patrick.net

It is a question of market timing, the OP is speculating that inventory will increase because prices have increased enough in SF. This increase in inventory will put pressure on prices, so sell now before that happens. This is a reasonable supposition but of course may not be true. I would *guess* given the psychology of home owners in SF that they wont take Greg's advice hoping, and not without reason, that prices will continue to rise. Bubble psychology is alive and well in SF. Will it burst in SF? Without an economic catastrophe I kind of doubt it. Prices may well flatten to what the market can bare, which in SF is quite high. I would hate to be looking to buy in SF. I think it is a unique market and reflective of some but not all areas in the Bay area.

More homes sold than for sale?

ELC says

Can someone tell me how there can be more homes sold than for sale?

For Sale is a shapshot on a day. Here, the 12th. Sold means over a month. Was the norm in a lotta places from 2003-Spring 2006.

badraig says

Sounds exactly like realtor propoganda during the bubble. People who listened to realtors then got financially wiped out.

Lots of them believed their own propaganda and got wiped out too. In 2006 I had an active email list of 100,000 Florida Realtors. Three years later over 70% of those addresses were bouncing.

gregpfielding says

But I hear from potential buyers every day and they are overwhelmingly worried that the market is taking off again and they don't want to miss out this time around.

It's that way in South Florida too. The newspapers are full of bullish press releases (as always). The problem is here they're finding out on the first offer they make how hard it is to get approved for a loan and how hard it is to get the property to appraise for the asking price. How the hell are people over in CA getting these huge loans?

Chart is right here on this website. Scroll down a bit.
http://patrick.net/?p=1211412

Call it Crazy says

I guess you weren't born yet back in 1988..... go pull some charts from 1988 to about 1995...

2008 was the first time anything like this has happened in RE since the great depression, it won't happen again.

I'm in the North Bay (Marin) and closed on our first house since moving here October 2002.

For all that time we were renting and for most of that time miserable...but our bank account loved us for the decision to stick it thru.

I've been fortunate to have an increasingly good income 2007 thru today so we began looking in earnest in January 2012 for a home once our lease ran out in mid-July. It was DEPRESSING. There was much less inventory than we ever saw in our 10 years of casually perusing the market.

The trough to buy in the North Bay was 2009-2011....due to restricted inventories, there was multiple bids offered on the first two houses we wanted to buy this year. We finally got the 3rd house, as it turned out the best of the bunch, but it ended up costing us about 5-7% more than we thought we could've gotten it for in 2011 (it was for sale then, too)

Like Greg, I think it a GREAT time to sell a home in at least close-in San Francisco Bay area today. You have less to compete with than in many years.

It ended up fine for us as we ended up getting a 7 year 0 points loan for 2.9%. So, tho we may have paid 5-7% more than last year for the same home, we are paying less monthly because of the lower rates this year. We have the savings to buy the house outright (we rented and saved all those years!!), but at 2.9% it's simply not smart to use your own money to buy these days.

Given the economic headwinds the US is riding into - no country can simply fluff off $55 trillion in National, State, Municipal, Corporate and Personal debts without major financial harm - this may be a high point in housing for some time to come.

robertoaribas says

your next paragraph shows you for the insulting jacktard you are... Being a longterm investor hardly counts as "looking for shortcuts", but if that's the best you got, go on with it!

Oh but when you insult others that's totally fine? You know where you can stick that double standard bs of yours buddy!

Expensive SFR's are going to drop in price over the decade. Old folks are either dying or downsizing. Interest rates don't have room to go down, and will have to be going up.

This is going to be a decade of a slow decline in expensive housing. Low end, cheaper inventory, don't know. But expensive stuff is going to go down.

Cash is going to be king for a long time in this industry.

Look - there is INFINITE room for int rates to go down.

What is more likely to happen:

1. Fed reserve raises rates or leaves them at 3% mortgage level and 'the world ends', RE prices crater, stock market tanks, riots in streets

2. Fed reserves continues to buy all mortgages/lowers rates to 2% then 1.5% then 1% for the next 20 years and RE prices go up - stock market goes up - cities get enough income to pay cops, no riots.

Easily its #2. They have PROVEN they can make prices go up despite there being no jobs and huge defaults and huge inventory of non payers squatting. Fundamentals did not matter in CCCP and they dont here in US now or in future.

Big hand of big gov only gets bigger (until collapse, then repeat). Its a looooong cycle.

Please explain how/why rates cannot be at 2% for a mortgage? easily they are already there almost.

Pocky, #2 just happened. "This time, the QE will take the form of purchasing $40 billion in mortgage-backed securities a month until the labor market improves (i.e. indefinitiely)." ZIRP confirmed until at LEAST 2015. See for yourself, the stock market got hyper-juiced in the last hour, gold and silver are up. House prices are going up as a result, at least in the SFBA where so many people receive compensation in the form of stock.

