May 27, 2008

Case-Shiller San Francisco Single Family Housing Index

I’m all verklempt. Talk amongst yourselves. The Case Schiller San Francisco Single Family Housing Index is neither San or Francisco. Discuss.

(Thanks to Burbed reader Renter for this find!)

Comments (70) -- Posted by: burbed @ 11:00 am

70 Responses to “Case-Shiller San Francisco Single Family Housing Index”

  1. tony Says:

    This just proves, NOW is the best time to buy!! These great deals won’t last…

  2. Hmmmmm Says:

    Not that special…

    http://tinyurl.com/3roba5

    http://www.forbes.com/forbeslife/realestate/2008/04/17/debt-homeowner-cities-forbeslife-cx_mw_0417realestate.html

    http://www.forbes.com/realestate/2008/03/25/suburbs-quality-lifestyle-forbeslife-cx_mw_0326realestate.html

    http://www.forbes.com/2008/03/13/foreclosures-homes-millions-forbeslife-cx_mw_0313homes_slide_2.html

  3. RealEstater Says:

    Go explain to the RBA seller that you cannot over-bid for his home because you saw this index.

  4. swoop Says:

    San Francisco means “San Francisco Metropolitan Area.” The group everything together. What is the definition of SF? Does Shiller give exact street boundaries of the SF “Area?”

  5. madhaus aka guitar hero Says:

    We are indeed special. We have the most expensive foreclosures out there. We will also have the most indebted FBs, the deepest underwater loans, and the largest HELOC borrowings that won’t get paid back.

    Irvine has a great school district too. Scores over 950. Why that place is practically Cupertino except no Apple Computer and closer to the ocean.

  6. steve Says:

    I say bring on the melt down. Yes, I own but I would much rather trade up. However, as hard as I look (and I have been looking) I’m not seeing any softening in the prices for the areas where I would want to live (PA, Menlo Park, Los Altos, PV, Noe Valley or the north slope of Potrero). Yes there are some horrid properties in these cities that might be lowering their list, but the good places are still going immediately after their first open (and above ask).

  7. Pralay Says:

    es there are some horrid properties in these cities that might be lowering their list, but the good places are still going immediately after their first open (and above ask).
    ———

    Does that mean that more than 50-60% properties from sold homes are “horrid properties”? Take the example of PA.

  8. madhaus aka guitar hero Says:

    I want to trade up too. I want to trade my crappy million dollar shack for a less crappy million and a half dollar shack. But if I want to move to a fancier zip code then I get a worse shitbox than I already own. It’s too bad I’ve run out of room for all my guitars, that’s why I need a 5 bedroom house. Maybe all my new neighbors will move out when I turn the amps up to 11, and I can store the extra gear at their places.

  9. San Mateo Home Sellers in Trouble Says:

    It just needs to fall another 20%, then maybe I will buy something.

  10. steve Says:

    Does that mean that more than 50-60% properties from sold homes are “horrid properties”? Take the example of PA.

    @pralay – do you have a link? are you really arguing that prices are down in palo alto? like madhaus, I need to store my guitars, so I am thinking 2000 sq ft house, 10000 sq ft lot and no train, highways or super-fund sites. Can you point me to something less than $1.75M?

  11. Pralay Says:

    @pralay – do you have a link? are you really arguing that prices are down in palo alto?
    ———

    Steve,
    I am arguing against your point that only “horrid properties” are lowering the price and all the good properties are selling quick and above asking price. You don’t have to go that far. Just take a took at Julian Lee’s chart Stevo and Burbed posted a few days back.
    http://www.julianalee.com/reinfo/sold-PA.htm
    How many home do you see selling above asking price? 13 out of 32? Does that mean remaining homes are “horrid properties”?

  12. ScottK Says:

    @swoop — According to KCBS this afternoon, the Case-Schiller index for San Francisco does not in Santa Clara County, so of course, this graph means nothing to the RBA. :-)

  13. steve Says:

    @pralay, thanks for the link. it’s helpful. a few observations:

    1) Most of the homes selling below list are either at the very low end for PA (2.5). The sweet spot for my budget (god, that is strange to type) remains very competitive.

