patrick.net

I don't live in SF, but hearing the kind of prices they have out there... I think they are suckers for not selling it while it's so incredibly high.

But you know, human nature, greed. Once something is expensive everyone wants it because they think it will make more, and when it will drop a few years from now, they will all cry and panic.

Good article, thanks for sharing.

Good marketing bloggers are less transparent. You didn't need to read the whole article to know it was an agent's work

About Andrew Jeffery

Andrew Jeffery is co-founder and CEO of Cirios Real Estate.

drew_eckhardt says

Good marketing bloggers are less transparent. You didn't need to read the whole article to know it was an agent's work

About Andrew Jeffery

Andrew Jeffery is co-founder and CEO of Cirios Real Estate.

He's one of the great ones. He's also been writing about the real estate market for years for minyanville (when it was great), before bay area real estate trends. He has also written an ebook that shreds NAR.

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

If you are in SF, he's the agent to talk to.

Will prices "go up more" Roberto?

robertoaribas says

sell now, before prices go up more...

Come on Roberto,we are talking about SF market and you are talking about your little Phoenix market with less then 100K properties - that is not even DP in SF market.

robertoaribas says

WHen those factors are in play, holding out for more price increase is the smarter move.

Sure, to a point. That's what everyone thought in 2006 too. Personally, and I guess I am just a financially conservative guy, if I had bought a house, it was above-water again and I had been thinking of selling, I would sell now while I know I can break-even at the least. Yes, waiting a year might net me some extra cash, but it might also get me back underwater. I think that it was Rockefeller that said that his secret to weathering the depression well was, "I sold too early." The ridiculously low supply we are seeing now won't last forever, and when supplies do return to historic norms, the generally weak economy will push prices back down to some level.

It's anyone's guess what will happen, really. The whole market is completely manipulated, top to bottom, and trying to guess what will happen with textbook economic principles doesn't seem to work out so well. Knowing that it is manipulated is a good start, but from there I really don't know how the tremendous downward price pressure from market fundamentals will reconcile with the tremendous upward pressure from various government and central banking policies. That's the big question here: for how long can reality be defied via financial engineering? I am starting to think, "indefinitely, or at least until the entire system comes crashing down, at which point buying a house will be very very low on my priorities list."

gregpfielding says

Here’s a bold prediction: There will be a record number of new listings in San Francisco this September.

There will be a record low in the number of new listings. I have never seen so few homes in the market in SF from 11 years living here.

You can't time the TOP or the BOTTOM. All you can do is look at the fundamentals of the market, and most importantly the fundamentals of your own financial situation.

Right now, the job situation is become more acute, wages have stagnated, and hiring forecast are minuscule. HP announced this morning that they are going to lay off 29,000 people (almost 1/3 of the job growth claimed for the entire U.S in August).

Does this sound like a good platform for higher housing prices?

Greg may be right. Unless the government starts subsidizing $1,000,000 mortgages, I don't see it.

robertoaribas says

holding out for more price increase is the smarter move.

Haha. Thanks for the laugh. Holding out for a 1 million $ shack to be 2 million $ shack? Not a even a chance for another two decades. For BA it is all about holding the bag of high mortgage for life time and hope for the best that there will be no major downward movement in economy in next 10 to 20 years.

bmwman91 says

indefinitely, or at least until the entire system comes crashing down, at which point buying a house will be very very low on my priorities list."

Funny. I said that in another thread - fall of the Roman empire!

robertoaribas says

maybe at some price points in the bay area it makes sense to sell. However, multiple real world home buyers have come to this forum, and complained about lack of inventory, bidding wars, and rising prices even in parts of the precious bay area. WHen those factors are in play, holding out for more price increase is the smarter move.

I wish my parents would take Greg's advice and sell now, while the gettin' is good. I tried my best to convince them when their hood was selling for 500K to 650K (and they do live in the Concord hood--just sad what it has become).

When house prices are this insane AGAIN, they have nowhere to go but down. My folks have watched their hood values go from 150K low back up to around 250K. My siblings and I just dread having to watch them live in a declining area just like they watched their parents refuse to move out of San Pablo.

