Listening to this Channel 7 ABC report they list 4 reasons home prices may drop - clearly not good with math since it's a "triple whammy" headline.
1. Shadow Inventory - California 80,000 homes, and 5 million nationally over the next 2 years according to two studies released yesterday. Both from currently banked owned that haven't hit the market, and those delayed in becoming foreclosures because the owners are trying to get loan modifications right now.
2. Rising interest rates when the government stops buying mortgage backed securities
3. Home buyer tax credit expiring
4. Jobs - I guess this wasn't a "whammy" in this report, but as one interviewee says, it could be the only item that really matters.
The caveat here - right now there is a lack of inventory and high demand. We're hearing a LOT of multiple offer stories, and the above ABC report quotes offers going 5% to 10% over the asking price on the Peninsula. I have several very frustrated buyers here in the City because they can't find what they're looking for. So... Sellers... IF you believe the above report, now is the time to sell.
Showing posts with label forecast. Show all posts
Showing posts with label forecast. Show all posts
1/23/10
Shocking turn around in SF Real Estate
December 2009 vs. December 2008 - night and day in San Francisco Real Estate
Three charts showing the massive year over year change in the San Francisco 2 BR Condo market. This is Terradatum data using SFAR MLS info.
Shocking truth #1
The number of listed Condos is down 18% year over year while sales are up 74%
Three charts showing the massive year over year change in the San Francisco 2 BR Condo market. This is Terradatum data using SFAR MLS info.
Shocking truth #1
The number of listed Condos is down 18% year over year while sales are up 74%
Shocking truth #2
San Francisco 2BR Condo supply went from 9 months to 4 months year over year.
Shocking truth #3
The number of 2 Bedroom Condos that Expired dropped in half year over year
And now for the caveats:
Of course the numbers are better. It could only get better from last year's armageddon. December Sales represent October and November contracts - the words "bailout" and "financial crisis" became the watch words of the day starting in late September 2008. Real Estate practically came to a standstill in San Francisco at that time.
With so few buying, demand built up. Buying only started slowly again with an uptick from March thru June and took off from August through December with November the peak for 2009 2 Bedroom Condos.
Now what? 2010 will no doubt be an interesting year. Right now demand feels strong, interest rates are still at record lows, and inventory still feels in short supply. In other words, expect similar charts for the next 3 to 6 months.
12/14/09
Interesting take on San Francisco's real estate market from my firm
My firm, Pacific Union, has a much more interesting take on San Francisco's real estate market that the two articles in my earlier post.
Discussing the "rate of demand" vs home supply for San Francisco single family homes.
Supply - or homes available for sale in San Francisco have only increased by 0.1% per year since 1998 from just shy of 63,000 homes to just above 63,000. "Rate of demand" is the percentage of all single family homes that sell in a given year. San Francisco's average rate of demand has been 4.7%. At that pace it would take 21.3 years for the entire inventory of homes to change hands.
When demand is above average prices tend to climb, when below, they tend to drop. More details and Pacific Union's take on the 2010 San Francisco market can be found here, and the chart is below:
Discussing the "rate of demand" vs home supply for San Francisco single family homes.
Supply - or homes available for sale in San Francisco have only increased by 0.1% per year since 1998 from just shy of 63,000 homes to just above 63,000. "Rate of demand" is the percentage of all single family homes that sell in a given year. San Francisco's average rate of demand has been 4.7%. At that pace it would take 21.3 years for the entire inventory of homes to change hands.
When demand is above average prices tend to climb, when below, they tend to drop. More details and Pacific Union's take on the 2010 San Francisco market can be found here, and the chart is below:
Two bullish articles on Real Estate & the economy
Business Week and the New York Times each have very bullish articles on both housing and the economy.
From Business Week:
http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm
The author tries to make the case that interest rate is more important than purchase price - that each 1/4 point is worth roughly $12,000 so if rates go from today's 5% to, lets say 8% in a year or two, he claims that's worth nearly $144,000 in value. In other words, if prices decline due to interest rates going up, you've got that built in.
Meanwhile, from the NYT article:
http://www.nytimes.com/2009/12/13/your-money/13fund.html?_r=1
They keep referring to the stock market rally from March lows as a "bull market" and how the "second phase" of the bull market might look.
Ahh, but the counter arguments are pretty obvious - no? And barely mentioned. Purchase price is paramount if you need to sell within 5 years. If you can hold for 30, then yes, lock in what will likely end up being the last time we ever see 5% interest rates. But the shorter your time line, the more advantageous it is to wait for even lower prices if you expect that to happen.
As for the NYT's "bull market". There are many economists who think the market must test the March lows before it can really become a bull market. And that could play out over the next 2 to 4 years, not the next 2 to 4 months. I'd be cautious messing around in the stock market since it's up so much higher than it's lows. Where can it really go now without earnings? And right now companies are not earning.
From Business Week:
http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm
The author tries to make the case that interest rate is more important than purchase price - that each 1/4 point is worth roughly $12,000 so if rates go from today's 5% to, lets say 8% in a year or two, he claims that's worth nearly $144,000 in value. In other words, if prices decline due to interest rates going up, you've got that built in.
Meanwhile, from the NYT article:
http://www.nytimes.com/2009/12/13/your-money/13fund.html?_r=1
They keep referring to the stock market rally from March lows as a "bull market" and how the "second phase" of the bull market might look.
Ahh, but the counter arguments are pretty obvious - no? And barely mentioned. Purchase price is paramount if you need to sell within 5 years. If you can hold for 30, then yes, lock in what will likely end up being the last time we ever see 5% interest rates. But the shorter your time line, the more advantageous it is to wait for even lower prices if you expect that to happen.
As for the NYT's "bull market". There are many economists who think the market must test the March lows before it can really become a bull market. And that could play out over the next 2 to 4 years, not the next 2 to 4 months. I'd be cautious messing around in the stock market since it's up so much higher than it's lows. Where can it really go now without earnings? And right now companies are not earning.
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