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San Francisco Home Prices Fell for the First Time in Four Years in March
- geggam 11y agoFrom the article you can see its a local equalization in process While San Francisco had the highest median sale price in the nation at $1,042,500, that number actually fell 1.8% year over year, and declined by 0.7% month over month, an unusual change from February to March. * In neighboring San Jose, prices rose 3% to $860,000 and Oakland rose 5.4% to $590,000
- mdorazio 11y agoThe article seems to imply some meltdown in housing is around the corner, but it seems more like the housing market is just leveling off as a result of market forces. You can only drive home prices so high before there aren't enough people who can afford them anymore. Hopefully that means that rent prices will also level off in the area in the near future.
- raldi 11y agoIn years past, there was a surge in the market due to the IPOs of companies like Twitter and Facebook. This could indeed just be a return to the mean.
- yardie 11y agoThat's not exactly true. A lot of REIs are built on complex structures. The SF estate market might be fueling other investments. Once one starts to collapse it can have a domino effect. Basically if investors were expecting 10% annual return and you tell them this year might be 1-2% they'll take that money and move it elsewhere. Now you have to raise money or sell. When I used to live in downtown Miami there were high rises going up everywhere with prices starting at 500k-1mm. These same places would later be short sales for 150-250k after the GFC. There was a glut of luxury apartments and few buyers. I wanted to buy one of these condos but couldn't find a bank that would give me a loan. They're were petrified at what was happening there
- ilostmykeys 11y ago<< Basically if investors were expecting 10% annual return and you tell them this year might be 1-2% they'll take that money and move it elsewhere. Now you have to raise money or sell. >> How can they take that money and move it somewhere? Most such investment contracts don't allow it. Am I missing something?
- kspaans 11y agoREI means Real Estate Index? Or do you mean REIT (RE Investment Trust)?
- pyre 11y agoI think Real Estate Investment.
- chollida1 11y ago> When I used to live in downtown Miami there were high rises going up everywhere with prices starting at 500k-1mm. These same places would later be short sales for 150-250k after the GFC. This sentence doesn't make any sense to me. The definition of a short is to sell something you dont' own with the explicit intention of buying it back later at a lower price. How can you sell a condo you don't own? and then why plan on buying the condo back at a later date?
- simantel 11y agoYou're thinking of the practice of shorting stocks, which is different than a short sale. From Wikipedia: A short sale is a sale of real estate in which the net proceeds from selling the property will fall short of the debts secured by liens against the property. In this case, if all lien holders agree to accept less than the amount owed on the debt, a sale of the property can be accomplished.
- avn2109 11y agoFrom the article: >> "...historically low inventory" >> "...many sellers are sitting this year out." >> "...The median sale price ... fell by 1.8 percent..." The article's authors are confused. Their explanation for falling prices consists entirely of "Supply is down." That's exactly the opposite of how supply, demand, and prices are related. If they wanted to claim that low prices are scaring sellers out of the market, since those sellers are hoping for a future rebound in prices, I might believe it. But the article claims the causality is going the other way.
- rspeer 11y agoIn Cambridge, a faction of candidates for city council promises that they will make housing affordable by opposing the construction of new housing. Apparently you can just tell people that supply and demand work the opposite way in the housing market, and people will believe you.
- home_boi 11y agoThe reasoning might be that if a place gets luxury apartments, rich people will flood the area. Then the crime rate per capita goes down. The criminal population becomes diluted. It starts a snowball effect where crappy apartments in the area looks more and more attractive to the upper middle class as more upper middle class outbid previous poorer renters for the old housing.
- rspeer 11y agoI know that's the argument, but it doesn't make much sense to me. It's comparing to a fictitious alternative where rich people don't move in. Why wouldn't they? It's already a desirable place to live, so rich people desire it too, and by definition they can afford to act on that desire. It is not hard for a rich person to outbid a poorer renter. I mean, this doesn't require a complicated explanation. Whether or not there's new housing, rich people can already outbid current renters because they have more money. And when this happens without new housing, not only does a rich person move in, someone else moves out. By trying to prevent gentrification from indirectly causing displacement, you just cause the displacement right away. This still sounds like supply and demand doing what one would expect, not doing the opposite.
- jordanb 11y agoI think that SV has probably been in recession for the last few quarters judging from some friends I have who have been interviewing. Everyone is interviewing like crazy but few are hiring.
- shiftpgdn 11y agoI've noticed a (perceived) spike in the number of foreclosures in SF on Zillow as well over the last 6 months.
- ModernMech 11y agoI'd say in the last 6 months, for sale signs have gone up all over my neighborhood in SF. There are at least 3 on my block alone. Despite this, there is a 3 bedroom apartment two doors down from me that is asking for $10,000 a month rent, $30,000 due at lease signing.