Once the kiddos are settled into their "fortress" neighborhood schools, prices must fall.

robertoaribas says

greg you are kind of like all the realtors who kept saying 'buy now' as the market clearly pointed otherwise.

Robert,
It's the exact opposite. I've been blogging about the bubble since 2005 and over the years Patrick has linked to scores of my articles. I'm happy to have been on the right side of everything.

Prices will probably still drift a little higher in SF and some of the other hottest markets, but this uptick isn't based on fundamentals. Here in the Bay Area, inventory is down 60-70%. Of course prices have responded.

The truth is that if the inventory was the same as last year, we'd be down another 10%, not up. I don't know when inventory will begin to increase, but everyone who didn't sell in 2012 will be an additional seller in 2013 or 2014.

Things could turn back down again just as quickly as they turned up.

rufita11 says

I wish my parents would take Greg's advice and sell now, while the gettin' is good.

I'm happy to talk with them. Lemme know.

gregpfielding says

Here in the Bay Area, inventory is down 60-70%. Of course prices have responded.

Maybe you have better information since you are in the industry, but I would assume that a huge part of the reason for the low inventory is underwater loaners holding on in hopes of loan mods, free government refi's or enough price juicing so that they can sell to at least break even. Some may well be underwater enough that they can't afford to sell, but I am not sure how many people are in that category. I'd assume that most just don't want to eat the loss and are hoping that election-year shenanigans will rain free money upon them and Ctrl+Z their unfortunate financial decision to buy the wrong house at the wrong time in the wrong place.

That, and I have to assume that some are waiting for the lock-up on FB worker bees' stock awards to be lifted. Despite the price declines in the stock, there will still be a couple thousand 25-35 year olds running around with a few hundred thousand dollars that want houses all along the peninsula (none of them are going to LOSE money on their awards, regardless of the stock price).

bmwman91 says

Maybe you have better information since you are in the industry, but I would assume that a huge part of the reason for the low inventory is underwater loaners holding on in hopes of loan mods, free government refi's or enough price juicing so that they can sell to at least break even. Some may well be underwater enough that they can't afford to sell, but I am not sure how many people are in that category. I'd assume that most just don't want to eat the loss and are hoping that election-year shenanigans will rain free money upon them and Ctrl+Z their unfortunate financial decision to buy the wrong house at the wrong time in the wrong place.

My best theory as to why inventory is down so much: OPTIMISM

Yes, foreclosures are delayed, but they were a year ago. And underwater sellers can do a short sale just as easily today. Robo-signing didn't cause the drop.

The only factor that could have such a dramatic, uncoordinated effect on hundreds of thousands of would-be sellers at once is simply that the herd has become optimistic.

Beginning last winter, inventory was so low that we started to hear about multiple offers. Ever since, I think that a ton of would-be sellers have been holding out and watching. A run-up of 10% or more could give an underwater owner equity again. Or make it worth it for a potentially strategic-defaulter to hang on a while.

No policy is different-enough in 2012 to have caused the inventory plunge. It has to be herd's social mood changing to believe that, at least for a little while, prices are going up.

What's worrisome about this theory is that it means there are scores of sellers who will probably list their homes the minute it looks like the rally is ending.

Anyone got a better theory?

APOCALYPSEFUCK is Shostakovich says

It's never been a better time to dump your crap on the next biggest sucka!

My money is on early 2007.. late 2006 as being the best time in history to dump property...

NOW, not so much.

Call it Crazy says

I believe that's the reason. They would like to sell but can't afford to come up with the difference. Plus, they need money to pay commission, closing costs, move and put down as a deposit on a rental or new house. That's a lot of cash needed....

I don't think many know of the short-sale procedure or are afraid of what a short-sale will do to their credit... so they sit and wait for the housing fairy to make their houses rise in value..

I think they have a long wait.....

That's just it.. they will get to WAIT for free while you keep paying rent. :) They may have enough cash after a few years to buy a property somewhere else in the US outright.

Call it Crazy says

Waterfront property on its own private island now available. Call soon, this property is going fast!

robertoaribas says

Prices are going up because of low inventory, but if inventory was high... they wouldn't be going up... wtf? seriously?

Economics 101. Supply and Demand.

Seriously.