    2) To that point, the sixteen houses listed between $1.25M and $2M with sales prices (1 is N/A) sold for an average of $85K above list (5.4%) and had a DOM time of 34 days (is that listing to close of escrow?)

    3) list price is a somewhat odd metric. at the high end it may be fishing; at 1.5 in palo alto it seems like bait for multiple offers. similarly, inventory is thin, so apples to apples is hard, but my sense is that price continue to be up (some over 2007 and massively over, say, 2005). I’m seeing corrections in Belmont, RWC, etc, but am I missing something in Palo Alto?

    Given how over-priced I thought RE was in 2004 and 2005, it is odd to be yearning for those “low” prices again.

  14. steve Says:

    oops, my point 1 got a little mangled. it should read:

    Most of the homes selling below list are either at the very low end for PA or well beyond my means (2.5 and above).

  15. Pralay Says:

    similarly, inventory is thin,
    ———–
    Steve,
    Take a look at year-to-year April data analysis. Inventory actually increased significantly in PA and MP from last year.

  16. madhaus aka guitar hero Says:

    Oooh, check out the Case-Schiller tiered pricing. The lowest tier (bottom third) has collapsed the fastest after rising the quickest. It’s now down to its (are you ready?) May 2004 level (168) after peaking in May 2006 at 218.

    The highest tier is now at 171, equivalent to March 2005 prices. The peak of 191 in August, 2007 was not a steady climb. Another local peak of 189, in July 2006, should be noted, and a third of 185 in September 2005. The drop from the higher and newer peak is sharper than any of the climbs, since there has been a plateau in the higher prices for two and a half years.

    The index is arbitrarily set to 100 = composite price on 1/1/2000.

  17. madhaus aka guitar hero Says:

    Danged San Carlos Dog ate my Case-Schiller comments!

  18. madhaus aka guitar hero Says:

    here they are, by the time burbed unearths them, no one will be reading this thread anymore:

    Oooh, check out the Case-Schiller tiered pricing. The lowest tier (bottom third) has collapsed the fastest after rising the quickest. It’s now down to its (are you ready?) May 2004 level (168) after peaking in May 2006 at 218.

    The highest tier is now at 171, equivalent to March 2005 prices. The peak of 191 in August, 2007 was not a steady climb. Another local peak of 189, in July 2006, should be noted, and a third of 185 in September 2005. The drop from the higher and newer peak is sharper than any of the climbs, since there has been a plateau in the higher prices for two and a half years.

    The index is arbitrarily set to 100 = composite price on 1/1/2000.

  19. San Mateo Home Sellers in Trouble Says:

    Anyone else think the sale of 21988 Mcclellan Rd in Cupertino is a bit fishy? According to Juliana’s site: http://www.julianalee.com/reinfo/sold-CU.htm

    The asking was approximately 1.2 mil and it sold for 2.28 million.

  20. Pralay Says:

    Anyone else think the sale of 21988 Mcclellan Rd in Cupertino is a bit fishy?
    ———

    We had some discussion about it before. It was a typo. Original listed price was 2.5 million. Probably it was reduced to 2.2 million (not 1.2).

  21. rick Says:

    Anybody pays attention to Radarlogic?

    Last couple of days are the first time that Price Per Sq drop below $400 for Santa Clara county.

    Also in Cupertino 95014 the cheapest SFH now is approaching $600k, the previous honor was $770k for 18624 LOREE AV half a year ago, it is still available now for $680k.

  22. Pralay Says:

    the previous honor was $770k for 18624 LOREE AV half a year ago, it is still available now for $680k.
    ———–

    LOL! The description says short sale but on market for more than a year. Is this guy serious? Listing price history:

    May 01, 2007 $853,000
    May 08, 2007 $851,000
    May 17, 2007 $791,500
    Jun 03, 2007 $781,500
    Jun 07, 2007 $741,500
    Jan 17, 2008 $719,000
    Jan 21, 2008 $709,000
    Feb 28, 2008 $709,500

    Mar 16, 2008 $705,000
    Apr 10, 2008 $699,000
    Apr 19, 2008 $689,500
    Apr 24, 2008 $681,500

    On Jan 21 he lowered the price to 709,000 and then increased to $709,500 on Feb 28. What was he thinking?