- dmode 11y agoHa ha. You think SV is in recession because few friends of you are interviewing. SV has ~3% unemployment rate, continuing increase in house prices, billions of dollars in VC funding, ever expanding job market etc. I just sold my home last month in a span of one weekend. I had 400 people show up for the open house and received 15 bids. The highest one was 50K over asking, with 50% down.
- ziszis 11y agoTalking to a notary based in SF this week, she saw an increasing # of Bay Area clients buying a home in Portland or Seattle and moving.
- theandrewbailey 11y agoMy brother in Portland has been complaining about the area receiving all these ex-San Fransisco residents and how they've been driving up prices.
- nxzero 11y agoSF had another real estate bubble during the dotcom boom, and as far as I know, the bust was regional in scope.
- NDizzle 11y agoMaybe it's just redfin not having this in their own data, but I'd really like to see these graphs from 1998 and up. Only going back to 2012 isn't very useful in my opinion.
- underwires 11y agoTrulia has some of the more basic data going back to 2000 http://www.trulia.com/real_estate/San_Francisco-California/market-trends/ http://www.trulia.com/real_estate/San_Francisco-California/m...
- NDizzle 11y agoWow. Number of home sales for 3 and 4 bedrooms currently at it's lowest level since 2000. I guess that's expected. Really validates my decision to move out of the bay area to raise my 3 kids.
- MoosePirate 11y agoZillow has a huge amount of data they publish at the Zip, City, County, State levels: http://www.zillow.com/research/data/ http://www.zillow.com/research/data/
- phamilton 11y ago"Plummet 22%" comes off as extremely alarmist. Median sales price dropped 1.8%. The number of sales dropped 22%. It's a signal, but of what? That's uncertain.
- lubujackson 11y agoIt's worth noting how tiny these numbers really are in a month like March. I just checked Zillow and 105 houses were sold in SF in the last 30 days.
- mywittyname 11y agoPeople holding out on a better deal next year.
- chadlavi 11y agoAs a Brooklyn resident (who rents), I hope this trend picks up steam and continues. Maybe I could be a homeowner some day after all!
- KKKKkkkk1 11y agoAs a foreigner, I don't understand this attitude. Why would you want all your wealth to be invested in a single leveraged asset that's also depreciating, requires your constant attention and ties you to a single locale?
- jschwartzi 11y agoBecause it means you don't have to pay rent after you retire.
- refurb 11y agoBut you're not paying rent because you have hundreds of thousands of dollars locked up in tye house? The real question is, how much money would you have made if all that equity was in the stock market? Sometimes that can be more than what rent would be.
- reverend_gonzo 11y agoAnd sometimes the stock market crashes and takes everything with it. See: every ten years. At least with a house, even if the value goes down, you still have a home.
- kspaans 11y agoYou say "stock market crashes", I say "dividend yields go way up!". The losses are usually paper losses (hello tax-loss harvesting!), which don't bother long-term investors (whether they are home owners or stock investors). (I don't think you can tax-loss harvest a home though...)
- epimetheus 11y agoA bit of an anecdote because the article mentions my town specifically - Tacoma: We put our house on the market Friday, April 8th, a bit below the "redfin estimate" - I saw it had gone live by 11am and we already had an interested party set up a viewing by 12pm. We showed the house 11 times by Monday morning and had 5 offers, some 12k above asking price. We accepted an offer by Tuesday (April 12). My head is still spinning from how fast this was and how many calls we were getting for appointments for viewing. This in a central Tacoma location, not exactly prime location (like the Proctor District or Stadium). We only had 3 other homes as comps in the area (1 mile radius). Port Orchard / Gig Harbor area is very low on inventory too, which is where we are moving (Port Orchard, we looked in GH though).
- djb_hackernews 11y agoThis plays out daily in hot real estate markets. I've been casually observing the Boston/Cambridge market and I have to scratch my head when I see properties on the market for only a few days and agents demanding offers by 2 days after the open house. Typically, I see listed on Thursday, OH Sat/Sun, offers due Tuesday evening. If I were a seller I'd think that we priced the property too low, then again I can imagine sellers just want it over and done with and who cares when it's the difference of locking in 100% appreciation or 108% appreciation.
- epimetheus 11y agoYeah, I'm pretty sure we could have waited it out and gotten other, higher offers. We actually chose to pick one that had a longer closing period (the house we wanted is occupied with people that want their kids to finish the school year), and with a dog and a toddler, the constant viewings were pretty inconvenient, enough so I'm happy at a lower price just to get it over with.
