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House Prices Drop Again in San Francisco and Silicon Valley
- the_70x 7y agoamazing drop -_-
- lordnacho 7y agoSeems to be really strong seasonality. How does that make sense? Wouldn't people put off their purchases until -it looks like- the end of the year?
- repsilat 7y agoIt's just a median price, not a proper index. Probably just people buying bigger houses/better locations at some times of year.
- i_cant_speel 7y agoSummer is generally the busiest time of year for real estate purchases and Christmas/New Years is generally the slowest.
- bradleybuda 7y agoAnecdotally, this is true in many places but not true in San Francisco. August tends to be slow for purchases in SF for historic reasons that I don't fully grok, but it shows up in the data and is "common knowledge" among local agents.
- bitbckt 7y agoSummer is the slow season for real estate in SF. The peaks are in Spring and Fall.
- hackin247 7y agoMaybe for SF. But for outlying areas, summer is still peak because parents don't want to move when kids are in school.
- droithomme 7y agoHouses are ugly and wet in winter. There's definitely seasonality to the housing market. Most sales in summer. And winter best time to buy, can save 10-20%.
- seanmcdirmid 7y agoUnless they are desperate, any wait until summer to sell, so winters can be supplied constrained.
- ramraj07 7y agoPossibly also select for more problematic houses?
- m463 7y agoI think home purchases are made after the school year ends, but before the next school year starts.
- paulddraper 7y ago> Wouldn't people put off their purchases until -it looks like- the end of the year A. Housing is one of the basic requirements, and there are a variety of reasons why you wouldn't be able to time it like that. E.g. ended a old job, started a new job, marriage, birth, death. B. Even outside large life events, many people don't want to disrupt large holidays with a stressful move. Ditto for school terms. C. Houses look and show better in summer that winter. Seeing a healthy yard instead of bare trees, snow, and brown grass is good for value. D. Often, the person buying a house is selling a house at the same time. Your new house costs 10% less in the winter, but your old house sells for 10% less as well. (Still a good deal if you are upgrading; just less of a good deal than you might initially think.) E. If buying a house is absolutely conditional on selling one, winter is a somewhat riskier time since the market's volume is lower.
- repsilat 7y agoNot that I think much of technical analysis, but from eyeballing those charts it looks like we're right on the (upwards) trend that has held all decade, with the exception of people getting a bit over-excited in 2018. I'm quietly hoping for it to flatten off or drop, but I don't see it in those charts.
- wahern 7y agoHere's a site graphing in different ways 30+ years of SF and SF Bay Area market data: https://www.marymacphersonsf.com/30-years-of-san-francisco-bay-area-real-estate-cycles/ https://www.marymacphersonsf.com/30-years-of-san-francisco-b... The pattern has been the same since the 1980s.
- rficcaglia 7y agoStanford is not going anywhere. UCSF is not going anywhere. UC Berkeley is not going anywhere. VC not going to completely uproot anytime soon. Can’t build much farther out in the suburbs due to water shortages, and not making more land. NIMBY prevents higher density housing projects. Apart from fires and earthquakes, I don’t see why the trend will change.
- mdorazio 7y agoBased on the charts, this looks more like a cyclical bounce rather than a long-term trend. Even at "9.5% below the peak in May 2018", that's only a little over a year of downward pressure. The question is if an economic downturn combined with new housing starts can actually upset the long-term upward trend for more 18 months.
- lallysingh 7y ago$100-200k of depreciation in a year is rather steep!
- rconti 7y agoYup. Sounds healthy to me, and hardly a "pop". Things were overheated and need to deflate a bit. In my 'hood on the Peninsula, single datapoint I know, a house was just listed yesterday at $1.25m with a zillow estimate of its peak value at $1.5m in October 2018. That corresponds with my "feel" of the market in the area, as someone who still has zillow listings emailed regularly for the past 5 years for my zip.
- asabjorn 7y agoSF Bay Area still has a fundamental problem with a decades long backlog in building new housing supply. Until the fundamentals are solved prices will continue to closely track the max capability of normal working class people to pay for existing supply. This is unfortunate, since this is money better spend on innovations and people getting enough wealth to start their own thing in their garage.
- oppositelock 7y agoStarting your own thing in your garage is one thing, but we have a much bigger problem, in that service industry workers simply can't afford to live within a reasonable distance of this area, so there's a shortage of that form of labor, despite paying well over minimum wage. Local stores, bakeries and restaurants, are closing down at a fast rate. I've been living here for a long time, and I'm sad to see small businesses being displaced by upscale chains. Downtowns areas which used to be a mix of small businesses and restaurants, are turning into chains of upscale restaurants and shops that are out of my price range (mid range tech worker) We're going to find out what an industry town looks like when all industries but one or two are priced out, and the initial indications aren't very nice.
- xeromal 7y agoYou're basically left with hipster restaurants and coffee shops that'll charge 10$ a coffee and 20$ a meal.
