TICs, San Francisco’s Involuntary Reflex: Part 2 — The Data

There are weeks when I look through the new listings on the MLS (Multiple Listing Service) and it seems like there are more TICs for sale than condominiums.  Turns out, this just isn’t true.  Here’s a chart showing relative sales volumes since 2003 (click to enlarge).

Units Sold By Month
Look at that!  Excluding those wonderfully regular dips every Xmas, condo sales are generally at around 200 units per month.  TICs rarely break 40.

Here’s how TIC and condo median prices stack up against each other on a monthly basis. ...  Additional Details

Supply/Demand: Does it predict price? Maybe not.

Now hold on there, matie!  Basic economic theory  says more supply than demand, prices will fall, right?  Well take a look at this graph. It shows the absorption rate of single family home listings from January 2006 through December 2008 plotted against median prices (click to make it bigger):

absorption-price-chart1

“Absorption” is basically the number of weeks it would take to sell all the homes available on the market based on the number of homes that are selling at that time.  (I’ve tweaked the formula to diminish the spikes caused by the huge seasonal dropoff in new listings each December/January.)   There are many ways to calculate absorption, but the basic idea is simply to capture how quickly demand is eating supply.  Less time to absorb the supply should reflect a “hotter” market where sellers can demand top dollar. A higher absorption rate, on the other hand, means that there’s relatively more listings on the market than demand for them.  That would tend to suggest a buyer’s market and softer prices. ...  Additional Details