- mountaineer22 11y agoI have observed the strategy of the listing agent slightly under-pricing the home to cause a bidding war among willing buyers.
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- mladenkovacevic 11y agoMeanwhile in Canada: http://www.cbc.ca/news/business/crea-house-prices-march-1.3537143 http://www.cbc.ca/news/business/crea-house-prices-march-1.35...
- adventured 11y agoPretty incredible bubble price increases, given the growth rate of the Canadian economy. How can that end any other way but in a massive crash? "The average price of a Canadian home hit $508,567 in March, a jump of 15.7 per cent compared to the same month a year earlier." vs "IMF downgrades forecast for Canada's economy in 2016 and 2017" "Canada's GDP will expand by 1.5 per cent this year and by 1.9 per cent next year. That's better than the 1.2 per cent performance clocked in 2015, but a pullback from what the IMF was expecting in January, which was 1.7 this year and 2.1 per cent next year. The unemployment rate is expected to rise to 7.3 per cent by the end of this year before ticking up to 7.4 per cent next year, the IMF now says." http://www.cbc.ca/news/business/imf-canada-forecast-1.3531869 http://www.cbc.ca/news/business/imf-canada-forecast-1.353186...
- dgemm 11y agoMost markets in Canada are in slow decline, which reflects reality. Then you have the two special markets of Vancouver, which needs no introduction, and Toronto, which fits somewhere between Vancouver and reality. It would be interesting to examine the fundamentals of each separately.
- deleted 11y ago[deleted]
- stuxnet79 11y ago> Pretty incredible bubble price increases, given the growth rate of the Canadian economy. How can that end any other way but in a massive crash? I don't know sometimes. People have been saying that it's going to crash for the past 7-8 years but the prices just keep going up and up. Right now a lot of people are trying to snap up property before the prices reach impossible heights.
- ryanSrich 11y agoIt's always hard to believe the numbers, but I trust Redfin since I used them to purchase my home. I think the problem is comparing what's turn key and not. For example they say: > Portland, OR had the nation’s highest price growth, rising 16.1% since last year to $325,000... The problem is you're fighting 100's of people for that one house in Portland that is livable at $325,000. Most houses that cheap need a ton of work. SF on the other hand is just seeing their ceiling come into play. Only so many people can justify raising a family and purchasing a home in The Bay. Why not change jobs to Seattle or Portland and make around the same money, but spend half on a house? I think that's what we're seeing.
- tortilla 11y agoA bit off topic, but how was your experience with Redfin? I'm thinking of using them.
- gedy 11y agoI used them and it was excellent - exactly what I'd want as a tech-comfortable person. It's not the best for people who want a person to meet with in person or talk to frequently on the phone. Also note that Real Estate agents on the other end of the transition can be a bit annoyed by you using RedFin.
- wyldfire 11y agoWhat is it? Some kind of real estate brokerage service? It's not merely a research site like zillow or trulia? EDIT: ok, it looks like it's a real estate agency that's salaried instead of commission -- err, scratch that, they take a less-than-industry average commission. Sounds a little disruptive.
- mrgriscom 11y agoRedfin as a company takes a lower commission -- more precisely, they refund about a third of their commission to you. Agents themselves are paid a bonus based solely on client satisfaction surveys. At least that's how they said it worked when I used them in 2013.
- steven2012 11y agoI wouldn't hold your breath just yet. In the peninsula prices are up $100k in my neighborhood. Interest rates are still low so it will take some time.
- naakkupoochi 11y agoEast Bay - My neighbors on either side sold their homes recently (last week). The house on the right sold for 75K above asking price. The one one the left sold for 90K above asking price (around 20 offers for each house). Listing price for both houses were already high.
- muzz 11y agoThat really just means that both houses had too low of a listing price.
