Fog City Guide

In 2008 the national real estate market experienced a sharp decline in pricing as credit markets woke up pto the fact that greed was allowed to play too big a role over the past few years.

Blame has been laid at the feet of borrowere who should not have taken out loans and lenders who should not have given out loans to the borrowers who shouldn’t have borrowed. So Ameican to blame the individual and not recognize the fact that from the top down everyone believed simply there was money to be made and since we are all supposed to take advantage of every opporunity to make money – Go For It!

The breakdown happened when finance products were made available by investors through securitized mortgage bonds. Looking back it looks to this simple observer that a Madoff – Ponzi scheme was pulled. Rates on sub-prime loans were very attractive to investors so more and more investors sought them out. Finally the well ran dry as all Ponzi schemes do and with no more money coming in, interest rates resetting on the sub-prime loans it became time to sell the asset that was no longer affordable.

Supply increased across the country which drove prices down and that meant that even the prime borrowers that used adjustable mortgages to purchase were forced to sell because the interest rates reset and the price of the property declined with the glut of inventory. Areas hardest hit were areas with large amounts of new construction.

San Francisco City & County has done pretty well when compared to the rest of the region, state and nation. My data is taken from the San Francisco Association of Realtors multiple listing service. I gather the data on the first of each month to get a snapshot of the inventory. My analysis shows that our market has held steady up till the last quarter when sales dropped off and inventory increased. At the end of the year single family homes had an absorbtion rate of 4.8 months, which indicates a balanced market verging towards a buyers market and condos at 10.6 months which is clearly a buyers market.

Pricing data in San Francisco is only of value as a trend tracking tool. Market value will vary by neighborhood and site inside each neighborhood. That said, median price in the City has decreased from Januray to December. The reflection of median price is skewed towards the larger quantity of homes sold in the lower than median price market.

I have published data and graphs on the Real Estate Page. Just click over to see what’s going on. I have other data and am happy to share it with interested parties. Feel free to contact me.