Tag: decline

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February Case-Shiller Report Released

The small decline in the Index reading from December 2012 to January/February 2013 is due to seasonal market factors, not a decline in values, and occurs every year. Generally speaking, January and February sales reflect offers accepted in the holiday season period from Thanksgiving to early January, and since the higher end of the market tends to check out for this period, sales prices in the first 2 months of the year are typically lower. Based on the heat of the market since the year began, we expect to see a similar pop in C-S values in March and April that we have already seen in median sales prices.

Note: The numbers on the 2 charts below are based upon the January 2000 value of homes being calculated at 100. Thus the number 144 signifies a value 44% above that of January 2000; the number 184 signifies 84% above January 2000. However, a decline from 184 to 144 equals a 22% decline in value from one point to the other.

Before trying to apply Case-Shiller Index trends to specific cities, neighborhoods and homes — which can be deeply misleading — please read the explanation of how the Index works: http://www.paragon-re.com/Case_Shiller_Index_Deciphered_for_SF

San Francisco home values have significantly out-performed the overall Case-Shiller Index metro area over the past 12 to 18 months.

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January Case-Shiller Index Released

The just released Case-Shiller Index reading for January for the high-tier price segment of the 5-county San Francisco Metro Statistical Area declined slightly from December. This reflects seasonal market issues, not a decline in values, and it occurs every year – indeed, the decline was smaller than what is typical.

From January 2012 to January 2013, the Index indicates an 11% increase in house values for this segment of the metro area market. However, the real estate market of the city of San Francisco itself has outperformed the general market of the 5-county metro area. And due to its methodology, the Index is 4 to 7 months behind what is currently occurring in the market. In a quickly appreciating market, that can be a long period of time.

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Our full report on the Case-Shiller Index is here: http://www.paragon-re.com/Case_Shiller_Index_Deciphered_for_SF

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September Case-Shiller Index Released

For the high-tier price index, there was virtually no change from August to September, though the lower price tiers continued to increase (these tiers are especially affected by the decline in distressed home sales). Here are 2 updated charts if you’d like to use one or more of them, one long-term, one short-term.

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Continued Improvement in the Housing Market or Borrowing from the Future?

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The National Association of Realtors (NAR) reported yesterday that existing home sales in October rose to their highest level in more than two years.  Nationally, sales were up 10.1% over September and up 23.5% year over year.

Most of the increase in sales, however, was not in the western region, where sales were  only up 1.6% from the previous month.  (Oh, the devil is always in the details.)  And more “good news”:  The western region median price of $220,200 — clearly this is not San Francisco — was down 14.7% year over year.

Not surprisingly, the article stresses the positive.  Inventories are shrinking, especially at the lower price levels where foreclosures and REOs are slowly being digested by the system.  Prices have fallen by the smallest amount in over a year (don’t you love that!).

You can argue that any press release by NAR is going to be self-serving, but its Chief Economist, Lawrence Yun, doesn’t mince words when he says that a lot of the sales surge was fueled  by the anticipated expiration of the First Time Homebuyer Tax Credit.  The $8,000 tax credit was originally scheduled to expire in November, but has now been extended  through April 30, 2010. Yun goes on to caution that “with such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

We can only hope that he’s right about that surge….

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Case Shiller Chimes in With Good News: US Down only 17%!

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Case-Shiller published its closely watched indices yesterday.  Hooray! The broadest CS index shows that the rate of decline in the nation’s largest housing markets has reversed in recent months.  Now we’re only going down 16% year over year instead of 20%.

They also point out that we are now back to 2003 values, which also holds true of San Francisco.  Here’s my chart from an April blog:

Core Area Medians vs All Districts

Before you go out and celebrate, Case-Shiller has “San Francisco” down a whopping 26.1% year over year.  Why the quotes?  Because it’s really the “San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area” and it includes ALL of Alameda, Contra Costa, Marin, San Mateo, and … San Francisco County. That’s 5 counties folks, a factoid often omitted even by such august publications as the New York Times (see today’s front page article).

Now here’s the “good” news.  My data says that the San Francisco we live in was down “just” 5.7% in June 09 year over year for homes.  Take a look under the Market Trends tab for annual and monthly data for the City and specific MLS Districts.  (By contrast, condos are down 15% year over year.  That also happens to be how much they’re down from their all-time highs, which occurred right about a year ago.  See my previous post.

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Surprise! Condos are Holding Up Better Than Homes

For the quarter century (gulp!) that I’ve been involved in real estate, the conventional wisdom has always been that condo values generally do worse in down markets than homes.  Why?  To be honest, I’m not sure, but I think it’s because it’s easier to overbuild the condo market than the single family home market.  It goes back to that famous quote:  “Buy land – they aren’t making any more of it.”  Just take a look at Miami, Chicago – or downtown San Francisco.  One new high-rise can hold hundreds of condos in the sky.  Try building just one new home in SF, let alone hundreds – it aint happening.Of course, more supply  + less demand in a down market means prices fall.  Has that been the case in San Francisco?

I looked at percentage change from all time highs for condos and single family homes (sfd’s) since January 2003 and here are the results for the city as a whole.

Condos vs. SFDs All Districts Chart

Until June 2008, condo and home prices were in lock-step in terms of price appreciation and decline.   Thereafter, homes fell first and further. (Do I hear a lithp?) In March 2009, the delta between condos and home prices was a whopping 13%.  Since then, however, home prices have recovered smartly:  as of June, homes are about 4.5% further off their all-time highs than condos.

What does this all mean?  First of all, I wouldn’t take too much consolation just yet in the upward spike in both condo and home prices since the beginning of the year.  If you take a look at the chart, this happens every Jan/Feb when people start buying out of the winter doldrums.  I wouldn’t predict a bottom until we see what happens this winter.

Secondly, given the woeful condition of the economy and the credit markets, together with the fact that San Francisco is not a badly overbuilt housing market, it sort of makes sense that condos are holding their value relatively well as people are finding themselves priced out of more expensive single family homes.

Still, the current delta of only $100,000 between median condo and median home prices seems rather small.  If people are just begging to know what the historical average is, let me know and I’ll find out.

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Update to Halloween Horror: Did it just get scarier….??

The day after I posted my take on the Case-Shiller Index, they came out with July’s report (they’re always trailing three month averages) showing a continuing decline in the San Francisco MSA.  Wait for it:  down 27.3% from July 2007.  Are we worried?  Not that much.  Why not?  Read my October 27 blog:  “San Francisco” means most of the Bay Area when it comes to the Case-Shiller Index.

You want scary?  Median prices are down 45% year over year in Contra Costa County.