We have been driving toward that fiscal cliff. Well, the driver just mashed the gas pedal to the floor.

http://finance.yahoo.com/blogs/daily-ticker/bernanke-bazooka-open-ended-qe3-very-aggressive-says-173314037.html

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

freak80 says

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

We're little fish. We have to play their game, or we're going to lose. If you don't want to get screwed by inflation, do something with your money to get some yields. Where do you go and get some return on your money as well as return of your money? RE seems like a safe bet to me. Gold might go up, but it doesn't produce any income.

Some countries, even Germany is selling bonds at negative interest rates, even our own Tbill is only .20% Some banks are beginning to charge to hold your money, if you use a SDB to stash your gold/silver they charge you. Lots of people with their hands out, from bankers all the way to the poor. The trick is to keep the money flowing one way or another.

E-man says

4.5% fixed interest rate on the property for the next 30 years.

Friend at work just got 3.275% for 30 years with no point. I charge him more than that when he needs me to spot him on lunch money. I told him he is living in Gov't subsidized housing now. He is a PhD with 20 years experience. A very sharp guy, one of the best in his field, and he needs a hand-out from the gov't to buy a house. Nice.

E-man says

freak80 says

Real interest rates are already negative. Cash sitting in a bank account loses its value via inflation faster than nominal interest can make up for it.

Thank you Bernanke. Hope you and your buddies in Big Finance enjoy your free money at my expense.

We're little fish. We have to play their game, or we're going to lose. If you don't want to get screwed by inflation, do something with your money to get some yields. Where do you go and get some return on your money as well as return of your money? RE seems like a safe bet to me. Gold might go up, but it doesn't produce any income.

Learn from your victory. Prosper from your failure.

Prefer stocks over RE because I can set stop limits for when the next crash comes and sell automatically or within a mouse-click. Would hate the feeling of being stuck with anything for too long when the tide turns. Gold might go up? It rocketed from lows to high after the bazooka was announced. Free monies for everybody! ;)

Or, quoting the NAR, "Now is an incredibly good time to buy or sell real estate." :)

tclement says

Or, quoting the NAR, "Now is an incredibly good time to buy or sell real estate." :)

If they were being more open and honest in their words then the above would read more like this.

"Now is an incredibily good time to give me two times your savings that has taken you years to accumulate".

Assuming 3.5% down and a 6% rob from NAR (national assembly of robbers)

RentingForHalfTheCost says

"Now is an incredibily good time to give me two times your savings that has taken you years to accumulate".

Better than working every day! With that much money at stake, I expect the robbers to come out.

E-man says

RE seems like a safe bet to me.

I'm considering a house purchase in my area. RE is very cheap realative to rents here. But it's Corning, NY...the epitome of a "one industry town." If Corning, Inc goes tits-up or moves to Texas like everything else, RE will tank. Like nearby Binghamton.

Heck the local RE market probably tracks the GLW stock ticker pretty closely.

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

my bold prediction: wait a couple years and sell for 20% more than what you can get now.

SFace says

gregpfielding says

Here’s a bold prediction: There will be a record number of new listings in San Francisco this September.
Why? Simple: It’s an unbelievably good time to sell real estate.

Epic Fail, unless you mean record low. It's bascally one month supply for a region of 8M people.

Inventory San Francisco

Dec 2012 6,798
Nov 2012 8,173
Oct 2012 9,366
Sep 2012 9,894
Aug 2012 10,154
July 2012 10,674

Sep 2011 19,068

http://www.deptofnumbers.com/asking-prices/california/san-francisco/

Actually, these numbers do not include San Jose, but yes, they are very low indeed. The real question is when will inventory bottom? It's not like it can continue going down to zero and that's the end of the RE market as we know it. At some point, it must rise.

tannenbaum says

It's not like it can continue going down to zero and that's the end of the RE market as we know it.

It would be very amusing though. The CAr would starve to death. Bwahahahaha

Here's an updated blog post on it:

http://bayarearealestatetrends.com/2012/12/18/bay-area-housing-inventory-half-of-last-december-asking-prices-up-56/

tannenbaum says

The real question is when will inventory bottom?

Tough to say without really understanding why it's so low. Yeah, foreclosures are down, but that's only a small fraction of it. And, there was even more negative equity in the last few years than there is today, so that's not it.

Herd mentality maybe. I dunno.

SFace says

gregpfielding says

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

It's your prediction as you signed off on it.

Sorry, but saying record inventory when the opposite happened is an epic failure. Blaming the fundamental just demonstate your incompentence as it should be accounted for.

Greg: You should sell your house now before inventory floods the market

Seller: ok

Seller 3 months later: What happended to the flood of inventory you talked about? I sold too early.

Greg: Market is not following fundamentals

Seller: WTF does that mean? Not following fundamentals, seriously?

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits. This mentality of trying to time the highs is exactly what leads to the next crisis when prices crash again and then it's all poor me, let's get another taxpayer bailout! I seems like a suspiciously high amount of patnet posters always make the perfect trade with housing, but I have easily left $20K on the table a couple of times by selling stocks too early, it beats losing your ass though. If you want to treat housing like a riverboating stock casino, fine, just get rid off all the deductions and bailouts first and let the taxpayer off the hook - or maybe Patrick can add a fantasy housing section where we all can make bets and gamble against each other a little bit so everybody can bet on housing without buying RE or REITS ;)

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice.

