patrick.net

Median condo prices in SF went up 23.20% in 2005.

What is the change of condo prices per square foot?

There are 300K studios and there are 5M penthouses...

"It looks like I wasn’t imagining things:
http://tinyurl.com/bta6n
Median condo prices in SF went up 23.20% in 2005." --Face Reality

Wow, ANOTHER year of ridiculous gains. You just have to ask yourself, what has happenned to any other asset class in history that has had a huge run-up like this?

I don't deny that the high-end housing where you're looking is probably not as badly overvalued as other types of units. And if you plan on holding this place forever, maybe keeping it in your family and have the money to afford the place, you might as well pull the trigger. It sounds like you REALLY want your own place and in that case paying a premium that you can afford may be worth it.

However, I would only add that trying to discount the current evidence of real estate overvaluation in San Francisco and thinking that current appreciation rates will continue is inconsistent with your screen name's credo of "facing reality."

True, but you can do a “short sale”.

I knew someone was going to say that. :)

"...he said that Sonoma is the new Sausalito."

Lmao...now there's a stretch. I suppose it's rather optimistic to hope for $1000/sqft someday up there.
Sonoma should actually hope it never becomes like S. Marin.

Athena, thanks for posting those #s
How far do you think sellers will chase the market down?

Expecting a high percentage of future appreciation on SF Bay Area real estate is really driving while looking in the rearview mirror. Also, what about the opportunity cost of using most of your earnings to make your mortgage payment? I expect that diligent renters will come out ahead of homeowners over the next few years.

So the median condo in SF-Oakland hit $616,800, eh? Wow.
I will say I'm impressed by buyers' continued willingness to bid prices far higher than rational expectations would allow, but then that's the textbook definition of a speculative bubble, no? Now worries, I'm sure those NAAVLPs will continue to pay off with future appreciation.

If I see negative numbers, I’ll definitely wait and rent meanwhile. So far, I haven’t noticed dropping prices (quite the contrary).

If you continue to speculatively buy RE until you actually see negative numbers, then --by definition-- you are basing your purchases on herd movement and have bought at the top. This is the worst "investment' strategy anyone could follow. Personally, rather than trying to precisely time the exact top (impossible), I'd rather cash out a bit early and leave a few chips on the table than ride this roller coaster all the way to the bottom. Everyone's tolerance for risk is different, though.

Also, when was the last time rents in major areas in CA were close to ownership costs?

I haven't run the numbers recently, but 2000 would be a good guess. They were certainly balanced (or better) during mid-to-late 90s (last trough).

The realtor (since 1978) in the area explained that with inventory expanding you can’t price “at the market” you have to be below the market to generate any buyer interest.

Yes, that might be the future for SF bay area sellers too.
"Price Cures All", and if inventory continues up, they'll need the "cure" in bigger dosages.

I'm seeing inventory head up again...is it earlier than normal for sellers to re-list?

“There are 300K studios and there are 5M penthouses… ”

Not unless they started building inverted pyramids or adopted mushroom-style architecture!

Huh? I was merely saying that a shift in market mix among these condos can produce huge movements in the median price. Condo prices are quite diverse.

If condo prices had crashed 25%, we would be hearing spins like "apartment conversions have dragged down the median, no need to alarm".

In the week of Feb 4, 2006, new home median price in San Mateo dropped more than 20% year-over-year, sales dropped more than 70% y/y!

Total new homes $829,000 -20.1% 11 -71.0%

(From www.viewfromsiliconvalley.com)

Does this mean more or less than the 25% increase in SF? :)

Simple - location, location, location. Most SFHs in SF are in relatively undesirable areas. Granted, there are some in the very best areas (such as parts of Pac Heights), but most SFHs are not located in those areas.

Can it also be explained that there have been more transactions on newer, more expensive condos in newly-trendy areas like SOMA? A lot of upsacle condos got built last year.

From Ben's blog: Orange County Home Prices ‘Down Sharply’

I believe BA is roughly in sync with OC in terms of buyer psychology. Perhaps time is up with Silly Valley real estates?

“Simple - location, location, location. Most SFHs in SF are in relatively undesirable areas. Granted, there are some in the very best areas (such as parts of Pac Heights), but most SFHs are not located in those areas.”

As doodler pointed out, the data comes from the entire metro area, not just SF. And, since the bulk of condo inventory created in 2005 was in new construction areas like Redwood City, San Mateo, San Bruno, would you care to rethink a while and repost another spin that's more plausible?

Definitely - a new market in “luxury” condos and lofts is evolving in SoMA.

I also expect new "luxury" condos in East Palo Alto. Similarity? Four Seasons Hotel. :)

At least the massive new condo project in Redwood City is located conveniently near one of their automatic gunshot detector stations.

Everyone hold on to your I/Os

Will the next one be a 50 bp hit?

At least the massive new condo project in Redwood City is located conveniently near one of their automatic gunshot detector stations.

Where is the project? Are the condos lined with Kevlar(tm)?

Will the next one be a 50 bp hit?

