Tampa are two other Sunbelt cities that were hard-hit in the downturn, but are now showing positive annual rates of change. Boston, Charlotte and Detroit, on the other hand, saw their annual rates of return deteriorate compared to April, even though prices rose over the month of May. Las Vegas posted both a positive monthly change in May and saw an improvement in its annual return; that said, the market is still more than 60% below it August 2006 peak.

On a month-over-month basis, prices rose across all three San Francisco price tiers.
S&P/Case-Shiller Index San Francisco Price Tiers: May 2012 (www.SocketSite.com)
The bottom third (under $323,621 at the time of acquisition) rose 2.4% from April to May (down 0.3% YOY); the middle third rose 3.1% from April to May (up 1.0% YOY); and the top third (over $582,976 at the time of acquisition) rose 3.0% from April to May, up 3.0% year-over-year (versus 3.1% in April).
According to the Index, single-family home values for the bottom third of the market in the San Francisco MSA are back above May 2000 levels, down 59% from a peak in August 2006; the middle third is back to April 2002 levels, down 39% from a peak in May 2006; and the top third is back to March 2004 levels, down 23% from a peak in August 2007.
Condo values in the San Francisco MSA rose 3.4% from April ’12 to May ’12, up 1.6% year-over-year, this first year-over-year gain in twenty (20) months.
S&P/Case-Shiller Condo Price Changes: May 2012 (www.SocketSite.com)
Our standard SocketSite S&P/Case-Shiller footnote: The S&P/Case-Shiller home price indices include San Francisco, San Mateo, Marin, Contra Costa, and Alameda in the “San Francisco” index (i.e., greater MSA) and are imperfect in factoring out changes in property values due to improvements versus appreciation (although they try their best).
Home Prices Continue to Rise in May 2012 [Standard & Poor’s]
S&P/Case-Shiller San Francisco: Home/Condo Prices Show April Gains [SocketSite]

47 thoughts on “Case-Shiller San Francisco: First Year-Over-Year Gain In 18 Months”
  1. Ironically, my feeling is that the market is cooling off a bit with homes taking a few extra days to go in contract and close; and prices coming in at or below asking. Could be the realtors got a little aggressive with pricing too. Heck, the teed haze project on greenwhich just sold below asking. The world is surely coming to an end!

  2. With zynga trading in the 2s and facebook at an all time low, I can’t see who could be in a hurry to pay bubble 2.0 prices.

  3. tipster,
    I think this recovery has 2 elements:
    1 – National. Prices all over the country have gone down so much between 2007 and 2011 that buying has become more attractive. This is the overall mood, the background noise.
    2 – Local. 2 stocks do not make an economy. There are tons of listed companies in the BA, and many more unlisted. Most are doing more than fine. Unemployment in the tech sector is very low, with very decent salaries and not many clouds ahead.
    Then again, The Donald said yesterday it was time to buy a house. Should we take his bullish stance as a signal to sell?

  4. Well, anyone who knows they will be in SF for a while, has some cash, and doesn’t like the prospect of paying $5k a month in rent is either buying or considering buying. And the inventory is just not there. Tons of properties are still being sold above asking and within one month of listing.
    I would expect a fall/ winter lull and then the market to be even much stronger this time next year once we get the election behind us and have a bit of certainty. Many people I know are hitting new net worth highs on a very regular basis. S&P 500 is up 10.14% YTD, IXIC up 13.34% YTD.

  5. This is generally the time of year when things start going down, but in my neighborhood (NOPA) things are moving along quite nicely, at least 50% of the listings seem to be in contract after the first open house. I know of was in contract 2 hours after the end of the open.
    Currently there’s nothing in the neighborhood that’s been on the market for more than 14 days.
    As anon pointed out rents make buying look very attractive right now, and inventory is quite low. Either home prices will go up, or rents will drop to re-establish equilibrium, but right now buying is pretty attractive as compared to renting for those with the means.

  6. It would be interesting to see this data on a rate-adjusted basis. A few weaks ago the editor ran a rate-adjusted analysisfor an apple, and it was very interesting.