Horrible? How much have prices risen since then? It's a bit early to make that call. If I tell somebody I'd sell AAPL at $600 and it goes to $750 but then drops to $450 I'd consider that a good call, even if it doesn't drop for a while. Staying with 10%-15% of the top is not that bad, isn't it?

Ok. I see you've added so far, I can go with that.

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice (so far).

Easy tiger. First, I'd recommend you actually read the Andrew's article. Then, I'd recommend you actually look at his body of work.
http://bayarearealestatetrends.com/author/schnageler1/

He's one of the good guys and even wrote a book about the horrors of NAR. He should actually be a favorite of patnet.

http://www.amazon.com/Homeownership-Any-Cost-Association-ebook/dp/B006FTIIW2

robertoaribas says

Well, my reliance on supply, demand, foreclosures rates etc. seems to be proving itself again... even in markets other than phoenix. Prices up, selling in September was a bad idea, as I predicted!

Yep. As long as supply is this tight, prices will continue to rise. The change will come at some point. It just wasn't this Fall.

SFace says

mell says

So what? if the seller sold for a profit then a profit is a profit and you cannot go broke making profits.

Greg and his group was adament that Sep 2012 was an "unbelievably good time to sell".

Sorry, that is just not the case and simply horrible advice.

I wouldn't be so quick to bury Greg for this. How lagging are the price indicators?

It's not like someone deciding to get out is selling and closing before the end of the month. I'd imagine the typical owner who says "honey it's time to sell" in mid September are included in the November or even December sales figures.

It's also worth noting that, in some spots around the Bay, September WAS the best time to sell.

Check out Danville, broken down into price tiers.

I had a Realturd call me earlier today and was telling what a great time it was to buy. He told me he had all his savings in Real Estate. I felt like telling him to "F Off".

gregpfielding says

Tough to say without really understanding why it's so low. Yeah, foreclosures are down, but that's only a small fraction of it. And, there was even more negative equity in the last few years than there is today, so that's not it.

Are numbers available for empty houses not for sale?

Building is very slow, right?

How many people missed 2005 and now are just holding on until prices get there again? Some of these people must have been the ones selling this spring/summer/fall as prices were significantly up.

evilmonkeyboy says

It seems like rents are dropping in the BA, they peaked (out of control) in the summer and now there are lots of rentals on the market. But what do I know I just rent here in the BA.

I'm moving out of the Bay Area at the end of this month. (my contract is over) My landlady is trying to get a $350 a month increase for a very small Millbrae area cottage. I'm currently paying $1,500 a month.

I wish her well, but that's a lot of money for a 400 sq ft property.

jvolstad says

My landlady is trying to get a $350 a month increase

That is a very real problem, that landlords think they are golden.

Is there apartment building going on in your area?

Mobi says

Since supply is low

I'd just like to say that every property on earth is for sale for the right price, terms, and conditions.

David Losh says

jvolstad says

My landlady is trying to get a $350 a month increase

That is a very real problem, that landlords think they are golden.

Is there apartment building going on in your area?

People looking in the bay area should look in the San Francisco (outer) sunset district. It's a bit far from the inner city (but hey, cycling is good for ya), very close to the ocean, no cars, hardly any crime, quiet, good air, the houses are a bit dated on average but you can get a $1700 sqft 2 1/2 bedroom for $2300 here. No rent increases.

David Losh says

Mobi says

Since supply is low

I'd just like to say that every property on earth is for sale for the right price, terms, and conditions.

Certainly, mines are for sale if you are willing to offer me the right prices. My guess is the supply will come back as long as prices keep increasing. You just have to guess where is the rolling-over point. I suppose you can make up a metric like Roberto to predit that.

robertoaribas says

or, you can just use my metric! It worked for selling in 2004-5, it worked for buying over the past two years...
http://robertoaribas.wordpress.com/2012/09/03/when-to-sell-a-home-especially-in-a-bubble/

But like I said in another post, Europe is a wild card here. Housing was the root cause of the 2008 financial melt down. So, for people keeping a close eye on the housing market like Roberto, it is not too hard to sell the houses before the sharp down turn. However, housing is not the only thing that can cause a financial collapse. If one of the stressed countries defaults on their government debt, potentially it would create turmoils in the banking sector and propagating here. But I suppose it is not too hard to see the writing on the wall.

SFace says

gregpfielding says

It's true. Andrew's prediction (which I shared), didn't come to pass. The market is far from fundamentals.

It's your prediction as you signed off on it.

Sorry, but saying record inventory when the opposite happened is an epic failure. Blaming the fundamental just demonstate your incompentence as it should be accounted for.

Greg: You should sell your house now before inventory floods the market

Seller: ok

Seller 3 months later: What happended to the flood of inventory you talked about? I sold too early.

Greg: Market is not following fundamentals

Seller: WTF does that mean? Not following fundamentals, seriously?

Hey, Greg got his take. From his perspective it was a slam dunk. Cha-Ching