CNN blogger creams himself over Facebook Effect
Have we discussed the price adjustments (up! up! up!) in both buying and renting in San Francisco due to the Facebook IPO? Not enough! Let’s see what happens when CNN lets one of its bloggers write a tl;dr post that makes our zip code pieces look like tweets by comparison.
The Facebook effect on San Francisco real estate
By Julian Hebron, contributor @CNNMoney May 17, 2012: 1:27 PM ET
(StockTwits) — The Basis Point is a popular mortgage and housing blog that tracks consumer critical issues and data. It is edited by Julian Hebron, a retail mortgage lender who runs the San Francisco branches of RPM Mortgage.
Three weeks ago, some clients wrote a $1.25 million offer on a 1,400 square foot 3-bed, 1-bath house with original kitchen and bath near San Francisco’s Dolores Park. They weren’t even close. There were 51 offers. It sold for $1.4 million and closed 8 days after offers were due.
That’s the most offers I’ve seen in 10 years. And a different property at that week got 23 offers.
Two weeks ago, another client offered $245,000 over list price on a 3-bed, 2-bath Pacific Heights condo. One of the other 9 offers was the winning bid in this $1.6 million to $1.9 million market segment. That was my client’s fourth rejected offer. He’s looking at two properties in this price range this week, and the listing agents are reporting similar demand: about 10 serious buyers circling.
That’s the norm. It’s what some are calling The Facebook Effect on San Francisco real estate.
That’s the norm: 10 serious buyers circling. StockTwits goes on at very great length to explain why this is happening, and mentions “The Facebook Effect” as if the term were newly minted. Here’s what Hebron said in much fewer words. (The charts are all linked from his article.)
1. Everyone not already working for Facebook is trying to buy before millions of Facebook employees get their license to print unlimited money
You will love this quote from the article:
The San Francisco buyer mindset is that they want to get in before they’re priced out, but they either haven’t reaped their firm’s windfall yet or don’t expect much if any windfall from their firm.
That’s right. They’re all worried about being Priced Out Forever. And this has never, never, ever happened before!
2. Ed Lee’s reelection as SF Mayor means tech employers can demand payroll tax adjustments
Twitter threatened to leave SF over the 1.5% payroll tax, what with all the high salaries and the stock option financials on top of that, Lee negotiated an adjustment with a maximum annual tax, and now all the other tech companies will expect similar easements. Which means they’ll stay in SF, which means high-paid twentysomething technogeeks will continue to buy real estate there, which means you can’t afford anything.
And this is all very interesting, except Facebook is not in SF. So why isn’t this article called “The Twitter Effect”?
3. Constricted housing supply. Really, really, really constricted. Plus rising rents. Did we mention constricted housing supply?
The key takeaway is that there were only 500-600 annual SF home sales above $1.5 million. Now, how many people do you think will be wanting one of those better places once the IPO cash hits?
And is it maybe possible that more homeowners would cash out when they start seeing more of these prices?
May 19th, 2012 at 6:11 am
At least in Sonoma County (and I suspect elsewhere) there is an unusually low inventory. With fewer REO coming on the market on the low end and thus fewer low end sales the median price rises. This has been exagerrated by a substantial increase in high end sales due to a number of factors. Even those high end sales are not at higher prices than I saw last year, most are below last year’s price. The headlines are encouraging buyers to offer a little more and sellers to ask for much more, not a big deal with all cash transactions. In the mid range there’s a problem, the homes will not appraise. Oops. No loan, no deal.
May 19th, 2012 at 7:50 am
Even in Vegas the inventory is dwindling, for those who are paying attention.
May 19th, 2012 at 8:52 am
Shouldn’t the Facebook effect start to mean something new – pricing a house or stock perfectly to reduce overbidding? Sell for $38, close just over $38 – Zuck is a savvy dude.
Whenever I see these stories about 50+ offers all over list I say to myself “don’t use that agent. They will list your home too low.”
May 19th, 2012 at 10:03 am
“Even in Vegas the inventory is dwindling, for those who are paying attention.”
After being marked down 75% or so, is it any surprise that so few are willing to sell at current prices?
I’m sure prices will quickly double–twice–to bring Vegas right back to peak pricing. And for those who purchased near the peak, I’m sure it will double quickly again, a third double in 2012.
Buy Vegas now or be priced out forever.
May 19th, 2012 at 10:36 am
Good to know that I’m not the only one getting outbid. It is happening everywhere in the Bay Area, especially where there are good schools.
May 19th, 2012 at 11:13 am
“Good to know that I’m not the only one getting outbid.”
Life is so tough when you’re a low-baller.
May 19th, 2012 at 12:33 pm
I can understand getting outbid in the current market. We’ve got plenty of evidence that certain markets have such low inventory that homes are snapped up within days. And there’s the new tendency of most places going to Pending/Don’t Show status, which removes the photos from MLS.
But SV Shopper, there’s no way you were continuously outbid in 2009 and 2010 and 2011 unless you were either a low-baller… or your claims were not intended to be a factual statement.