  7. Tipster – “I can’t see who could be in a hurry to pay bubble 2.0 prices.”
    Sometimes I really love how your mind works Tipster. Just fascinates me how you could pull out ‘bubble 2.0 prices’ in response to:
    SF MSA prices being “up 0.6% year-over-year, the first year-over-year gain in eighteen (18) months.”

  8. C’mon Rillion, what does it take for you to realize that we are watching dot com bust 2.0. Zynga, the “monster IPO” has lost 80% of its value from its peak. Facebook looks not too far behind. This is pets.com all over again.
    Venture capital has peaked and is now down 12% YOY. The cycle is over.

  9. Good to see prices up YOY again. Last time that happened (2010) it was short, but sharp – with prices up around 18% YOY at one point. Interesting to see what happens this time.
    and condos – prices have risen by around 15% in the last three months alone! which means you could have bought and sold within three months with 20% down, paid your selling costs, and still made an annualized return of I think almost 300%!

  10. There is a lot of pressure on the market from people who want to buy and can afford to buy, but no one wants to overpay and the selection on the market is limited by the huge amount of properties at some stage of foreclosure. The state of this market is very much mixed.
    The technology sector currently employs roughly the same number of people as it did in the early 1990s, so there are limits as to how much technology will support the housing market. Of course their are some big payouts from the latest bubble, but as always this is more noise than signal.
    Anyone who listens to a serially bankrupt taker of government handouts like “The Donald” and repeats what he says is hard to take seriously. William Baumol’s collaborative work “Good Capitalism, Bad Capitialism” goes into great detail about the striking and very real differences between creative entrepreneurship and mere rent seeking.
    People like to see home prices go up if they feel invested in properties they own, but for most potential buyers rising prices represent a barrier. This is troubling because ongoing research shows that the primary cause for high prices is restrictive zoning. As such what we are seeing is not rising value based on local opportunity, but rising costs from irresponsible zoning and building regulations which is bounded only by what the market will bear. That realtors tend to be happy about rising housing costs only serves to emphasize the lack of lack of utility that they provide.

  11. anon1 is correct
    pets.com sold a product to paying customers
    facebook gives away it’s product for free

  12. Tipster, sorry I thought you were referring to real estate prices on this thread about the real estate prices in the SF MSA. I did not realize you when you said no one was going to pay bubble 2.0 prices you were referring to the price of stocks. I agree, the web 2.0 stock bubble has burst. Whatever impact it had on the SF MSA was limited, I don’t think it was what drove up the CSI 0.6% yoy though so did not see how you felt it was really related. Still don’t I guess. Which is why I said I find it fasicinating how you think.

  13. Comparing Facebook and pets.com is not completely asinine, although it is limited. Obviously companies like pets.com and webvan etc never made any money. Facebook is another thing entirely. HOWEVER, some of the bubble behavior IS similar…in how the stock market and real estate market in particular was reacting to Facebook and Zynga and Twitter and the (real and potential) creation of wealth in Web2.0. Looks like the bubble is deflating a bit now (and bursting for the likes of Zynga).
    Moleman…I don’t have the figures, but I believe that SF proper has many more tech workers now than during web 1.0, when things were just getting going here, and alot of the action in SF was an echo of the Peninsula. You are quoting bay area wide figures, I believe, which mask the movement of tech from hardware to the web. I think Real Estate folks will confirm that tech wealth is much more important locally now than during the early 2000’s and certainly much more important than in the 90’s.

  14. A lot of tech is mature in SF and the BA. Many young dot-commies 1.0 are in their late 30s-mid 40s and at the top of their technical game. They work mostly for established firms and some are joining new ventures, with the old bubble and its mistakes in the rear view mirror but not forgotten.
    Did I mention they were ripe to start families and settle down, and that their income often matches what is needed to afford market prices for homes in SF and the SV.
    Sorry Tipster. No bust 2.0 for you.

  15. Established firms like HP or Cisco? All laying off.
    VC is way down. Job opportunities are starting to dry up. The peak has been reached.
    We just renewed an office lease and the building owner bent over backwards to keep us. I was frankly shocked at how low the renewal was. The vacancy rate is way down, but the building owner knows what’s coming, and I’ve been through two busts with him before – he knows I pay no matter how badly the economy is doing, so he’s desperate to make sure I stay through the next phase.
    After the election, we both know it’s going to be a catastrophe, no matter what the perpetual boosters want you to believe. People can WANT to start families all they want, but if the only jobs are selling virtual cows no one wants, or ads no one looks at, that doesn’t leave a lot to work with.

