CFAH

With two weeks left in the year and the seasonal real estate slowdown in full swing, the inventory of single-family homes and condos actively listed for sale in San Francisco (352) dropped 16 percent over the past two weeks but remains 17 percent higher versus the same time last year.

At a more granular level, the number of listed single-family homes on the market (130) is running 6 percent higher versus the same time last year while the number of listed condos (222), which doesn’t include the vast majority of new construction units on the market, remains 25 percent higher.

The percentage of homes on the market in San Francisco with at least one price cut dropped from 23 to 20 percent over the past two weeks. And the number of homes on the market listed for less than a million dollars is holding at 41 percent for the second week in a row, one point lower than its fourth quarter average to date.

Comments from Plugged-In Readers

  1. Posted by BayviewSF

    Inventory is still low even with a 17% increase. Market will continue to rise next year.

  2. Posted by SFresident

    With interest rates set to rise and SF being at full employment, it seems unlikely that prices will continue to rise and sales will stagnate.

    • Posted by BayviewSF

      How is full employment bad for housing market? New jobs will mean new residents, more demand, right? Mortgage rate is no increasing even when Fed raise rates.

      • Posted by san FronziScheme

        On the Demand side, prices will likely rise when one or more of the following conditions happen

        – Lower rates
        – More potential buyers
        – Higher wealth
        – Higher incomes
        – Lower borrowing standards

        Better employment falls in the “more potential buyers” category. If you are in full employment, there’s very little room for improvement, and the only way a better job market could have an impact is better wages.

        • Posted by BayviewSF

          Actually “full employment” is the most important reason for future appreciation. “Full employment” simply means that the existing residents are all employed and all the new job openings will mean new residents moving from other places. These new people will need a place to live. Do you think that our new construction will be enough for these new residents?

  3. Posted by JR "Bob" Dobbs

    Sales seem to be slowing (at least, looking at November numbers), which is the other piece of the supply/sales equation. If sales are slowing, and inventory is growing, that is the formula for price easing (or at a minimum a slowdown in appreciation).

    • Posted by Dave

      Add in a likely (?) Fed funds rate hike, Bay Area affordability, anemic GDP growth despite about 4 trillion in QE money poured into the economy, slowing job growth and a slowdown or small pullback seems inevitable here.

      This is not as easy to gauge as in earlier times. There is too much government manipulation (QE) and the focus on the 5% unemployment rate ignores U6 which is not good.

      I know, a pullback can’t happen in the Bay Area. Hi-tech is recession proof. Folks seem to have forgotten the dot-com collapse. JMO.

      • Posted by BayviewSF

        Pullback can happen anywhere, and pullback happens more frequently in the Bay Area than Texas.

        However, the time for pullback is not now or next year, it might be a couple of years away.

        • Posted by Dave

          What are the fundamentals that support the idea of SF real estate prices continuing their to date increase over the next few years?

          • Posted by SFRealist

            Fundamental #1: Apple makes more money than any company on earth
            Fundamental #2: Google
            Fundamental #3: Facebook
            etc.

            Sure, it’s possible that we’ll all stop using Apple and Android phones, and log off Facebook, and we’ll stop searching with Google. Anything is possible.

          • Posted by Mark

            Yeah, sorry ‘bubble’ people, you actually come off as stupider for consistently chiming in about the bubble popping than those who ignore the idea that a bubble could ever be in effect. What part of having the world’s most valuable companies all concentrated in a specific geographic area don’t you understand, as far as housing valuations are concerned?

      • Posted by anon

        Not sure why QE is government manipulation any more than when trillions and trillions rolled out of the economy due to insanely tight money in 2008? In a fiat money regime, isn’t Fed inaction just as important as action?

        • Posted by Dave

          QE of this magnitude is way beyond government action or inaction. IMO it fueled the stock market boom in part.

          Prior to this the biggest flood of stimulus money was after 9/11. Under billion.

          The QE is thew wildcard and its nothing like the economy has experienced before. So predictions are more difficult

          Fed action is one thing – 4 trillion in stimulus with a 2.2% GDP these years later is another.

          .

          • Posted by Dave

            Correction. Post 9/1 was under 800 billion. Far short of 4 trillion.

          • Posted by san FronziScheme

            dave, do not forget the Bush Tax Cuts, which had a similar impact in the form of smaller tax collection and more cash for corporate and individual tax payers

          • Posted by anon

            NGDP fell by trillions in 2008-2009. That’s trillions in the other direction, so not sure what you mean.

          • Posted by anon

            Still not sure how QE is “stimulus money”. It’s just the Fed managing the monetary base. Some folks here seem to have no idea how monetary policy actually works, aside from listening to the crazies on the right (gold!!!) or left (big banks!!! fat cats!!!).

        • Posted by jaguar

          “The Digital Disruption Has Already Happened

          World’s largest taxi company owns no taxis (Uber)
          Largest accommodation provider owns no real estate (Airbnb)
          Largest phone companies own no telco infra (Skype, WeChat)
          World’s most valuable retailer has no inventory (Alibaba)
          Most popular media owner creates no content (Facebook)
          Fastest growing banks have no actual money (SocietyOne)
          World’s largest movie house owns no cinemas (Netflix)”
          Largest software vendors don’t write the apps (Apple & Google)”

          Notice how your fundamentals have no true equity, infrastructure, or “real” value?