Prepare for even more inversion, if that's the case.

Prepare for even more inversion, if that’s the case.

I even prepared for free sushi.

Where is the project?

Between downtown and Chestnut, East of El Camino. There's another newer one going in South of Woodside Road, East of El Camino, in an even worse area. They're going for the Emeryville standard: build condos in the worst part of a rail corridor, carved out of Section 8 housing neighborhoods.

The Ikura is on me.

The Ikura is on me.

I will get some Uni.
Add one quail egg.
We have a cholesterol feast.

Converting chickencoops to living quarters for $79K MIT graduates in the Bay Area?

Even my cat lived better when I was living in San Jose, and he doesn't have any fancy college degrees.

Certainly there is some sort of larger metaphor being presented to us by this whole housing hysteria. Certainly it is an image of some higher, unpleasant truth.

Perhaps it's that California in general, and the Bay Area in particular is nothing more than a giant friggen' psych ward, where the inmate pay
for the privilege of being incarcerated.

Certainly the Bay Area is becoming a caraciture of its former self, if
not a shell.

Pray for the housing bubble collapse...

Pray hard!

Perhaps it’s that California in general, and the Bay Area in particular is nothing more than a giant friggen’ psych ward, where the inmate pay
for the privilege of being incarcerated.

There is a term for it: voluntarily committed! :)

“Is it earlier than normal for sellers to re-list”?
--I’m not sure that re-listing is part of the normal protocol.

DinOr--
I recall hearing about sellers delisting homes over the winter, hoping for things to pick up again in the spring. I'm not sure that's the case, but I'm seeing inventory pick up again. Perhaps this is a seasonal norm.

Pray for the housing bubble collapse…

Divine intervention is not necessary. We should pray hard for America though.

If you are serious about selling your “home” why would you take it off the market for a few weeks then “re-list”. What’s the strategy here? Is this like “window re-dressing”?

They are attempting to manipulate buyer psychology.

Now you see it. Now you do not. Now you see it again. Buy before it disappears.

If you are serious about selling your “home” why would you take it off the market for a few weeks then “re-list”. What’s the strategy here? Is this like “window re-dressing”?

They are attempting to manipulate buyer psychology.

I don't know if there's any truth to it, but I did notice a significant drop in home listings late November to Dec '05. All the same, I can guess which sounds better: listed since July 05, or just listed Feb 06.

I don’t know if there’s any truth to it, but I did notice a significant drop in home listings late November to Dec ‘05. All the same, I can guess which sounds better: listed since July 05, or just listed Feb 06.

Yes, realtors can point to the listings and say that most entries were listed not long ago. Meaning: buy now or they will be gone!

When a property sits on the market for a long time, people start to wonder what’s wrong with it. The de-list/re-list combats that psychology.

The price is wrong. This fact cannot be corrected until the price is significantly reduced.

Also, any respectable buyer's agent should be able to dig up this relisting history.

This is really flirting with some core ethical issues then isn’t it? I can see someone backing out of a listing b/c of personal issues, job transfer didn’t go through etc. This is getting awfully silly for adults, why aren’t there at least some guidelines as to what is ethical/legal here?

I tend to agree here. But to me it is mostly a silliness issue. Any rational buyer with a competent agent should be able to see through the smoke.

But again, I can also say that a rational buyer in this market has wings. This statement is just similar to "a unicorn has one horn".

I'll step in and say something about "bay area psychology". As a person coming from out of state, I noticed something oddly amiss here. After a few years, I've come to realize that people here seem to in many ways be fairly progressive, but alarmingly immature about tons of things. Back home, you got your job, you got your house, you had fun on the weekends, but you got your act together, and didn't fool around because by the time you are 30, you reallly should be acting like an adult. That isn't so here. I know way too many people who are 35-40 years old, still partying it up every night, drinking like drunken sailers, and the whole nine yards. The lack of maturity comes I think from the lack of experience many people have here in respects to housing, family, and kids, which a very small percentage have here. It isn't their fault, but in the end, you have a TON of really immature and financially irresponsible people who don't know what the hell they are doing, bidding on something they cannot afford, and because of this lack of maturity, the sheer stupididty just keeps right on going. Again- people from TN give me real funny looks when I mention CA housing. Just my observations...

"Will the next one be a 50 bp hit?"--PeterP
"Prepare for even more inversion, if that’s the case." --Randy H

Remember guys, HITMAN tried to tell me that a basis point is actually 1/10 of a percentage point rather than 1/100th of a percentage point a few threads ago (http://patrick.net/wp/?p=151#comments), so in his fantasy world that is going to be one Hell of a yield change and one Hell of an inverstion!

Ladies and Gentlemen, Scope this:

Barron's: Get Ready for 'Shock' Over Mortgages

Barron's warns that "sticker shock" is hitting homeowners with adjustable mortgages as rates have risen.

The rate increases may have grave effects for those with mortgages and the overall U.S. economy.