  16. Reading tipster, tech workers are just one paycheck away from the breadline. Not.
    There are pills for that.

  17. I know technical analysis is not a perfect tool for analyzing investments (let alone housing), but does anyone besides myself see a head and shoulders pattern?!?! Seems uncanny to me.
    I am willing to wait and see how the right side of the shoulder pans out.

  18. Tipster,
    My impression is that even though tech labor demand is lower than it was 6 months ago, it is still very much a seller’s market.

  19. Apple’s hiccup last quarter is definitely having ripple effects in the hardware world. Chip companies supplying them, while not yet at layoffs, are freezing new hiring.

  20. well this is definitely reminiscent of net bubble 1.0 although this time the bubble was a lot smaller. still, there are always some bubble survivors and there will be this time too.
    yes the valuation of facebook is bubbly and it seems to be deflating. but it’s a profitable company and eventually will find it’s price. I’d buy facebook at the right price, not sure what that is. it will survive.
    zynga is also profitable (now) but on the basis of their terrible quarter it looks like that may change pretty soon. would not touch this one. don’t think they are going to make it.
    groupon will be gone pretty soon.
    these other companies, twitter, airbnb, etc. not sure what their financials are like.
    main thing keeping prices afloat is incredibly low interest rates. the amount of leverage available now allows people to pay more for homes.

  21. As for the established firms laying off people, from a wall street financial numbers perspective that is true, but they are also still hiring. They just use contract employees instead of regular employees. A friend just started at Cisco. He’s basically making the same as when he was full time, he just marked up his contract salary to cover the taxes, worker’s comp, health insurance, etc that he has to cover so that his net is the same.

  22. First, there’s no bubble, it’s just a few companies that have gone IPO. While FB was the biggest IPO fail of it’s kind ever, it still generated billions of dollars for facebook, which it will need to do something with, much of that money will be spent on hiring, much of the rest will go to acquisitions… The money is still flowing. IPOs have been under-performers for years now, so this is nothing new. Wake me up when we see over 200 IPOs in a year.
    Second, tech workers are doing just fine (which is the only way these continued threads about IPOs and such have any relevance to real estate). I know several people who were recently laid off, and quickly found jobs, within a few days. Some companies lay off, others hire. The important thing is are jobs growing or shrinking.
    While I agree there are some significant headwinds against the economy, the reality is that they will not likely become a significant problem until next year at the earliest. The real estate market is quite strong, construction is picking up, and the economy is doing OK, and will likely continue to do OK due to election politics. After the election all bets are off.
    Right now the bay area housing market and job market are strong (at least for areas focused on tech).

  23. “First, there’s no bubble, it’s just a few companies that have gone IPO.”
    FB Dropped $2B Just Yetserday
    Dont Think pets.com ever hit $2B
    “Wake me up when we see over 200 IPOs in a year.”
    80 Small Fry Fail out of 200
    1 Big Guy Drops 40%
    No Difference

  24. Pets.com was out of buisness within a year of its IPO. Anyone want to make a wager with me that Facebook will still be in business 1 year after its IPO? If you aren’t willing to take the FB is out of business within a year side of that bet then stop trying to equate FB with Pets.com.
    Also minor quibble with lyqwyd’s comment, I don’t think the housing market is ‘strong’ just less bad then its been recently. There is so much government support for the market right now, if the market were really strong on its own it wouldn’t need all the help.

  25. Point to ANY economic forum that has as many bubbly posts as some I read here! Whether your politics are right or left, from Nobel prize winning economists on down, everyone outside of the San Francisco real estate community is saying we are going into a second slump.

