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While 2020 has certainly shown me that anything can happen, this is feeling eerily similar to Great Recession in SF/Bay area, where housing prices didn't bottom
by ProfessorLayton 6y ago
While 2020 has certainly shown me that anything can happen, this is feeling eerily similar to Great Recession in SF/Bay area, where housing prices didn't bottom out until 5 years from their peak [1]. The economic devastation that's happening is _not over_, but many signs point to this one being considerably worse than the last one.
While SF looks like it's doing pretty well now, prices did drop ~25% during the last recession, and they didn't recover until ~2013 [nominally]. Remember, a home that fell by 1/4 in price needs to appreciate by ~1/3 to be back in square one, which is considerable and shows that even the hottest markets are not immune from downturns.
SF has certainly recovered from much worse, and long term it will recover just fine, but for many the appeal of the city currently missing, and will continue to be missing for a not-insignificant amount of time. The price-to-rent ratio is currently widening as rentals continue to flood the market, as many are not finding the SF-premium worth it at the moment. All these downward pressures will surely [imo] put significant downward pressure on SF housing.
The wild card here is the Gov't, which has allowed many to put their mortgage on forbearance, and because of that I'd expect the real price movements to happen after that. However, that only applies to conforming loans, and not jumbo loans, which are on a case-by-case basis.
One more thing — with a grain of salt because I don't have a better source —, while this report says list prices have fallen 4.9% yoy, that's still 5% above contract prices [2].
[1] https://www.bayareamarketreports.com/trend/san-francisco-home-prices-market-trends-news https://www.bayareamarketreports.com/trend/san-francisco-hom...
[2] http://socketsite.com/archives/2020/08/400-percent-more-reduced-listings-on-the-mls-in-san-francisco.html http://socketsite.com/archives/2020/08/400-percent-more-redu...