  4. Posted by jaguar

    “Almost 70% Of US Stocks Are Below Their 200-Day Moving-Average.”

    “Severe Recession Coming To the California Bay Area: Silicon Valley has been in a food fight for about three years now. There are now 145 unicorn companies (private companies with a valuation of $1 billion or more that don’t make any money), with a total combined valuation of $506 billion. Everyone knows the Bull Market bubble is going to end, except for the folks in Silicon Valley. Anyone who invested in any of these valuations, such as Uber – the biggest unicorn company for example,” will be selling their real estate holdings along with China and Russia investors.

    I see a severe earth shaking recession in 2016 that begins in January. “They” have been artificially holding up the markets but won’t be able to continue… Too much universal fear exists for (financial and real estate) prices to continue to rise.

    It will be a buyer’s market again… I wonder if many of the Great San Francisco Homes will be available again…

    • Posted by SFRealist

      I’ll accept without checking your assertion that all these unicorns are worth $506B. You know how much Apple is worth? $624B. Google? $515B. Both are worth more than every unicorn combined. We’ll be fine.

      • Posted by jaguar

        I know, Apple and Google are Giants and Apple actually does have Infrastructure. They are part of the 30% that are properly valued but will still be affected in a major financial collapse.

        This is only a seven year cycle and it’ll all come back. The object of the game is to survive, not panic, and buy low .

        The one thing that I learned from this board, is that Apple can steal and use your intellectual property and you have no recourse.

    • Posted by SFRealist

      Jaguar–so January 2016. Would you like to make this a wager?

      • Posted by jaguar

        OK, a Socketsite Wager, where we are all anonymous 😉

        2016 should be a very harsh year. I see a major event taking place, possibly terrorism related that will trigger the seriousness of the times. The exact transit is around the end of January, however, events can manifest anytime. The last time the world experienced this was 1979, which was the Middle East Crisis, Iran Hostage Crisis, Shah of Iran, War, Oil Crisis, similar to what is happening now. Look for History to repeat itself. I am still expecting the stock market to crash before the year is over, maybe this week.

        • Posted by SFRealist

          Wow, a stock market crash before the year is over, and certainly by the end of January. I’ll give you points for specificity.

          My bold prediction: slow and steady job growth in 2016, just like the last 6 years. Nothing exciting. Without external unpredictable events (North Korea decides to launch nukes, etc.), we’ll have more of the same.

          • Posted by jaguar

            “Without external unpredictable events (North Korea decides to launch nukes, etc.)”

            The entire theme of 2016 is unpredictability and uncertainty, expect the unexpected…

  5. Posted by BayviewSF

    I think the most important indicator is the rental market. When rental vacancy increases and people are moving out of Bay Area, we can start worrying about the housing market. Without an increasing vacancy rate and declining rent in the Bay Area, any prediction of housing downturn would be premature.

    • Posted by jaguar

      I’m expecting the economy to be bad and unemployment to rise which should affect SF’s rental market.

  6. Posted by alberto rossi

    Given all the different rounds of funding with different rights and preferences, very few unicorns are really valued at $1B.

  7. Posted by jaguar

    The point is that the Unicorns supposedly have a value of 1B+ but they don’t make any money…

    • Posted by SFRealist

      Well, some of them make money. Uber (which I find loathsome and refuse to take) makes money. Not profits, but it does make money. Can that work? It’s sure worked well for Amazon.

      • Posted by Jake

        Uber loses money, according to financials leaked this year to Bloomberg and Gawker. Converting a dollar into 50 cents isn’t “making money”, it is losing money, regardless of the volume of hype.

        Amazon purposely operates near breakeven to fund growth. They could easily adjust their business to yield billions in profit annually while foregoing some growth.

        • Posted by Ohlone Californio

          Uber is “losing money”? Uber is doing this, “Thus, the leaked financials make it look as if Uber pulled in $57 million in the second quarter of 2014 against costs of $164 million. But a little back-of-the-envelope math — take this with heaps of salt — suggests it might have pulled in gross revenue in the range of $285 million against overall costs of $395 (or so) million, with $230 million or so going to drivers and $164 million going to other operating expenses. The former view makes it look like Uber is deep in the red with few prospects for profitability. The latter view — one backed up by other leaked financials — makes it look like a behemoth rolling in cash and running fairly large losses in order to soak up market share and rapidly expand its business.”

        • Posted by Jake

          Uber is “running fairly large losses,” your quote. Until they release financials, that’s about all we know. We can surmise they aren’t using their fat profits (if any) from early markets like SF to fund their expansion because then they wouldn’t need billion $ plus financing every year or so.

          Amazon took in about $2 billion to finance their growth to breakeven and self-sustaining. Webvan raised $1.2 billion from their IPO and VC rounds, and never made it close to breakeven. At something like $8+ billion invested so far, Uber is the biggest bet in SF. Guess we will see which side of the P/L chasm they end up on. And some people think there is no gambling in SF.

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