The Best (or worst) Week of 2006
Depending on who you ask, this is going to be the best week in 2006 for San Francisco Real Estate.
If you're a buyer, of course...
For some reason, agents and sellers have gotten it in their heads that dumping their inventory on the market the weekend after a holiday is the way to get the job done.
I say that buyers need to take note and get busy this week.
Why?
I track weekly trends from the MLS, and for this past week (compared to all other weeks in 2006), we see the following:
Overall, I'm also seeing:
This is for single family homes, condos, TICs, lofts, and 2-4 unit buildings in districts 1-10 in San Francisco.
For those naysayers and bubble prophets, I'm still not worried about the market. But you'll also notice that I wasn't crazy enough to have any listings on this week. I did my business back in August. And did just fine. Sold two properties with multiple offers in only a couple of days.
We'll see that this week, too, but only for the cream of the crop.
And I'll be back with listings in 3-4 weeks after this chaos dies down.
And there are still LOTS of buyers out there. And they're willing to pay fair prices for good properties. But that's it. And this is the real estate version of 'fair' not the bubble-blogger version of 'fair'. It's also not the "my neighbor got $X, so I want $X + 15%" type of market. That won't fly, either. Smart sellers with good agents get exactly what they should. A good price for a properly marketed property in a short period of time.
So you can be a happy seller, you just have to do it properly, and LISTEN TO YOUR AGENT.
And as a buyer, don't wait too long this fall. The majority of our fall inventory has just hit. It will be all be piece-meal for the rest of the year with lower weekly numbers of new listings.
And for those that think this is just a continuation of perpetually rising inventory, that's not the case at all. Inventory has been dropping since just after Memorial Day with a one-week exception (that's right) the weekend after July 4th. Same goes for the number of properties on our broker's tour.
Difference is, through all of this, the number of sales has been steady. Which brings me back to what I said above. Buyers shouldn't take this as some sign that the sky is falling. This is called OPPORTUNITY.
So if you're a seller who has dug your heels in on an inflated price, and you've been on the market for 45 days, it's time for a dose of reality. The market is not going to be kind to you this month. Plus, you've got all of this competition to deal with.
My suggestion? Stop muddying the waters with your speculative sale. If you don't need to sell, don't sell. You won't get what you're asking for if you have been on the market for more than a week, anyhow.
The naysayers can try to pick me apart on a percentage point here and there, but I've been right all year long, no? Sales have been steady, prices are rising, and the market is just fine for the majority of buyers and sellers. And we have a much more balanced market, which is good for almost everyone.
There's nothing for me that says that any of my clients have anything to worry about. Even the ones who bought in 2005.
Perception & the media versus reality [SFHomeBlog]
posted by Matt Lanning @ 8:58 AM
9 comments
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9 Comments:
All right, Matt!
Though I'm still having some trouble with the term "fair price."
Ah... whatever. There's actual analysis of the market here - well done.
I too think it's a great time to make a deal, but I'll be hard pressed to offer almost anyone their asking price right now. Excellent stats though, well worth the read!
You're assessment of the current market is accurate but you can't state with any certainty what the future holds. A few more WSJ, BW, and Forbes articles on the 'bubble' bursting, or interest-only arm calamity stories could certainly scare off a few more buyers and instill a sense of buyer panic, thus drying up demand pretty significantly. I'm not saying the sky is falling but a lot of buyers aren't willing to stretch into those houses where the mortgage product is what puts them into the house.
Also, you did pretty in August, but I'm not sure a 2bd up, 1bd down remodeled Victorian would fly off the market in 3 days for $1.6M in October 2006, and I'm fairly confident such a property could decrease in value a few % points in 2007 and even more in 2008. Maybe not enough to warrant a 5 year buyer from sitting on the sidelines, but enough to make you think about being very selective in what you buy and how much you pay now.
Do you publish those stats you track? What’s happening with rents in the city? These are very interesting time to be studying the market.
Andrew
No, I don't publish those stats. I just track them for use from time to time. In general, they don't change all that much, either.
Rents in the city are rising and rental vacancies are dropping now. Partly because of the 'articles' you refer to, and partially because people still want to live in SF, and will pay well to do so.
If the rental market tightens up a bit more, it will actually affect the purchase market again, as it did at the beginning of the decade.
Thanks for reading!
Thanks for responding. Your blog is a good read; very fair and balanced, but always with a RE point of view. I wish someone would post those stats, along with average the withdrawn’s and reduction stats. As an observer, and not an insider, I get stuck with the woefully inadequate sfarmls public view of the market :(
I agree that rentals moving up in price will dive the RE market. I'm curious to see where the tipping point will be? It will never be break even, at least not in the SF market, but it should be interesting to watch rental rates going up to see how far they can go. I've spoken to a few rental agents and they can't get enough inventory to keep up with the demand. Should be good for sellers who might need a safe haven that dont want to sell, or aren't getting what they think they deserve for their properties.
Andrew
I don't bother posting the price changed, withdrawn, or back-on-market stats because they are more or less the same, week after week, for all of 2006.
The averages per week are as follows:
Inactive (withdrawn or expired): 67
Price changes (up or down): 101
Back on market: 29
And since these are not rising or falling, but staying more or less static, there's no story there...
Given that the after-tax carrying costs of owning (interest, tax, insurance, maintenance or hoa) are almost twice the cost of renting in SF, I'm highly doubtful that even moderate rent increases are going to push many people into buying:- the differential is simply too historically abnormal. What will influence people is the expectation for appreciation (or depreciation) of property values. Given current levels of affordability, don't hold your breath on that one either.
www.socketsite.com has posted reductions lately which have been significant (between 8 %and 13%).
Yeah, and there were price reductions in August of 2005, too. Since everyone wants to write about the apocalyptic downfall of the market, I'm here to offer a different view.
If you want negative news, you can swing a stick and hit 20 blogs and sites that will feed your hopes and dreams for a market crash.
I'm sorry to disappoint you, but I just don't believe that everything in this market is so terribly negative.
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