Category: Economy

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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. ...  Additional Details

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Fears of a New Chill In Home Sales

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That was the title of an October 27 article in the New York Times, and, as one of my readers and clients pointed out, it’s what I’ve been tentatively suggesting as a possible scenario for this winter. See here, for example.

And, ironically, the gloomy head-line announced yet another “positive” month of data from the Case-Shiller Home Price Index. The little up-tick in the index from last month’s July data that I discussed as a possible “dead cat bounce” continued in August. ...  Additional Details

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Dead Cat Bounce?

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At the end of last month, the media was full of Case-Shiller’s upbeat report on the national housing market for July 2009, its most recent reporting month. Three months of improving sales “continue to support an indication of stabilization in national real estate values,” according to the September Report.

Here’s the chart, by the way, which also shows that on a national basis we are back to Autumn 2003 price levels.

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See that little up-tick at the very end of down side of the mountain?  That’s what every one is celebrating, folks.  Indeed, it’s hard not to laugh when the Report includes tortured phrases like “the rate of annual decline … seems to be decelerating”  or “all metro areas are showing an improvement in the annual rates of return, as seen through a moderation in their annual declines.” Whoopee! ...  Additional Details

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Waiting for the Other Sheep To Drop… Or Not

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Does anyone really know what’s going on?  Despite the gloom and doom of my recent posts (Waiting for the Other Sheep to Drop, Alphabet Soup:  What Shape will the Recovery Take?), the latest publication of the Conference Board’s Leading Economic Index (LEI) on Tuesday trumpets:  “Fifth Consecutive Increase!”  The LEI is supposed to predict economic activity approximately 6 months into the future, so you’d think that a five-month run would mean it’s time to celebrate, especially given what looks like the impressive bounce shown in this graph. ...  Additional Details

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Alphabet Soup: What Shape Will the Recovery Take?

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On the anniversary of Lehman Brothers’ demise and the near-collapse of global markets, it seems appropriate to take a step back from our little corner of heaven for a wider view.

Given where we were a year ago, the world seems to have heaved a huge, if cautious, sigh of relief.  During the chill days of February, the stock market had lost more than half it’s value.  Now it’s down “only” 35%.

San Francisco home prices have also improved.  In January home prices were down 37% from their all-time highs. By July prices had recovered 11%. In August, however, prices fell back 2%.  That’s a pretty stiff drop. (Click the chart for a big version.) ...  Additional Details

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The Worst May Be Over According to Big Brain, Ken Rosen

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Ken Rosen, Chair of the Fisher School For Urban Economics over at UC Berkeley, has good news for San Francisco home owners.  “The recent rise in home prices and sales activity lead us to believe that the worst part of the correction in home prices is behind us and that housing market conditions are showing signs of improvement.”

This report, based on June results, is the first of what will be a monthly analysis of the San Francisco real estate market undertaken by The  Rosen Consulting Group on behalf of The San Francisco Association of Realtors.  You can download it here. ...  Additional Details

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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). ...  Additional Details

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More Grim News on Housing

Saturday’s NY Times proclaims “A Gloomy Outlook for Home Sales’ Big Season.” The headliner, by the way, was “Job Losses Hint at Vast Remaking of U.S. Economy.” Is it really any wonder we have difficulty sleeping a’ nights?

Here are some of the cheery highlights:

  • One out of every seven apartments and houses in the US are vacant, a level not seen since the 1960’s. That’s about 19 million units
  • Less than a third of those are actually for rent or for sale, meaning that many more could yet come onto the market.
  • New contracts for previously owned homes fell at their fastest pace for two years.
  • Some areas that have fallen fastest, like inland California, are seeing improved sales.
  • Urban areas that have withstood the recession reasonably well, like San Francisco and New York, are “frozen.”

We pass Elk Grove on our way up to Tahoe.  Beautiful spot east of Sacramento.  You can buy a 3 BR house there for $193,000.  The same house sold for $336,000 four years ago.  The mortgage is a $100 less than it costs to rent a 2BR apartment.  It’s hard not to think of that as positive.  That is, unless you were the one who lost $143,000 in equity. ...  Additional Details