  23. RealEstater Says:

    Steve,

    All of these points have been brought up with Pralay before, but he seems to living in a different world.

    Pralay,

    Inventory is up from extremely low levels in PA and MP, but that inventory is being quickly digested. Any buyer will tell you there’s no price correction whatsoever. When was the last time you saw an open house in PA? You seem to be completely disconnected with reality.

  24. Pralay Says:

    RealEstater,
    Instead of spewing your as-usual bullshit and pointing finger at me, why don’t you just make your case by backing it up with data/stat. Please do it. Comment like “inventory is being quickly digested” really does not cut it unless you backup with some fact/data/stat.

  25. Pralay Says:

    The lowest tier (bottom third) has collapsed the fastest after rising the quickest. It’s now down to its (are you ready?) May 2004 level (168) after peaking in May 2006 at 218.
    ——–

    What is interesting is that, if you look at 2005 and 2006 data, lowest tier was doing pretty good till Aug 2006, while middle tier was fluctuating.

  26. RealEstater Says:

    Pralay,

    No need to throw your usual tantrum. It’s not good for what’s left of your image.

    Multiple people have already shown you all kinds of data, and the public sites still have the same links. However, no amount of data can help someone with a set agenda and has already made up his mind.

    A simple check of MLSlistings shows Palo Alto only has 44 listings under $2M, which is the range most people are looking at. Out of those, only 27 has a minimum of 1500 sq. ft. The point I’m trying to show you is that unless you apply real world parameters to the data, you have no idea what you’re looking at. Mostly your analysis looks at high level summaries that bunches various unlrelated things together, and then you extrapolate to the future without understanding the market dynamics over the course of the year.

  27. Pralay Says:

    LOL! RealEstarer. Don’t worry about the image of a guy who is “Priced Out Forever” and cannot “water his own lawn”. :) Worry about your own image. A person who lives in “management class” with “smart people” and has a Porsche (and brag about it) does need A GOOD IMAGE. Think about this comment (post #41), posted someone who agrees with you sometimes but still think you as “hypocritical”. :(

    And you are yet to back up your comment “inventory is being quickly digested” with some kind of fact/data.

  28. RealEstater Says:

    Pralay,

    Are you trolling again?

  29. Pralay Says:

    A simple check of MLSlistings shows Palo Alto only has 44 listings under $2M, which is the range most people are looking at. Out of those, only 27 has a minimum of 1500 sq. ft.
    —————

    That kind of data is relevant only if you are looking for certain kind of properties. But it is irrelevant to assess market condition.
    Check Inventory vs Sale chart (third one):
    http://rereport.com/scc/palo_alto.html

    Sale volume for March/April is nowhere near 2007 (March/April) level, but inventory is much higher. You can explain/spin how market will keep up with the inventory increase and “digest” everything quickly, but the fact is that the numbers you see in those charts are facts.

  30. SiO2 Says:

    “That kind of data is relevant only if you are looking for certain kind of properties. ”

    Well, I am looking for a certain kind of property. I’m not so interested in the market in the abstract, I’m interested in my own situation. Like Steve, around 1.5m, in Los Altos or Saratoga. PA is out of reach. Like Steve, I see that these houses still sell quickly, unless they back up to a freeway, or are under power lines. There’s also a large school district component, houses in Saratoga but not Saratoga or Cupertino school district sometimes linger. But sometimes not, just depends.

    The prices seem to be the same as last year at least, not going up more. I’ve tracked inventory for houses listed below 1.55m. It’s slightly more than last year, was about 85 houses given my search parameters last year, now is 90.

    Will it continue? As houses in SJ decline, that should lead to less money for trade up buyers.

    OTOH the tech companies are still doing fairly well (INTC and HP had good results,as have others). Selling overseas offers some insulation from the US, and the declining dollar makes goods look cheaper to other countries.

    And the reality is that there’s just not that many houses available considering 3 bd, livable (e.g. not falling down), not freeway or powerline adjacent, not on a major road, saratoga / los altos / monta vista high school, and sub 1.5m. In fact I just ran a search, the total available with those parameters is 18. And of those, 6 are pending. So 12 houses. There’s 12 people who are willing to spend $1.5m to live in these places, hence the price is not declining. Believe me, I wish it were.

