Having peaked at a 7-year high last month in the absolute, the relative number of homes listed for sale in the San Francisco (940) remains around 40 percent higher versus the same time last year.
At a more granular level, the number of single-family homes currently listed for sale in the city (340) is running 56 percent higher on a year-over-year basis while the number of listed condominiums (600) is up 31 percent, not including the vast majority of new construction condos still for sale across the city.
At the same time, having hit a two-year high last month, the number of homes on the market listed for under a million dollars is now running 44 percent higher on a year-over-year basis while 24 percent of the homes listed for sale in San Francisco have undergone at least one price reduction (which is even with the same time last year).
Expect inventory levels to decline though the end of December in the absolute with normal seasonality in play and the percentage of listings with a price cut, which topped out at 27 percent in San Francisco last year, to tick up.
One plus side to higher inventory is a flood of unique and unusual properties trying to hit the tail end of the cycle. I love getting a peak inside older buildings that rarely have units for sale.
I am seeing some units unable to sell for their 2013 price; some unable to sell for their 2007 price. All nice units. It’s getting nasty out there.
Totally, it’s getting nasty out there, midtown terrace fixers are only getting $1177/ft and they are only getting $1463/ft for Wisconsin and 21st
Ouch, the first property has an etimsted drop of over $100K since it sold. The second property almost a $400K drop. Truly nasty; and it’s just the beginning.
Wait a second. You actually base a comment off of a Redfin quote all of days old? For a property that only sold last week? Do you know how ridiculous your comment is? What happened to the old guard on this site? They were at least intelligent.
One has to be careful with home value estimates. Be them from Refin or anyone else. I live on Mt. Davidson – across from Midtown terrace. I can find any number of listing where the Redin estimate is showing price gains. 43 Molimo per Redfin is up 66K since it sold this past spring. My home was listed as up 100K in September per a Caldwell Banker estimate. It is wrong – the figure was skewed by several recent sales in my area. Homes on paper like mine but with many interior upgrades that my home does not have.Things are not getting nasty. They are slowing, but YOY per CS the median price is still up significantly. Though that figure is slowly dropping now as new monthly CS numbers are rolled out. It seems as if the YOY numbers for SF/the Bay Area will continue to drop for this year and into next year. Could the median price go negative? Not too likely but, if it does, it won’t be by much. Even as Redfin shows gains on homes in Miraloma Park, the semi-flip at 44 Molimo just went pending after 43 days on the market. Back in June or so the days on the market number for this area was around 15 and has been rising slowly. it was 21 in August .Definitely a slowdown is upon us.
It’s beyond me why people think there will not a drop in housing prices this time. The early 90s saw a 10% drop; early 2000s just over a 10% drop; and the Great Recession a drop of almost 30%. We are ending a period of historically low interest rates, a massive run up in tech company valuations, tax cuts to squeeze every last drop of this historically long bull market, potential grid lock in DC post midterm elections, and the most supply the SF housing market has seen in a long time. There abolsultey will be a drop in housing prices in the 2019-2020 time frame; and I would estimate at least a 10% drop.
“It’s beyond me why people think there will not a drop in housing prices this time.”
Many people seem to think that home prices never drop, or at least never drop in SF. There are a few reasons for this.
SF is a high end market and while that doesn’t mean that it is immune to a price drop, it does make the day to day impact of a price drop less severe. As they say, “price is what you pay, value is what you get”. If a $4.5M home drops to $3M or a $1.5M condo drops to $1M, what does that do to the neighborhood? Nothing really. The buyer at $3M of the home will most likely be indistinguishable from the $4.5M previous buyer, and the same for the $1M buyers of the condo. The buyers at $4.5M and $1.5M might receive a financial knockout punch, but they will simply be washed out of the market and replaced. The pain of the downturn is felt in the price, not the value.
Contrast that with lower end areas where a downturn means vacant homes and all the blight they bring, and people hanging on to a middle class life being replaced with those with lower incomes and more significant societal problems. And then the tax base drops right when the need for social services rises. And with vacant homes, new construction stalls when home prices fall below replacement cost, and this kills construction employment which is often a ‘last-resort’ source of employment in lower end areas.
In many other areas, a RE downturn is impossible to miss. Its effects are everywhere. In higher end ares, it’s mainly a price issue. People who got in at the tail end of the cycle might suffer large losses, but they simply get washed out and replaced with new entrants. In ‘bottom of the barrel’ ares, there is no place for the economically disadvantaged to out migrate to. And this on exacerbates the downturn.
And while now we have sites such is this one, Redfin and Zillow and indices such as Case-Shiller, not everyone follows them closely. And it can be difficult and inaccurate to estimate home sales from a few local anecdotes. Particularly for SFRs which, especially in SF, are all unique and may not trade that frequently. If the house next door has not been on the market for 15-20 years and has undergone multiple remodels in that time period, what can you infer about the recent changes in the market when it sells? In theory you could try to estimate the value of the remodels and back out prior years appreciation, but that is a very inaccurate process and your average layman is not going to do that with any great precision.
That’s one advantage of looking at “apples”, you get a clearer, more accurate view of short term market changes. And you tend to have more condo apples which speeds price discovery in the condo market and is one reason why the condo market tends to lead the SFH market through market cycles. If you’ve seen a few similar units to yours sell for 2015 prices, you have a good idea of what to expect going to market. If you have a few neighborhood comps with long holds, differing sizes and other features than your home and maybe some remodels, you really have no idea what that is telling you about the current RE market. It’s very common for SFH owners to have large expectation vs reality gaps.
I am sure I am not the only one looking forward to a greater shakeout in asset markets generally.
I follow some illiquid closed end funds in which scared money gets shaken out every time the wind changes. There a meaningful universe once more of those funds trading at a substantial discount to net asset value and with a distribution rate over 10%. Provided you are prepared, the best think about a downturn is the chance to buy more.
Can you provide a few examples of some of these funds?
Agreed on your best time to buy thoughts!
cefconnect dot com is a great free resource for research. Don’t do anything with closed-end funds until you understand the distinction between net asset value (NAV) and market price.
People are afraid of many of these funds because of rising rates and trade wars and lots of bad stuff that can still happen. Your mileage will vary.
Funds that meet the criteria I described:
FAX: 10.6% distribution rate, -14.38% discount to NAV – Emerging market debt
AWP: 10.95% distribution rate, -14.36% discount to NAV – Real estate stocks
Other interesting stuff:
BIF: 3.76% distribution rate, -17.35% discount to NAV – Berkshire, Cisco, Wells Fargo – brand name large caps
EIA: 4.78% dist. -15.5% discount to NAV. California Muni Bonds. (Yes, still tax free on the income even if a closed end fund.)
These funds have expensive management fees and some will have done better with a FAANG basket or their Vanguard index funds or whatever their uncle told them to buy. That said, if you want equity that barfs out income, and that you can sell without engaging a realtor, here you go.
I am not saying this is the bottom for any of these, but if you buy when people freak out and the NAV discount expands, you improve your chances.