- e40 7y agoService people? Seriously, people who make $100,000 a year will have a lot of trouble living in a nice place and still be able to save for retirement. I don't know how many people in the Bay Area make $100k or less, but I would guess many millions.
- echelon 7y agoI don't know why SF is so popular. It smells bad and is always cold. Atlanta, for instance, has way more culture (rap, hip hop, country, hollywood) and diversity (of race, wealth, background, career, etc). The food scene is phenomenal - I follow people on Instagram to find out where the trendiest midnight pop-ups are. Music is everywhere. Art permeates. It's about as far from a monoculture as you can imagine. I own a huge home in the city and pay less on my mortgage than people in SF pay for rent. It's a cool hipster place too - 1800s cotton mill with 20 foot ceilings. A couple of my coworkers have fairly large machine shops in their homes. Space is practically unlimited here. Food is cheap, rent is cheap, but the experience and lifestyle exceeds expectation. I work for a tech company and make the same wages y'all do. The only thing that sucks here is transit, but I live on the Beltline and walk/bike everywhere, so it's not so much a problem for me. I feel like tech needs an exodus from SF. A lot of the money for innovation is just being handed over to landlords.
- droithomme 7y agoI think the most important principle here is that no reasonable and compassionate housing reform should be attempted until I, I mean, until people, until people have a chance to cash out at the peak.
- samcheng 7y agoNote that the lockup for the recent spate of IPOs hasn't expired yet. It's possible that there will be a small recovery/bounce in the coming winter and spring. We'll see.
- mr_tristan 7y agoIt's weird, but I wonder if people may be holding on to supply with this in mind. Or even waiting until next spring.
- dougmwne 7y agoBut decreased supply from buyers waiting to list should increase prices, not decrease them.
- refurb 7y agoIndeed. However, I wonder how median price is impacted by a shifting mix of the houses that change hands? If buyers were moving towards the lower end of the market and away from the upper end, you could see the median price decrease when in fact any given house has actually gone up in price.
- nostrademons 7y agoNow, at least. If the buyers don't materialize and they give up on waiting, it increases supply and decreases prices.
- foggyeyes69 7y agoIf they were holding on to supply, it would keep prices high (since the people that did want to buy houses right now would have to pay higher prices to make up for the lost revenue sellers would have gotten post IPO
- rconti 7y agoWith a seemingly endless stream of stock wealth, those recent IPOs don't even cross my radar, frankly. I don't have the impression that there are more IPOs recently than there had been over the past decade, but maybe I'm wrong.
- pascalxus 7y agoSF median price is 1084$/sq ft. It still has a long long way to drop before it gets anywhere close to the 128$/sq ft nationwide average. At the rate of -6% per year, it would need to continue dropping at that rate for 35 years before we reach the national average. So, one way or another, we're going to be stuck with extremely high housing prices for a really long time.
- GuiA 7y agoWhy would one ever expect the median price per square foot in San Francisco, a metropolis with high economic activity, to ever approach that of the US on average?! If we’re going to pick targets, then comparing it to other large metropolises in the US makes more sense (LA: $678, Seattle: $526, San Diego: $447)
- pascalxus 7y agoThose are more examples of over-regulated over-zoned blue state cities that have done it wrong. Take a look at a city that knows what they're doing with housing, like Chicago or Houston (population 2 million and over, and Houston growing x4.5 faster than SF!). Houston added 364K people in the last 8 years. How many did SF do, a pathetic 80K in a city that has sooo many tech companies and soo much money. SF and other blue cities have a lot to learn about how to grow, and how to create the type of policies that allow them to do so (some of the population is hellbent against that). Know how much housing costs in a city twice as large as SF, growing x4.5 times faster, Houston is 143$/sq foot and puts the entire West coast and every other blue state/city to shame.
- asveikau 7y agoI don't know much about Houston, but it's worth noting that Houston has 14x the land area.
- inferiorhuman 7y agoAnd no zoning laws whatsoever — which is great until some chemical plant next to a retirement home blows up and people die (or are seriously injured).
- AdrianB1 7y agoThe title of the article is misleading. First, is not a serious drop and it is also heavily influenced by seasonality, so "drop again" is kind of pointless, it will drop every year in the low season.
- awolf 7y agoThe article is comparing year over year. July 2019 to July 2018.
- lovfishing77 7y agoPrices are definitely softer than they were a year ago, but they appear to have flattened. Note: Summer of 2018 was the highest. Prices reached euphoric levels as people overbid on homes. I'm not certain many of those buyers will recover those costs anytime soon. Here's the median sale price from Trulia: https://www.trulia.com/real_estate/San_Jose-California/market-trends/ https://www.trulia.com/real_estate/San_Jose-California/marke... We've also done some analysis on home prices in the popular cities. Compared to 6 months ago: Fremont https://agentsunlocked.com/trends/Fremont https://agentsunlocked.com/trends/Fremont Single family homes in the 1500-2000 sqft range are down by about 1% San Jose https://agentsunlocked.com/trends/San-Jose https://agentsunlocked.com/trends/San-Jose San Jose is up by about 2% Palo Alto https://agentsunlocked.com/trends/Palo-Alto https://agentsunlocked.com/trends/Palo-Alto Up by 4%. Inventory in PA is usually quite thin. San Francisco https://agentsunlocked.com/trends/San-Francisco https://agentsunlocked.com/trends/San-Francisco SF is flat.