  31. Pralay Says:

    Are you trolling again?
    ——–

    Ha ha! This is called trolling (post #66). And when it is obvious that the other person is ignoring you (because you are troll), then one more time (post#68) – to get attention.

  32. SiO2 Says:

    Here is my situation:

    1121 RUSSELL AV, Los Altos 94024 (Los Altos)
    $1,595,000 Beds: 4 bed(s) Baths: 3 bath(s)

    Excellent opportunity to remodel this well maintained home in a sought after location.Refinished hardwood floors,new paint and mature landscaping.large family room opens to expansive back yard.Lots of natural light and 2 master bedrooms.Close to highly rated Los Altos schools and Rancho Shopping center.Staged shows great. Co list with Karen Lemcke APR Palo Alto.Offers 5/22

    It’s 5/28. It’s pending, so someone liked it. It will be interesting to see exactly what it sells for. But, paying 1.595 for an “Excellent Opportunity to Remodel” is not exactly a situation where prices are crashing.

    Again, the crash could come. It has not come to these areas yet.

  33. Pralay Says:

    And of those, 6 are pending. So 12 houses. There’s 12 people who are willing to spend $1.5m to live in these places, hence the price is not declining.
    ——–

    SiO2,
    Fair argument. But above quoted line is based on the assumption that there ALWAYS be 12 potential buyers available in market and qualified properties (that meets your conditions) won’t increase from 12 to 15 or 20 or 25. In addition, those potential buyers don’t any options in other neighborhoods – e.g Sunnyvale or better parts of SJ. But when Sunnyvale/SJ starts going downward and gets significantly cheaper, don’t you think that some of those potential 12 buyers (if not all) are going to have second thoughts about PA?

  34. Pralay Says:

    But, paying 1.595 for an “Excellent Opportunity to Remodel” is not exactly a situation where prices are crashing.
    ———–

    SiO2,
    If you check stats from other parts of bay area (so called non-RBA) where market already crashed significantly, you will see that it started from lower end homes. But people in those area argued that the slowdown would not affect higher end homes. But it did – eventually.

  35. SiO2 Says:

    Hi Pralay,
    I definitely see your point. It’s very possible that the move up market will dry up as the median drops.
    OTOH. The market is kind of like a pyramid. (not pyramid scheme!) There’s many people living in SJ. Some percentage of those aspire to move up to saratoga. Some percentage of that percentage can do so. It’s pretty small, there’s only a few hundred houses sold in saratoga in a year. So, as SJ prices fall, are there less than 12 people who can get money from elsewhere (stock options, bonus) to make it up? Maybe, maybe not.

    And about sunnyvale/sj as competition. Definitely possible. Let’s say my SJ house declines to $400k but the saratoga house is still at 1.5m. Private school looks a lot more interesting then.

    Another factor vs the outlying areas is new construction. Lots and lots in some parts of CA. Almost none in Saratoga and Los Altos, other than people buying 1.2m scrapers and building new. But that doesn’t increase the number of houses available.

    The thing that could break the market would be if there’s a lot of people in saratoga who need to sell, due to heloc overload. I have not seen one single foreclosure in saratoga/cupt schools. But, I have seen a couple in Los Gatos schools. so that could change it.

    It also depends on how quickly we get out of recession in the us. If it turns positive before the market breaks, it’s possible that we’ll just see some years of flat prices, vs the sharp declines seen in outlying areas. In real terms this is a decline, and the amount of decline depends on if you think inflation is 4% or 10%. The folks driving Hummers 50 miles per day probably see 10% inflation, but it’s less for me.

  36. Crossroads Says:

    how much $ do private schools run for around here?

  37. SiO2 Says:

    My last thought for the evening.
    I have been watching LA/saratoga since 2002. The houses that I wanted to buy have gone from 1.25 to 1.6m. Meaning, 3 bd, 1800 ft, reasonably nice. I have no data to back this up, it’s sort of my personal case shiller index. This is a 28% increase over 6 years. Not really that dramatic, roughly 4.5% per year, and nothing like what was seen in outlying areas. Also in places like EPA, it really shocked me that places there were going for $600k when reasonable houses in reasonable parts of SJ were also $600k. That’s changed of course!

