Market Update as of June 5th 2009
Jun
6
I read a lot of real estate blogs. I am always curious to see what other people are writing about and I can’t resist adding my 2 cents if I have an opinion on topic. I swear off a few of those blogs every couple of months when the comments and editorial get particularly vicious towards real estate agents, as they often do – then get sucked back in when there’s an interesting story I can’t resist.
What I’ve noticed is that both on the blogs, and in the press, the overall ‘mood’ seems to be that we’ve hit a bottom of sorts. I wrote a post back in March titled ‘Signs of a Real Estate Rebound’ about a CBS report on the multiple offers that were happening in the low end of the market, and you would have thought the title was ‘OMG YOU’RE ABOUT TO LOSE OUT ON YOUR ONLY OPPPORTUNITY TO BUY EVER’. Nowadays the venom when people are suggesting we are at a bottom is far less vicious although that opinion is definitely still present.
You will always get the side who vehemently insists there is more pain to go through, and there are certainly numerous statistical analysis, and intelligently written articles to make that case. My personal opinion is that prices and the economy as a whole are far more emotional in nature, and that consumer confidence, more than most anything determines whether the market is going either up or down. Right now confidence is up, I’m not certain it still will be this fall, but at the moment we seem to be headed in the right direction – and that is reflected both in the press, and in the subtle changes we’ve been seeing in real estate sales as a whole. I would say on record, I’m not really a bull or a bear, and that as always buying real estate is a personal decision. What is going to be the right choice for one is not going to be for another.
That being said let’s take a look at some of the most recent numbers.
Hotsheet Statistics for the past 2 weeks:
New Listings: 339 (down from 370 from the 2-week period ending May 1st, a not unusual reduction as spring moves into summer)
Back on Market: 78 – 20% of all properties going contingent sale or pending sale are coming back on market
Price Reductions: 252 – the number of price reductions is still very high – for every property that sold, 1.6 properties reduced their prices
Went Contingent Sale: 198 (basically unchanged from 1 month ago, but a significant increase over previous months)
Went Pending Sale: 193 (basically unchanged from 1 month ago, but a significant increase over previous months)
Sold: 157 (basically unchanged from 1 month ago, but a significant increase over previous months)
Sold REO: 13 – 8.5% of home sales were REO sales (Note: there are currently 95 REO sales contingent or pending sale.)
Expired/Withdrawn: 163 (a bit lower than one month ago)
Back on Market: 78 – 20% of all properties going contingent sale or pending sale are coming back on market
Price Reductions: 252 – the number of price reductions is still very high – for every property that sold, 1.6 properties reduced their prices
Went Contingent Sale: 198 (basically unchanged from 1 month ago, but a significant increase over previous months)
Went Pending Sale: 193 (basically unchanged from 1 month ago, but a significant increase over previous months)
Sold: 157 (basically unchanged from 1 month ago, but a significant increase over previous months)
Sold REO: 13 – 8.5% of home sales were REO sales (Note: there are currently 95 REO sales contingent or pending sale.)
Expired/Withdrawn: 163 (a bit lower than one month ago)
The overview, as of today June 5th 2009, is that market activity has continued to get stronger over the past month, continuing a trend that began in March/April. Median prices of those properties that have accepted offers have increased, which suggests that values are stabilizing. The number of properties that have accepted offers but not yet closed are up in every category and inventory levels of Active properties (available for purchase) is down, slightly. This is all compared to the data collected as of May 1st 2009.
Signs of a Real Estate Recovery [SFHomeBlog]
Current Trends in San Francisco Real Estate 3.2.09 [SFHomeBlog]
You cannot really be surprised when some show how upset they are with realtors?
*****
And a bottom in what??
A bottom in pessimism?
Perhaps.
Though a house price bottom is years away.
And it could be said that recent upticks in activity are due to the ordinary seasonal influences.
But hey, you guys are the experts.
*****
A decent article is at bottom.
Interestingly, there is no mention of some of the usual "fundamentals" when considering house prices, using such factors as rent and price-to-income ratios, etc.?
In many places, especially locally and where financing has become particularly difficult to obtain, these factors are still significantly out of alignment.
Prices may adjust to eventually reflect a return to a baseline, but since we've recently spent so much time above such, would going below trend for some time in the future be unexpected?