  26. ^Missing the Point
    What if FB had a PetsBook buisness unit last Friday worth $2B
    Now Poof! PetsBooks Fails! FB drops $2B
    PetsBook a seprate Stock goes $2B to Zero
    The Real Wager is will FB lose $2B in value within a year

  27. Well Apple’s down $4B in value so far today. Guess that makes it twice the bubble popper as FB. It could have two iPads for Pets units fail! Just today! Poof!
    Apple =/= FB =/= Pets.com

  28. “Point to ANY economic forum that has as many bubbly posts as some I read here! ”
    Tru Dat!
    SF basesd Zynga -75.0% … “First, there’s no bubble, ”
    SF Housing +0.6% …”Right now the bay area housing market and job market are strong ”

  29. “Well Apple’s down $4B in value so far today. Guess that makes it twice the bubble popper as FB.”
    “Apple’s hiccup last quarter is definitely having ripple effects in the hardware world. Chip companies supplying them, while not yet at layoffs, are freezing new hiring.”

  30. From Apple: “The Company posted quarterly revenue of $35.0 billion and quarterly net profit of $8.8 billion, or $9.32 per diluted share. These results compare to revenue of $28.6 billion and net profit of $7.3 billion, or $7.79 per diluted share, in the year-ago quarter.”
    Yes, profit and revenue only increased 20% Year over Year.. I’m sure the suppliers are starting layoffs imminently.

  31. Why are you guys even mentioning Apple…there has been no meaningful downdraft in Apple for some time. It is down for the day (marginally), but up for five days, a month, 3 months, a year. Maybe we should get back to real estate.

  32. so according to RfR 1 large company dropping 40% after an IPO losing 5% of it’s current market cap is the same as pets.com going bankrupt and means we had a bubble.
    Facebook’s IPO may have been a failure, but the company is a success and will be around for quite a while. The original investors also did quite well. People got too excited too soon, but Facebook will become a major competitor for Google and others.
    A few companies going IPO does not make a bubble and a few of those companies stock prices dropping dramatically does not mean the non-existent bubble has popped. Back in 1999 & 2000 there were over 400 IPOs each year.
    I think Rillion mentioned Apple to point out how ridiculous RfRs measures of a bubble are.
    Rillion, I agree that the housing market is not strong in a fundamental sense, but meant it as compared to the last few years, sorry for any confusion. I definitely think there are headwinds to any sustained growth in housing prices in general, and expect them to be fairly flat over the next few years, with some ups and downs mixed in.

  33. Perhaps this is all backwards looking, but I don’t think so:
    San Francisco boasts the highest tech-jobs growth rate in the nation, according to real estate services firm CBRE. Current growth is about double the rate of the next two fastest-growing markets of New York City and Silicon Valley, a boost that’s lifted the city’s tech jobs to more than 36,600, or 13% higher than the dot-com peak in 2001, according to CBRE.
    The current situation, where ZNGA and FB stock is down but overall the stock market is flat to up, will give us an interesting chance to test my hypothesis that new IPOs have an inordinate effect on the local housing market. ZNGA lockup expired on May 29th, so we will see if it impacts prices in Q3 as I expected. The fact that it’s stock is so down will definitely mute the impact.
    I don’t see any slowdown of hiring in SF proper, perhaps tipster has his pulse on the tech economy in SF more than me now that I work in Silicon Valley but I kind of doubt it.

  34. “so according to RfR 1 large company dropping 40% after an IPO losing 5% of it’s current market cap is the same as pets.com going bankrupt and means we had a bubble.”
    If Ya think there Was No Bubble its youre Lucky Day
    Ill sell you as much Zynga as you want @ $12
    Point is the size of The Bubble aint number of IPOs
    You Guys talk like pets.com was an Epic Never be Repedted Disaster
    It was tiny Less then $2B
    ” At its peak, the company had 320 employees, of which 250 were employed in the warehouses across the U.S.”
    70 Desk Jobs at peak
    Zynga got 40x that
    So Yeah 1 Big Bubble from $10B to $2B is like 10 $1B Bubbles with 8 going to ZeroVille

  35. One new cool feature on the iPhone 5 could wipe out the ZNGA boondoggle in just a few minutes of trading.
    And silence the ZNGA trolls? Probably not.

  36. How does Zynga’s stock price going down make a bubble?
    The dot com bubble popping resulted in losses in the trillions of dollars, hundreds of corporate bankruptcies and was the biggest economic event of it’s time, and impacted some of the biggest companies in the world.
    Today a few companies have lost a few $billion in market cap, they are all still operating and generally adding staff, the majors in this industry and others are not affected at all, and since nothing has actually happened it’s having no effect on the overall economy.
    No bubble.