- gorkemyurt 11y agoDevelopers are finally building in SF.. http://www.bizjournals.com/sanfrancisco/blog/real-estate/2016/04/s-f-s-10-largest-residential-projects-of-2016-will.html http://www.bizjournals.com/sanfrancisco/blog/real-estate/201... http://www.socketsite.com/archives/2016/04/san-franciscos-hub-heights-2-0-and-potential-for-a-600-foot-tower.html http://www.socketsite.com/archives/2016/04/san-franciscos-hu... This is very good news, my prediction is that this wave of supply is going to reduce the prices for a while. There is actually still a lot of space in SOMA/Mission Bay/Central Waterfront to build. New construction is all going to be condos rather than single family homes, people who want to live in single family homes and drive to Costco on the weekends (nothing wrong with that) will continue to move to Seattle or Portland. Money is flocking to SF from all over the world through VC companies and mutual funds, still. It used to be VCs with previous exits who already live in the region but in the last 2 years a lot of dumb money coming in. At some point in the next 5 years Uber, Airbnb, Pinterest, Lyft, Dropbox, Slack, Palantir and Stripe are going to have exits, even if 3 out of 8 lives up to their potentials these exits are going to create a lot of potential home buyers. Facebook, Google, Apple and Netflix (yes, netflix) are going to continue growing their empires. If SF's city officials can pull it off, with the increased investments in public transportation eventually San Francisco is going to become a global A+ city. (https://en.wikipedia.org/wiki/Global_city https://en.wikipedia.org/wiki/Global_city) Only a 'black swan' event can stop SF's medium term growth. We already had a 'black swan' event in tech in the recent history, burst of 2000, everyone is expecting a similar story here. It's the nature of 'black swan' events that if people are already expecting things to fall apart, the magnitude is much less. (https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory)
- 727374 11y agoSales plummet 22% in SF, yet there's a bidding war on every property? This implies that demand still outpaces supply so I don't see how you could predict a crash, yet. In reality, prices only dropped 1.8% y/y. And that was for March, which is traditionally a low-inventory month. I personally think the correction is still a year out.
- ChuckMcM 11y agoReaffirming once again that if "nobody can afford to buy them" the actual prices start coming down. A more interesting thing for me however was that owner occupied (which is to say the person buying the house lives there) has not been growing[1]. Instead third parties are buying the houses as investments and renting them. That is a really risky strategy in a place like SF with rent controls as the floor can fall out of the market, and you're unable to raise rents to cover your balloon payment (or other over leveraged strategy) and that squeezes the investor to default. [1] https://www.homeunion.com/blog/investment-home-prices-rising-faster-than-owner-occupied-home-values/ https://www.homeunion.com/blog/investment-home-prices-rising...
- Flammy 11y agoA significant number are bought as investments, but NOT rented out, making the housing situation worse. Investors from more volatile economies (China) really see a few % up or down as incredibly stable compared to their native currency fluctuations.
- nitrogen 11y agoA huge chunk (but not a majority) of urban real estate in my city is also unoccupied most of the time, but I wonder how many are parking cash and how many are just summer vacation homes.
- fludlight 11y agoCurrency fluctuations are peanuts. The real risk in emerging markets is losing everything due to a massive economic downturn, political instability, or corruption.
- Cypher 11y agoEven if houses are flat its still better to put your cash into one than the bank...
- zippy 11y agobank - liquid asset house - illiquid, with maintenance, property tax, and insurance costs
- raldi 11y agoIs this just a reversion to the mean following a one-time jump due to IPOs from, e.g., Facebook and Twitter? I guess what I'm asking is, did SF housing prices merely fall back to where they were in 2013? Or all the way back to where they were in, say, 2009?
- BashiBazouk 11y agoNot even close. More like they dropped to a few months ago. 1.8% seems like a rounding error. Probably the middle to high end is seeing most of the drop. In the 2-5 million range, houses have been staying on the market longer. Houses around where I live are still selling for $100,000 + over what I paid in 2013...
- simonebrunozzi 11y agoAn Uber, Dropbox or AirBnB IPO would quickly make prices go up again. However, these companies don't seem to be preparing for an IPO anytime soon.
- jmount 11y agoMore like: distribution of sales prices fell. I don't think many individual homes sold for less.
- gigawhat 11y agoWeirdly, I own a house and think I'd be better off if prices fell-- fell a lot. I bought a few years ago and would be happy if prices uniformly dropped to those levels. Why? I want a 50% bigger/nicer house in the same area. But bigger/nicer houses have increased in price proportionally to mine. So the gap in absolute dollars between what I have and what I want has expanded quite a bit. My income has increased, but not really enough to cover the gap. Strong increasing prices really only help homeowners to the effect that they're eventually willing to downsize or move to a lower-cost area. If prices rise strongly and proportionately I suspect it just causes stagnation. I can't really upgrade without a windfall, thus my house stays off the market. So other folks can't upgrade to my house.
- beamatronic 11y agoNot to mention: Property taxes are "forever", even with Prop 13. In Santa Clara County, in the Bay Area, taxes are about 1%. So if your purchase price is $1,000,000, your taxes are about $10,000 per year, half payable in December and half in April.
- muzz 11y agoThey can go up a miniscule amount, 2%. So not exactly forever, but relatively close
- deleted 11y ago[deleted]
- tormeh 11y agoThe more expensive a property is, the less its price falls in bad times. Rich people are rarely forced to sell. It's a different market basically disconnected from the rest. I don't know what kind of house you want, but there's a nonlinearity there that might be important.
- the_economist 11y agoDo you have some data to back this up?