    So the question is, has the salary, options, and net worth of directors / vps / CEOs in silicon valley gone up by 28% in the last 6 years? probably, particularly when you consider the impact of the bush tax cuts. Like them or not, the tax cuts had a bigger effect on richer people, who are more likely to buy in saratoga/los altos.
    Again I have no real data to back this up, but it’s based on my observations, and I welcome any opposing observations, particularly about those cities. I’d love to see some -30% action there!

  38. SiO2 Says:

    Dear Crossroads:
    Secular private elem school is around $10-15k. E.g., stratford, or challenger. There’s a few others as well. Harker is an outlier, around $20k.
    There’s not that many high schools. Harker and Castillejero (sp?) are about $30k.

    Catholic schools are less. Also, Valley Christian is about 8k for elem, 15k for high? There’s many other church-affiliated small elem schools.

    the premium for “premium” district over “ok” (e.g. look in Saratoga, compare Cupertino to Moreland) is about $200k or so. so with one kid, it’s close to a wash, if you believe that there will be some home appreciation over 12 years. With 2 or more kids, it’s better to pay the premium. although the private school is probably a better education than the premium districts, so you can justify it that way.

  39. madhaus aka guitar hero Says:

    SiO2 believe me I am looking at many of the same houses you are. I don’t know if you are starting out or trading up, you didn’t mention that, but we are looking at a pretty similar price range ($1.5m). The thing is, I like Sunnyvale CUSD and I’m willing to trade up in my very own neighborhood. There are many quality of life issues here vs Monte Vista, such as the walk score. Everything west of Stelling has a terrible score. Mine neighborhood isn’t great (43) but it sure beats just about every house in MV. People there shop at the Trader Joe’s in Sunnyvale/Los Altos.

    I don’t consider private school and a crappy school district an option. Buying in a good school district is the good investment component of buying a home. Even if I sent my kids to private school, I would not buy in San Jose except 95129 (Cupertino school district), and I probably wouldn’t do it anyway. Having lived in both SJ and Sunnyvale, I can tell you Sunnyvale is a much better run city. If you have a tree root bucking the sidewalk, Sunnyvale fixes it right away. San Jose fixes it in a year and then bills you for it. And if you don’t pay they stick a lien on your house.

  40. RealEstater Says:

    I think SiO2, Steve, and I are all seeing (and saying) the same thing. I particularly like the Pyramid analogy. It’s a simple way to show why Pralay’s simple minded theory about move-ups is flawed. Another way to look at it: Would a Porsche buyer care if Hyundai lowered its prices?

  41. RealEstater Says:

    >>I don’t know if you are starting out or trading up, you didn’t mention that, but we are looking at a pretty similar price range ($1.5m)

    Madhaus,

    I kinda feel sorry for you guys who have to compete in the $1.5M range. That segment is pretty tough if you want to move to a better neighborhood. Just think about it: 2 random guys on the internet get into a chat, and both happen to be looking in that range. There are tons more people just like you.

  42. Pralay Says:

    There’s many people living in SJ. Some percentage of those aspire to move up to saratoga. Some percentage of that percentage can do so. It’s pretty small, there’s only a few hundred houses sold in saratoga in a year. So, as SJ prices fall, are there less than 12 people who can get money from elsewhere (stock options, bonus) to make it up? Maybe, maybe not.
    ————

    SiO2,
    Regarding move-up theory, there is an excellent post by Gavin (post#7) two weeks back. Please read it. Basically, if SJ homeowner is stuck in SJ, Saratoga market will get affected. These are all intertwined.

  43. RealEstater Says:

    Pralay,

    It’s pretty obvious you didn’t understand Gavin’s post. That has nothing to do with the “pyramid” SiO2 was talking about.

  44. Pralay Says:

    Would a Porsche buyer care if Hyundai lowered its prices?
    ———-

    It’s like someone easily could say in late 1970s: Would a GM or Ford car buyer care if Japanese cars are more fuel-efficient?