Ominously, the respected financial weekly says that "Over the next two years, monthly payments on an estimated $600 billion of mortgages, to borrowers with checkered or no credit histories - the "sub-prime" market, may zoom as much as 50 percent higher as the two-year teaser rates on hybrid adjustable-rate loans expire."

Barron's calls this a "reset problem" that poses a significant risk to the country's economic well-being. [Editor's Note: Sir John Templeton and Financial Intelligence Report first warned of this mortgage nightmare scenario - find out how to protect your investments - Go Here Now.]

Mortgages taken out by sub-prime borrowers include Hybrid ARMs, with low teaser rates in the early years, and IO Mortgages, which initially charge interest only.

Nearly all the $1 trillion in outstanding sub-prime loans were taken out in the past two years, most with an introductory rate period of only a few years, so the "teaser rates" on many of these loans are due to expire shortly.

Worse still is that due to the Fed's hikes in short-term interest rates, adjustable mortgages will see a boost in interest rates when they reset, according to Barron's.

In the recent past, borrowers who couldn't handle the increase in their monthly payment could sell their home to pay off the mortgage and even reap a profit, thanks to soaring housing prices.

But home prices now appear to be leveling off and in some places even declining. And inventories of homes are dramatically rising - meaning it will be difficult for borrowers to sell off their properties like they could in recent years. And many borrowers have only a narrow gap between what they owe on their mortgage and the price their house could fetch if sold - or no gap at all.

Doug Duncan, chief economist of the Mortgage Bankers Association in Washington, D.C., is optimistic:

"I just don't see any coming collapse in the sub-prime market as long as the U.S. economy and job growth stays strong and interest-rate increases remain subdued."

But according to one doomsday scenario outlined by Barron's, we could see "a coming spiral in delinquencies, foreclosures and credit losses from tapped-out, sub-prime borrowers facing monthly payments they can't meet."

Sir John Templeton first warned housing prices could crash 50%. Find out what he said and learn how to protect yourself and even profit from the coming storm

I don’t think that people in SF actually are progressive. People tend to be liberal about certain things, but people are very afraid of change here.

I am a moderate conservative but I tend to be very open to changes that would improve the society. (e.g. I will not object to a Bay Area nuclear power plant)

Perhaps there are no distinction between liberals and conservatives, just human nature.

Can a platform like Zillow help get rid of those tacky “Unicorns on Black Velvet”?

We probably need to wait for the open platform. Instead of a listing-based service, we need an address-based service. Users should be able to see the entire history (status, ownership, price) for any given address.

OpenMLS, banzai!

Thats a good point SFwoman, and frankly, sometimes I almost think that too much liberalism can actually lead to digression, as seen by the subject we are discussing here.
On the other hand, there are other extremes. Where my parents live, they are experiencing an explosion of growth. I am only 30 and I can't recognize places I was familiar with 10 years ago. The sprawl in many places in the south is insane, and ther is hardly any regulation to control it either. Subdivisions full of Immense houses, chain after chain of fast food joints, wal marts on every exit, and freeways that seem to pop up every year. There are 6 major freeways that run through TN now. The result is very affordable housing, but a lot of urban blight and the irreversible changing of areas that were once farmland. The Bay area is the antithisus of this, not wanting any change, which causes stagnation and a 2 tier class system similiar to Brazil.. and I still think it causes a slower maturity rate for long term residents. You only mature when you tackle life's major decisions, and people do not experience those things here until much much later.

Subdivisions full of Immense houses, chain after chain of fast food joints, wal marts on every exit, and freeways that seem to pop up every year. There are 6 major freeways that run through TN now. The result is very affordable housing, but a lot of urban blight and the irreversible changing of areas that were once farmland. The Bay area is the antithisus of this, not wanting any change, which causes stagnation and a 2 tier class system similiar to Brazil.

Change is the only constant. We can never go back to the way things were, no matter how many NIMBY laws get passed. 30 years from now our children may be pining for the "good old days" (the way things are now) and see today's world as a sort of "Golden Age" of relatively low population densities, low energy prices and a large prosperous middle class. Who knows?

Personally, if my only choice is between the affordable "urban blight" that relatively unrestricted devleopment brings vs. begging some old couple for the "privilege" of paying six figures for their converted chicken coop, I'll take the blight, thank you.

"Personally, if my only choice is between the affordable “urban blight” that relatively unrestricted devleopment brings vs. begging some old couple for the “privilege” of paying six figures for their converted chicken coop, I’ll take the blight, thank you. "
Well stated, HARM! Definitely a case where somewhere between the extremes is desirable.

Interesting Mortgage Purchase Index trend data here:

realtyworldcal.com/

@SFWoman, :lol:

Save that premis for the next 'Bubble tales' creative writing thread.

Save that premis for the next ‘Bubble tales’ creative writing thread.

Can you create one?

Or avian flu could evolve into a human-human transmissible virus or something else pop up and wipe out a fourth of the worlds population and we could end up bulldozing the sprawl.

Well, you are the expert in microbiology.

Ice (avian flu) or Fire (nuclear war)?

Will we have to perish twice?