SF Bay Area still has a fundamental problem with a decades long backlog in building new housing supply. Until the fundamentals are solved prices will continue to closely track the max capability of normal working class people to pay for existing supply.
This is unfortunate, since this is money better spend on innovations and people getting enough wealth to start their own thing in their garage.
Starting your own thing in your garage is one thing, but we have a much bigger problem, in that service industry workers simply can't afford to live within a reasonable distance of this area, so there's a shortage of that form of labor, despite paying well over minimum wage.
Local stores, bakeries and restaurants, are closing down at a fast rate. I've been living here for a long time, and I'm sad to see small businesses being displaced by upscale chains. Downtowns areas which used to be a mix of small businesses and restaurants, are turning into chains of upscale restaurants and shops that are out of my price range (mid range tech worker)
We're going to find out what an industry town looks like when all industries but one or two are priced out, and the initial indications aren't very nice.
It's true, but prices declining is a positive thing, and I'll take what I can get. (I say that as a Bay Area homeowner—contrary to my financial interests, I would rather see relief for lower-income renters than more equity for tech workers like me!)
Prices are definitely softer than they were a year ago, but they appear to have flattened. Note: Summer of 2018 was the highest. Prices reached euphoric levels as people overbid on homes. I'm not certain many of those buyers will recover those costs anytime soon.
Based on the charts, this looks more like a cyclical bounce rather than a long-term trend. Even at "9.5% below the peak in May 2018", that's only a little over a year of downward pressure. The question is if an economic downturn combined with new housing starts can actually upset the long-term upward trend for more 18 months.
Yup. Sounds healthy to me, and hardly a "pop". Things were overheated and need to deflate a bit.
In my 'hood on the Peninsula, single datapoint I know, a house was just listed yesterday at $1.25m with a zillow estimate of its peak value at $1.5m in October 2018. That corresponds with my "feel" of the market in the area, as someone who still has zillow listings emailed regularly for the past 5 years for my zip.
I don't know why the article title (and therefore this post's title, currently) says "House prices drop" as the article specifically says the opposite:
> In California overall, there is now a bifurcation: Condo prices are already falling on a year-over-year basis, and house prices are still rising.
Note that the lockup for the recent spate of IPOs hasn't expired yet. It's possible that there will be a small recovery/bounce in the coming winter and spring. We'll see.
Is that actually a major blocker? Anecdotally, when I check out expensive open houses, it's frequently Uber & Lyft engineers that are also there. It's possible that they're just window shopping, but to me it seems like if you know you have $X in pre-IPO stock and have been pulling in $150-200K base for 5+ years the lockup doesn't really matter. You've got enough saved for a down payment already, and when I talked to a mortgage broker they seemed willing to lend against public-company stock compensation. (This strikes me as...risky, but it wouldn't be the first time banks have done something risky in a bubble.)
With a seemingly endless stream of stock wealth, those recent IPOs don't even cross my radar, frankly. I don't have the impression that there are more IPOs recently than there had been over the past decade, but maybe I'm wrong.
Over the years I've constantly heard about how expensive X city is. But you look 10 years later and it's even more expensive.
If the city has jobs and the weather is relatively nice versus the rest of the country then don't expect the home prices to drop for any long period of time.
What ends up happening is that a set of people that can't get the right paying jobs get priced out and those that have the right skills move in. We see it over and over again. You would think that technology would have disrupted the situation but it has not.
My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay.
Los Angeles is one of those cities that has long ago priced many people out of being able to buy a home. So what has happened is that people commute into the city from cities around LA. I don't expect that to change in most of our lifetimes.
"If the city has jobs and the weather is relatively nice versus the rest of the country then don't expect the home prices to drop for any long period of time."
people move there because of the companies and their HQs, and how the density drives the salary up, it has very little to do with the weather?
"My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay." Again, what does this have to do with the primary motivations to move?
The title of the article is misleading. First, is not a serious drop and it is also heavily influenced by seasonality, so "drop again" is kind of pointless, it will drop every year in the low season.
Because the general quality of life here is miserable and it’s a filthy area. For instance, in recent events the DA is fumbling the prosecution of a homeless attacker and the judge said jail wasn’t always the solution... I saw a guy pull his penis out on the BART escalator and rub it on 3 women! I saw another guy with a huge knife walking around the BART platform. Anyone who took the Civic Center BART would remember the hallways of heroin addicts with needles in their arms. And then houses cost $1M for a house where cops won’t do anything about people shitting on your property or camping on your property unless you have a restraining order... and then you a job you work 9-17 hour days at? It’s just not worth it. I just wish I knew where I wanted to escape to. Seattle, Portland, Denver are all nearly as bad and getting worse. Where are the normal people fleeing to? Is there refuge somewhere? Austin is seemingly more appealing all the time, but the weather and politics of Texas are turn offs.