May 19th, 2012 at 12:41 pm
#3, does list price really matter in a market where multiple bids aren’t unusual? Better to get 5-10 bids (hoping that one buyer will go nuts – as long as the house will appraise of course) than to price perfectly at the market and take a few more weeks to get into contract at a potentially lower price (than when buyers are feeling competitive). Ever notice how some fools will bid sh*t up on eBay to more than what you’d pay at your local store? That might not happen any more these days with all of the “buy it now” listings, but it was common several years ago.
May 19th, 2012 at 1:01 pm
SEA says,
>>I’m sure prices will quickly double–twice–to bring Vegas right back to peak pricing.
I would not be surprised at all if Vegas doubles within 10 years. The price point is so low now doubling is not very difficult.
May 19th, 2012 at 2:14 pm
#9- Do you think I really seeks to invest very little and double it? What I want is RBA property: Double more than not a lot of money.
May 19th, 2012 at 4:25 pm
I think the moral of the story from today’s feature is that when people come to a lot of money (as opposed to not a lot of money), they want to buy real estate. It is what people want. The #1 reason for people to not buy real estate is because they don’t have a lot of money.
If you want to tell who has money and who doesn’t, don’t bother to look at the person’s cars, jewelry or clothing; all you have to look at is whether they own real estate.
May 19th, 2012 at 4:43 pm
all you have to look at is whether they own real estate.
—–
You are right, home-debtor.
May 19th, 2012 at 5:31 pm
Yep, just look at all the people in the ‘hood in my hometown of Detroit. They own real estate. They’ll continue to own it for a long time, unless they can get the city to take it back for an urban farm.
May 19th, 2012 at 6:34 pm
“If you want to tell who has money and who doesn’t, don’t bother to look at the person’s cars, jewelry or clothing; all you have to look at is whether they own real estate.”
For so long I thought Zuckerberg was a poor man. Good thing he ended that run by buying real estate.
May 19th, 2012 at 8:22 pm
Obvious Troll is obvious.
That said, I must admit I’m feeling like I got the last good deal in the Bay Area by buying this winter.
May 19th, 2012 at 8:46 pm
That’s why Warren Buffet is dirt poor, while Casey Serin is rolling in simoleons.
May 19th, 2012 at 9:42 pm
>>You are right, home-debtor.
Let me correct you, you are the home debtor. Not only will your rent go on forever, it will keep increasing, forever.
May 19th, 2012 at 9:46 pm
>>That said, I must admit I’m feeling like I got the last good deal in the Bay Area by buying this winter.
Last year was the best time to buy a house. I said it last year, and I’ll say it again. If you missed the last train, you are left walking. Needless to say it’s pretty tough to keep up with those who are riding the train.
May 19th, 2012 at 9:49 pm
>>just look at all the people in the ‘hood in my hometown of Detroit. They own real estate. They’ll continue to own it for a long time
What happened to those people was a once in a lifetime event. It’s also a once in a lifetime opportunity for investors.
May 19th, 2012 at 10:26 pm
Let me correct you,
—-
You are not qualified.
May 19th, 2012 at 11:06 pm
Hey everyone, while you’re all arguing about when the bottom was, the Zuckster went and got himself hitched!
May 19th, 2012 at 11:32 pm
I was just wondering when someone would bring that up.
May 19th, 2012 at 11:53 pm
Less talk about prenuptial agreement.
May 19th, 2012 at 11:55 pm
BTW, some of his Harvard friends used to say he always had weakness for Asian girls.
May 20th, 2012 at 12:38 am
Do you think he’ll be surprised to learn about the extra tax deduction?
May 20th, 2012 at 12:39 am
WARNING: Some trains are bound for wrecks.
May 20th, 2012 at 1:03 am
I dunno, we got outbid in 2009 twice… Before getting a house that had no bids on it 20K below asking.
I’m wondering why the inventory is still so low… I mean, I know why some of it is low; people don’t want to sell while they won’t get back their investment and buy what they want. But why is rental low? As far as I can tell, we don’t suddenly have more people in town and many apartment and condo complexes had a large churn in the downturn; our old apartment complex went from having two times as may people as bedrooms to less people than bedrooms.
May 20th, 2012 at 1:37 am
Looking back, one of the houses we lost a bid on they paid 8K less than we offered.
May 20th, 2012 at 12:50 pm
One of my neighbors is renting her place out – she’s moved out of state but (looking at the comps) she’s probably not going to be able to sell without a loss.
May 20th, 2012 at 1:11 pm
> Hey everyone, while you’re all arguing about when the bottom was, the Zuckster went and got himself hitched!
IPO, wedding… See how all these good things happened AFTER he bought a house. That’s definitely proof that real estate is a great investment.
May 21st, 2012 at 12:29 pm
[...] got a new piece on Burbed on why SF house prices and rents going up so much, which is a response to this article on CNN/Money. The article is actually pretty [...]