  37. @lyqwyd
    Was the Tech bubble, or the worldwide real estate bubble and associated financial failures a far bigger loss in terms of what was the “biggest economic event” of our time?

  38. “You Guys talk like pets.com was an Epic Never be Repedted Disaster”
    It was Tipster that first brought up Pets.com in this thread. As for us talking like it is a never to be repeated disaster, no, its just that some of us don’t agree that every failed IPO is the next Pets.com.
    A few social media stocks getting sold at high prices on the secondary market then declining after they have IPO’s is not the second coming of the 1995-2000 dot.com bubble. The real story of the tech bubble wasn’t Pets.com, it was things like Apple going from $3.3275 in 12/97 to $34.6725 in 3/00, CSCO going from $2 in 2/95 to $77.31 in 3/00, MSFT at $3.9375 in 2/95 to $58.30 in 12/99, INTC $4 in 1/95 to $74 in 8/00, and on on on throughout the tech industry. Also the bubble was not just limited to dot.com or tech companies, the entire stock market was in a bubble.
    So you or Tipster trying to equate a small handful of stocks (zynga, facebook, groupon, linked-in) as the second coming of the ‘dot.com’ bubble is just silly.

  39. lyqwyd: “was the biggest economic event of it’s time”
    anoncurious: “was the “biggest economic event” of our time?”
    Something doesn’t quite match up here…

  40. I’ll answer even though the qustion was directed elsewhere since I’ve been commenting on the same topic. I think the real estate bubble popping was a far bigger economic event. It directly impacted more people as the amount of paper wealth people had in their homes was far greater then the amount of paper wealth they had in stocks. Also the resulting financial panic and credit crisis that resulted is leading to the worst depression since the great depression.
    Although I believe it would be possible to make a strong argument that we would not have had the real estate bubble (or it would not have been as large) without the Fed’s response to the stock market bubble bursting in 2000.

  41. “Also the bubble was not just limited to dot.com or tech companies, the entire stock market was in a bubble.”
    Agree with that
    Dot Com 1 Bubble happend with Whole Stock Market Bubble
    Dot Com 2 bubble was just Socal Media not the entier market
    “So you or Tipster trying to equate a small handful of stocks (zynga, facebook, groupon, linked-in) as the second coming of the ‘dot.com’ bubble is just silly.”
    Small Handfull of Large Stocks
    Large Handfull of Small Stocks
    Looking at Number of Stocks is Silly
    Gotta Look at Value
    FB alone was $107B at secondary market now $39B
    Dropped $68B
    Add up the Dot Com 1 Victems, Pets, Broadcast,…
    Need alot to get to $68B

  42. anoncurious, not sure what you are asking.
    The dot com was the biggest economic event of it’s time.
    The mortgage crisis and ensuing collateral collapse was the biggest economic event of it’s time.
    Both statements can be true as they happened at different times. Note that I said “of it’s time” not “of our time”
    Does that clear things up for you?

  43. The dot com bust was around $5 trillion in realized losses due to bankruptcies and other failures.
    FB is a still trading and growing, and most of the losses are paper at this point, and orders of magnitude less than the dot com bubble.
    There’s simply no comparison, and I’ll repeat again a few companies stock prices dropping is not a bubble. On average the S&P 500 alone fluctuates market cap by about the same amount as the total FB market cap drop from peak to today.
    No bubble.

  44. “The dot com bust was around $5 trillion in realized losses due to bankruptcies and other failures.”
    Thatd Be 2,500-5,000 dot.coms the Size of pets.com Failing
    Dont think their were Ever even $5T of dot.com 1 Companies

  45. I thought we determined above that the dot com bubble was more than just dot com companies. Some assessments put the total losses even higher than $5 trillion.
    Why do you keep talking about pets.com, Webvan was worth about $8.5 billion at peak. Again, a handful of companies does not create a bubble, and their poor stock performances can’t end something that doesn’t exist.
    You want a bubble go look at student loans, or bonds, or healthcare costs, or derivatives. Those are some real bubbles, there is no tech bubble.

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