I'm also curious where people are going - one place is out on the BART extensions. Public schools 9's and 10's, reasonable police response to violent behavior etc (I saw guy spit on old women on BART, she was near tears, she'd asked him to move his feet (he had them out across the handicapped seats). No one even blinks - my guess is he could punch but not kill her without consequence.
Not that I think much of technical analysis, but from eyeballing those charts it looks like we're right on the (upwards) trend that has held all decade, with the exception of people getting a bit over-excited in 2018.
I'm quietly hoping for it to flatten off or drop, but I don't see it in those charts.
> Wouldn't people put off their purchases until -it looks like- the end of the year
A. Housing is one of the basic requirements, and there are a variety of reasons why you wouldn't be able to time it like that. E.g. ended a old job, started a new job, marriage, birth, death.
B. Even outside large life events, many people don't want to disrupt large holidays with a stressful move. Ditto for school terms.
C. Houses look and show better in summer that winter. Seeing a healthy yard instead of bare trees, snow, and brown grass is good for value.
D. Often, the person buying a house is selling a house at the same time. Your new house costs 10% less in the winter, but your old house sells for 10% less as well. (Still a good deal if you are upgrading; just less of a good deal than you might initially think.)
E. If buying a house is absolutely conditional on selling one, winter is a somewhat riskier time since the market's volume is lower.
Houses are ugly and wet in winter. There's definitely seasonality to the housing market. Most sales in summer. And winter best time to buy, can save 10-20%.
Yet from what I've seen rent prices continue to hold or rise. If I had to guess, more and more people may be opting away from home ownership so the charts on demand for purchasing homes may be trending downward as demand for renting trends upward. Would've been interesting of the article juxtaposed the two but it could help explain why prices for one has gone down as the other goes up.
>>> more and more people may be opting away from home ownership
I don't think people are opting away from home ownership but rather forced away from home ownership due to high down payment requirement and lack of enough jobs that allow someone to save enough.
Who has $100,000 in cash to put down 10% downpayment?
It is a vicious cycle.
Less people are able to afford downpayment. So more people are crowding into rental market. But affordable rental supply is decreasing as more rental units are converted into condo/house AND more people are forced into rentals.
It is really a vicious, destructive downward spiral.
I'm seeing significant migration to basically any liberal city with a decent quality of life. I've lost friends to Boulder, Toronto, Boston, Raleigh/Durham, Seattle, and Sydney (Australia).
It looks like prices peak in the summer and bottom out in the winter. The difference in price isn't far off from what a Realtor would charge in commission (otherwise there would be arbitrage.)
I think the most important principle here is that no reasonable and compassionate housing reform should be attempted until I, I mean, until people, until people have a chance to cash out at the peak.
SF median price is 1084$/sq ft. It still has a long long way to drop before it gets anywhere close to the 128$/sq ft nationwide average. At the rate of -6% per year, it would need to continue dropping at that rate for 35 years before we reach the national average. So, one way or another, we're going to be stuck with extremely high housing prices for a really long time.
Why would one ever expect the median price per square foot in San Francisco, a metropolis with high economic activity, to ever approach that of the US on average?!
If we’re going to pick targets, then comparing it to other large metropolises in the US makes more sense (LA: $678, Seattle: $526, San Diego: $447)
[+] [-] asabjorn|6 years ago|reply
This is unfortunate, since this is money better spend on innovations and people getting enough wealth to start their own thing in their garage.
[+] [-] oppositelock|6 years ago|reply
Local stores, bakeries and restaurants, are closing down at a fast rate. I've been living here for a long time, and I'm sad to see small businesses being displaced by upscale chains. Downtowns areas which used to be a mix of small businesses and restaurants, are turning into chains of upscale restaurants and shops that are out of my price range (mid range tech worker)
We're going to find out what an industry town looks like when all industries but one or two are priced out, and the initial indications aren't very nice.
[+] [-] pcwalton|6 years ago|reply
[+] [-] lovfishing77|6 years ago|reply
Here's the median sale price from Trulia: https://www.trulia.com/real_estate/San_Jose-California/marke...
We've also done some analysis on home prices in the popular cities. Compared to 6 months ago:
Fremont https://agentsunlocked.com/trends/Fremont Single family homes in the 1500-2000 sqft range are down by about 1%
San Jose https://agentsunlocked.com/trends/San-Jose San Jose is up by about 2%
Palo Alto https://agentsunlocked.com/trends/Palo-Alto Up by 4%. Inventory in PA is usually quite thin.
San Francisco https://agentsunlocked.com/trends/San-Francisco SF is flat.