    There is no such thing as “Porsche buyer”. People are not born with that kind of labels. If a potential buyer gets a million dollar car for a price of Porsche, he might not hesitate to transform from Porsche buyer to Bugatti buyer. Same way, if Hyundai is cheap enough, some of the potential buyers might have a second thought whether they should buy Porsche or not.

  45. Pralay Says:

    It’s pretty obvious you didn’t understand Gavin’s post.
    ———

    The real question is you understood or not.

  46. Pralay Says:

    So the question is, has the salary, options, and net worth of directors / vps / CEOs in silicon valley gone up by 28% in the last 6 years?
    ———–

    SiO2,
    It’s not that last four years were the ONLY period of becoming rich. In Bay Area enough people got rich in late 1990s too. Then why real estate run-up is modest in 1990s but frenzy after 2002? Can you think of any factor? Two things comes to my mind:
    1. Immediately after dot-com bust people had impression that real estate is safer place to put money than stock.
    2. Relaxed lending standard.

    #2 is gone. After all these, now, many people may not consider #1 as true either.

  47. RealEstater Says:

    Quote of the day:

    “if Hyundai is cheap enough, some of the potential buyers might have a second thought whether they should buy Porsche or not.”

    Author: Pralay

  48. rick Says:

    Well, SIO2 and Steve, I have no idea what you truly want:
    . You want to buy a 1800 sqf charm house in a good school district for 1.5m? Good for you, go buy it.
    . Oh nothing fits your range? Then wait if you believe it will get better.
    . You don’t think it will get better? Then go buy a smaller house.
    . No you don’t want that? Then tell us what you want?

    People here are either not buying because they expect price to drop, or have interest convincing people to buy. I have no idea what you want, you seem to be complaining houses are too expensive, you think they are getting more expensive, you want to buy, and yet you don’t want to lower your criteria or pay more money. What’s up with that? That is what I call whining. It is the same like a seller want to sell for a wishing price and whine that there is no buyer. If he don’t want to give his house away then don’t sell, isn’t it that simple?

  49. SiO2 Says:

    Hi Rick,
    yes, I guess I am whining in a sense. wa wa, I can only spend a buck and a half on a house… actually it’s a good problem to have in a sense. and you are right, no seller will meet my wishing price. I guess that’s a good turnaround from the usual use of “wishing price” on housing blogs.

    My point really was that the downturn is not evenly distributed, and those who are saying that everything is going south are not really correct.

    BTW I saw the dataquick numbers for CA. Los Angeles is similar. Westside is up. Beverly Hills is up. (y-o-y). Beach Cities are up. Bell / Compton / etc are down.

    I think that the runup (for lax lending reasons or even fraud) affected the outlying or lesser neighborhoods more than the already-expensive neighborhoods. E.g., los banos was up by 100%+ over the last 6 years, whereas saratoga/los angeles were up 28%. So, if you believe that there’s no more wealth than in 2002, and prices must go to 2002 levels, then the already-expensive neighborhoods will fall less than the outlying or not-so-expensive (EPA) neighborhoods. And any upwards wealth redistribution over the last 6 years will exacerbate this effect.

  50. mrbogue Says:

    Damn, thats a great idea. I’m going down to the Hyundai Dealership and trade in my BMW right now. After all, I want to support my Korean peoples and not some Krauts! (j/k to all my german folks out there) Nothing like the Korean new car smell, sort of like Bul Gol Ki!

    Then, I think i’ll take the money I save and buy a house in Antioch or Pittsburg. Screw the RBA!

  51. Pralay Says:

    I’m going down to the Hyundai Dealership and trade in my BMW right now.
    ———

    mrbogue,
    You sound like RealEstater. Like, it does not worth living in Antioch and not driving BMW. Afterall, one is RBA homeowner and another is BMW owner. But I am talking about some of the potential buyers (not all) who may not be as snob as existing owner(s).

    BTW, I know some jews people who would rather drive hyundai than getting BMW for free.