- sjg007 7y agoA recession resulting in job losses in tech would probably drop house prices. Still at 1.5 million there’s a long way to decline.
- smaili 7y agoYet from what I've seen rent prices continue to hold or rise. If I had to guess, more and more people may be opting away from home ownership so the charts on demand for purchasing homes may be trending downward as demand for renting trends upward. Would've been interesting of the article juxtaposed the two but it could help explain why prices for one has gone down as the other goes up.
- dba7dba 7y ago>>> more and more people may be opting away from home ownership I don't think people are opting away from home ownership but rather forced away from home ownership due to high down payment requirement and lack of enough jobs that allow someone to save enough. Who has $100,000 in cash to put down 10% downpayment? It is a vicious cycle. Less people are able to afford downpayment. So more people are crowding into rental market. But affordable rental supply is decreasing as more rental units are converted into condo/house AND more people are forced into rentals. It is really a vicious, destructive downward spiral.
- outside1234 7y agoThere aren't enough 1%ers being minted by things like Google and Facebook IPOs to drive purchases. (Winter is coming)
- PaulHoule 7y agoWhat is the seasonality? It looks like prices peak in the summer and bottom out in the winter. The difference in price isn't far off from what a Realtor would charge in commission (otherwise there would be arbitrage.) Am I right about that?
- not_a_moth 7y agoHaving boots on the ground here, have to wonder if related to all the increased Austin emigration.
- nostrademons 7y agoI'm seeing significant migration to basically any liberal city with a decent quality of life. I've lost friends to Boulder, Toronto, Boston, Raleigh/Durham, Seattle, and Sydney (Australia).
- hombre_fatal 7y ago> Sydney (Australia) Do you think people on HN don't know where Sydney is?
- gumby 7y agoI don't know why the article title (and therefore this post's title, currently) says "House prices drop" as the article specifically says the opposite: > In California overall, there is now a bifurcation: Condo prices are already falling on a year-over-year basis, and house prices are still rising.
- asdf333 7y agoin sf bay area specifically it is dropping. as the title says. in california (which i am sure you know is different from the sf bay area) house prices are slightly up.
- diogenescynic 7y agoBecause the general quality of life here is miserable and it’s a filthy area. For instance, in recent events the DA is fumbling the prosecution of a homeless attacker and the judge said jail wasn’t always the solution... I saw a guy pull his penis out on the BART escalator and rub it on 3 women! I saw another guy with a huge knife walking around the BART platform. Anyone who took the Civic Center BART would remember the hallways of heroin addicts with needles in their arms. And then houses cost $1M for a house where cops won’t do anything about people shitting on your property or camping on your property unless you have a restraining order... and then you a job you work 9-17 hour days at? It’s just not worth it. I just wish I knew where I wanted to escape to. Seattle, Portland, Denver are all nearly as bad and getting worse. Where are the normal people fleeing to? Is there refuge somewhere? Austin is seemingly more appealing all the time, but the weather and politics of Texas are turn offs.
- privateSFacct 7y agoI'm also curious where people are going - one place is out on the BART extensions. Public schools 9's and 10's, reasonable police response to violent behavior etc (I saw guy spit on old women on BART, she was near tears, she'd asked him to move his feet (he had them out across the handicapped seats). No one even blinks - my guess is he could punch but not kill her without consequence.
- ramraj07 7y agoNew York? What's wrong with new York? They're authoritarian in just the one thing most people want them to be authoritarian on, which is policing
- WheelsAtLarge 7y agoOver the years I've constantly heard about how expensive X city is. But you look 10 years later and it's even more expensive. If the city has jobs and the weather is relatively nice versus the rest of the country then don't expect the home prices to drop for any long period of time. What ends up happening is that a set of people that can't get the right paying jobs get priced out and those that have the right skills move in. We see it over and over again. You would think that technology would have disrupted the situation but it has not. My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay. Los Angeles is one of those cities that has long ago priced many people out of being able to buy a home. So what has happened is that people commute into the city from cities around LA. I don't expect that to change in most of our lifetimes.
- make3 7y ago"If the city has jobs and the weather is relatively nice versus the rest of the country then don't expect the home prices to drop for any long period of time." people move there because of the companies and their HQs, and how the density drives the salary up, it has very little to do with the weather? "My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay." Again, what does this have to do with the primary motivations to move?
- scruple 7y agoI moved to LA for work, but I've stayed for the weather.
- forbin_meet_hal 7y agoLeft Bay Area in mid-2000s. Cannot go back. Not sure if I want to.