[+] [-] sjg007|6 years ago|reply
[+] [-] mdorazio|6 years ago|reply
[+] [-] rconti|6 years ago|reply
In my 'hood on the Peninsula, single datapoint I know, a house was just listed yesterday at $1.25m with a zillow estimate of its peak value at $1.5m in October 2018. That corresponds with my "feel" of the market in the area, as someone who still has zillow listings emailed regularly for the past 5 years for my zip.
[+] [-] lallysingh|6 years ago|reply
[+] [-] gumby|6 years ago|reply
> In California overall, there is now a bifurcation: Condo prices are already falling on a year-over-year basis, and house prices are still rising.
[+] [-] asdf333|6 years ago|reply
in california (which i am sure you know is different from the sf bay area) house prices are slightly up.
[+] [-] samcheng|6 years ago|reply
[+] [-] nostrademons|6 years ago|reply
[+] [-] rconti|6 years ago|reply
[+] [-] mr_tristan|6 years ago|reply
[+] [-] WheelsAtLarge|6 years ago|reply
If the city has jobs and the weather is relatively nice versus the rest of the country then don't expect the home prices to drop for any long period of time.
What ends up happening is that a set of people that can't get the right paying jobs get priced out and those that have the right skills move in. We see it over and over again. You would think that technology would have disrupted the situation but it has not.
My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay.
Los Angeles is one of those cities that has long ago priced many people out of being able to buy a home. So what has happened is that people commute into the city from cities around LA. I don't expect that to change in most of our lifetimes.
[+] [-] make3|6 years ago|reply
people move there because of the companies and their HQs, and how the density drives the salary up, it has very little to do with the weather?
"My thinking is that with the deliver anything in 2 hours apps. It will be easier for people to move into an area where they don't have all the restaurants and small shops people usually like in the neighborhood. They can just order it. Therefore, making it easier for prices to stay up as long as there's a way to pay." Again, what does this have to do with the primary motivations to move?
[+] [-] AdrianB1|6 years ago|reply
[+] [-] awolf|6 years ago|reply
[+] [-] diogenescynic|6 years ago|reply
[+] [-] privateSFacct|6 years ago|reply
[+] [-] ramraj07|6 years ago|reply
[+] [-] repsilat|6 years ago|reply
I'm quietly hoping for it to flatten off or drop, but I don't see it in those charts.
[+] [-] wahern|6 years ago|reply
The pattern has been the same since the 1980s.
[+] [-] lordnacho|6 years ago|reply
[+] [-] paulddraper|6 years ago|reply
A. Housing is one of the basic requirements, and there are a variety of reasons why you wouldn't be able to time it like that. E.g. ended a old job, started a new job, marriage, birth, death.
B. Even outside large life events, many people don't want to disrupt large holidays with a stressful move. Ditto for school terms.
C. Houses look and show better in summer that winter. Seeing a healthy yard instead of bare trees, snow, and brown grass is good for value.
D. Often, the person buying a house is selling a house at the same time. Your new house costs 10% less in the winter, but your old house sells for 10% less as well. (Still a good deal if you are upgrading; just less of a good deal than you might initially think.)
E. If buying a house is absolutely conditional on selling one, winter is a somewhat riskier time since the market's volume is lower.
[+] [-] i_cant_speel|6 years ago|reply
[+] [-] droithomme|6 years ago|reply
[+] [-] repsilat|6 years ago|reply
[+] [-] m463|6 years ago|reply
[+] [-] smaili|6 years ago|reply
[+] [-] dba7dba|6 years ago|reply
I don't think people are opting away from home ownership but rather forced away from home ownership due to high down payment requirement and lack of enough jobs that allow someone to save enough.
Who has $100,000 in cash to put down 10% downpayment?
It is a vicious cycle.
Less people are able to afford downpayment. So more people are crowding into rental market. But affordable rental supply is decreasing as more rental units are converted into condo/house AND more people are forced into rentals.
It is really a vicious, destructive downward spiral.
[+] [-] not_a_moth|6 years ago|reply
[+] [-] nostrademons|6 years ago|reply
[+] [-] PaulHoule|6 years ago|reply
It looks like prices peak in the summer and bottom out in the winter. The difference in price isn't far off from what a Realtor would charge in commission (otherwise there would be arbitrage.)
Am I right about that?
[+] [-] droithomme|6 years ago|reply
[+] [-] outside1234|6 years ago|reply
(Winter is coming)
[+] [-] forbin_meet_hal|6 years ago|reply
[+] [-] the_70x|6 years ago|reply
[deleted]
[+] [-] pascalxus|6 years ago|reply
[+] [-] GuiA|6 years ago|reply
If we’re going to pick targets, then comparing it to other large metropolises in the US makes more sense (LA: $678, Seattle: $526, San Diego: $447)
[+] [-] paxys|6 years ago|reply
[+] [-] jjav|6 years ago|reply
https://www.visualcapitalist.com/interactive-map-price-per-s...