  52. bob Says:

    This isn’t a rich neighborhood versus dirt-poor neighborhood comparison only. The fact is that some of the more desirable neighborhoods-aka- not filthy rich neighborhoods- are seeing price reductions. I live in a somewhat well-off East Bay city, which is a fairly safe, pleasant, area that attracts mainly people with kids who want the schools and so on. Typical BA white bread neighborhood. The prices are down more than 100k over last year already. This I can assure you is being affected by the prices across the way in Oakland.

    The argument has been made that super-rich neighborhoods are less affected by downturns, which would make sense because many who live there are in the minority where buying a house isn’t really much of a financial issue, hence they’re less concerned about its future value. Frankly, I don’t care about those plaes since I’d never live there anyway.

  53. Pralay Says:

    My point really was that the downturn is not evenly distributed, and those who are saying that everything is going south are not really correct.

    BTW I saw the dataquick numbers for CA. Los Angeles is similar. Westside is up. Beverly Hills is up. (y-o-y). Beach Cities are up. Bell / Compton / etc are down.
    ———

    SiO2,
    I think you know that Riverside and San Diego are the worst area hit by this downturn. But still there are people in San Diego who are arguing that this block of San Diego does not have any price drop and that block of San Diego is still appreciating. I don’t think there is any precondition or criteria of downturn that it has to be evenly distributed across all neighborhoods. Wealthy neighborhoods hold up price better than non-wealthy neighborhoods. But in the end they do get affected – just it did opposite way 3-4 years back, when RBA home price affected non-RBA homes too.

  54. Pralay Says:

    The argument has been made that super-rich neighborhoods are less affected by downturns,….
    ———–

    Here is an interesting article in Bay Area Housing Review, where it says:

    Just two banks, Washington Mutual and Countrywide, wrote more than $300 billion worth of option ARMs in the three years from 2005 to 2007, concentrated in California. Others—IndyMac, Golden West (the creator of the option ARM, and now a part of Wachovia)—wrote many billions more. The really amazing thing is that the meltdown in California is already happening and virtually none of these loans have yet reset.

    Option ARM loans were heavily marketed to upper-tier home buyers in California. It’s hard to know how bad the option ARM crisis will be before it actually happens, but Moe Bedard, an advocate in Southern California who advises homeowners on foreclosure and blogs about the crisis at Loansafe.org says that the difference in the time until the rate rises is the main reason that upper-middle-class Orange County (now facing foreclosures at a rate merely twice the national average) hasn’t yet been hit as badly as places like Riverside.

    And at the end, Greg Fielding’s comment:

    As we’ve discussed before, the Bay Area may not be different than Southern Califoria, just behind.

    Our market started changing in the fall of 2005, while theirs changed in January of 2005. Headlines in the LA Times and Orange County Register may be previews of what we’ll be seeing here in 9 months or so.

    That is, of course, unless it really is different here.

  55. madhaus aka guitar hero Says:

    My neighborhood (Sunnyvale CUSD) has jumped the shark. Today’s the Realtor’s Tour, always a great time to check out the open houses for the weekend nice and early. Another big place to check out, no agents, just neighbors like me seeing what’s better than what they’ve got.

    Except the other neighbor wants to downsize.

    Boy did the agent get ticked off at me when I told the neighbor my theory that the prices have peaked. She kept trying to jump in about how that was “just my opinion,” except, like a typical RE agent, she didn’t know squat about trends for the neighborhood, the zip, the school district, nothing. I mentioned 5 houses that came in the market that I was checking out, she didn’t even know about them all.

    At least she didn’t claim to be a tech gal.

  56. Pralay Says:

    At least she didn’t claim to be a tech gal.
    ———-

    I thought that’s the norm here. A real estate agent has to be smart and tech guy/gal.

  57. Crossroads Says:

    what’s a realtor’s tour? how does one sign up?

  58. rick Says:

    SiO2,
    It is true, high priced areas did not rise as much as the bottom areas, that is further proof that the bubble originated from irresponsible loans and scams. And it is also true that strong assets not perform as well as weak assets in a bubble euphoria, and will be the last one to fall as well as falling less.

    When we are talking about statistics we are of course not talking about the particular house you want, but that is statistics all about, for others there are a lot to be simply relieved about, and you can just wait if not being able / willing to do anything else.