*****
The New York Times
Economic View
Why Home Prices May Keep Falling
By ROBERT J. SHILLER
Published: June 6, 2009
http://www.nytimes.com/2009/06/07/business/economy/07view.html
sf jack at June 8th, 2009 at 10:01 pm ( )Jack -
you and I will obviously NEVER agree on anything related to SF real estate, but one thing is for certain, making an argument using anyone named Case or Shiller is not going to gain you any points with me. they prove in their "index" that they are out for nothing more than sensationalism, so why would their writings be any different? especially when you know darn well that this blog focuses on one thing: SAN FRANCISCO. not the bay area, not the state of California, not the USA. Just 49 square miles. San Francisco.
when are you going to acknowledge that this is NOT a market with infinitely buildable land? if you want to have the same conversation about the nation as a whole, the Phoenix or Vegas markets (or even markets just a mere dozen miles from here), I would not necessarily disagree with you. but as long as there is old money, new money, and a ridiculously skewed supply/demand equation here in SF, your arguments will continue to be proven wrong.
but either way, thanks for reading!
Matt
Matt Lanning at June 8th, 2009 at 10:15 pm ( )Home pricing in SF while impacted by lack of land for new building is not the most significant factor affecting price. Employment,cost of money,availability of credit are far more critical in leveraged asset real estate sales.
ronald at June 9th, 2009 at 1:59 pm ( )You cannot really be surprised when some show how upset they are with realtors?
*****
Sensationalistic?
Have you ever seen Mr. Shiller?
Are you saying prices are not coming down in San Francisco?!
And… demand?
Demand for houses in San Francisco, as seen in sales activity, has been dropping for a number of years now.
Since demand (sales) was certainly above trend during the bubble years, it's easy to see that demand could head even lower well into the future.
As well, to emphasize just one factor that Ronald outlined above:
"All real estate may indeed be local, but financing is global."
sf jack at June 13th, 2009 at 4:55 pm ( )Meredith – what do you think of this building wave of foreclosures as reported at fieldcheckgroup.com? It seems to me that homes over 500k (the only kind in SF!) are going to be impacted by this:
http://www.fieldcheckgroup.com/2009/06/14/6-14-the-next-foreclosure-wave/
Once people said "Real estate will never go down in California". Then it was "in the Bay Area". Then "in Palo Alto". Fixed amount of land or not, we have 11% unemployment, a poor credit market and a weak economy. How can we expect a bottom in housing prices (SF proper or not) when those issues are not close to being resolved?
Brian G at June 17th, 2009 at 3:52 pm ( )Brian,
You pose a really good question and to be honest the concern is legitimate but I dont believe we're going to see a wave of foreclosures in SF. Short Sales yes, foreclosures not as much.
I honestly DO NOT know if we are at a bottom. Another wave of bad news in the fall could easily shake up this rally we've been seeing, but I'm inclined to think the worst is behind us and that in retrospect this will turn out to be a golden window to buy a property in a sweet spot of pricing. It's a personal choice and I dont advocate anyone buying right now that doesn't have 7 years to invest in a purchase – or anyone who thinks the market is going to continue to decline, they need to follow their own gut.
As far as foreclosures go, there are A LOT of short sales already in SF – and not just in the lower price ranges. I have a listing that was purchased from the developer for $950,000 in 2007 – I have it listed as a short sale for $789,000, assuming we can get the bank to play ball it'll probably close for $750,000.
But it's not likely to ever go to foreclosure. It will cost the bank more to foreclose than it will to sell to a buyer in hand, they're getting smarter about recognizing this – and thus when it closes it just becomes another comparable sale that is resetting pricing lower.
SF owners typically do not just walk away from their homes like some in other areas that are overwhelmed by the process might. Even a short sale saves (I'm told but have not confirmed independently) up to 9 years on your credit (I'm told Short sales ding your credit for approx 2 years vs an 11 year gouge for a foreclosure). So intelligent owners (and most in SF are or they would not have made enough money to buy in the first place) are going to salvage what they can.
Not sure if that answered your question sufficiently…short answer, it could happen but it's less likely in SF because of the demographic of the property owners here.
Meredith at June 18th, 2009 at 3:55 pm ( )