  59. madhaus aka guitar hero Says:

    Crossroads, around here on Thursday midday, usually 10 am to 1 pm, all the weekend open houses are also open, mostly Real Estate agents come look at them so they know what to advise their buyers to visit. Except now with MLS online they don’t have to do that so much.

    Anyone can walk into an open house on the real estate tour. In fact, I bought the house I live in now after doing exactly that.

    So if you like a neighborhood, drive around Thursday right before lunchtime and look for the open house signs.

  60. Real Estater Says:

    Check out the current issue of San Francisco magazine. It explains where the “new money” comes from. The article says that there are 50,000 families in the city with at least $2 million in their pockets. That’s why there is no recession here.

  61. Real Estater Says:

    >>I’m going down to the Hyundai Dealership and trade in my BMW right now.

    Wait. You can trade your Hyundai for the Indian car Tata. It doesn’t get cheaper than that.

  62. Renter4 Says:

    Oh, that brings back some memories… is it Tata who make those awesome motor rickshaws? We need a lot more of those in the Bay Area.

  63. Real Estater Says:

    To paraphrase a Porsche commercial: The Real Bay Area, there is no substitute!

    What Pralay and Madhaus don’t get is that other areas becoming cheaper just makes RBA that much more special. The more expensive the RBA gets, the more exclusive it is, and therefore buyers want it even more.

  64. DreamT Says:

    RE – same claim was made about the Pacific Palisades.

  65. Historian Says:

    Real Estater says:

    Thank you for pointing out the article.

    You say:

    The article says that there are 50,000 families in the city with at least $2 million in their pockets.

    But that’s only 10% of the households. That’s too small a fraction to support the market.

  66. WillowGlenner Says:

    SiO2, on your comments starting with your post #30, about prices in Los Altos/Saratoga around 1.5 million staying the same recently – I have a little different datapoint. I agree Los Altos/Saratoga 3br/2ba around 1.5mm sell quickly and have not fallen in price since 06.

    But in my part of San Jose (Willow Glen, obviously) we have the same sort of phenomenon despite what the overall stats show- basically, properties that were $750K-$950K back in 05/06, have RISEN to around $900K-$1.25mm. Other houses in the area may have fallen- less desirable tract homes etc- but there is a “sweet spot” of desirable homes in Willow Glen, these are the 3br/2ba, desirable non-busy street, decent size lot, good part of town- these tend to become scarcer and scarcer every year and those are going up. It is very difficult to present hard data on this subsection of houses in desirable areas because the stats have too many undesirable properties in the mix, and this foreclosure crisis has flooded the market with massive quantities of undesirable houses on major streets, under power lines and other things that bring the comps down. But I am quite certain that in early-mid 2006, a $900K house here was perceived as a quality higher-end midprice home whereas today $900K is a starting point for that sort of house.

    So my point is this sweet spot probably exists in all quality areas even San Jose, where houses at a certain price point are going up, the only difference is that price point is lower in San Jose and only applies to a few areas (Willow Glen some parts of Campbell and some of the new areas where the country clubs are is my guess).

  67. Troy Says:

    A simple check of MLSlistings shows Palo Alto only has 44 listings under $2M, which is the range most people are looking at. Out of those, only 27 has a minimum of 1500 sq. ft.

    Oct 2 2009: 186 total listings under $2M and 117 over 1500 sqft.

    Time machines are awesome.

  68. bob Says:

    I think a lot of those “sweet spots” are going to be affected by the upcoming 2nd wave of loan resets. Over 30% of the BA used these and the majority are for prime properties, not poor as the earlier ARMS tended to be. That and a 12% unemployment number doesn’t help either.

  69. anon Says:

    it’s going to be awesome.

  70. Real Estater Says:

    As of 10/3/2009, there are in fact 66 SFH listings in Palo Alto under $2M with a minimum of 1500 sq ft., of which 12 are in sales pending status. Thus, only 44 properties meeting the criteria are current available, just as it was on 5/28/2008. No downturn here!


Leave a Reply

Please be nice. No name calling, no personal attacks, no racist stuff, no baiting, etc. Let's be nice to each other in the true Bay Area spirit! (Comments may be edited/removed without notice.)