How much have prices come down in 1 year?
July 31, 2009Lets find out, shall we? Since the 1st half of ’09 is officially over and recorded, we crunched some numbers and then compared it to the same period for ’08. What we found leads us to some very general statements about year over year price declines in San Francisco. We say “very general” because we’re looking at the City as a whole. Different neighborhoods of course behave in different ways. Matter of fact, each individual property behaves in a unique fashion. In any case, here is what we found:
Single family home prices have come down 18% and condo prices have come down 15% since this time last year.
Here is the spreadsheet:
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| SFH | |||||
| Avg SP | Med SP | Avg PPSF | |||
| 1st Half 09 | $958,995 | $718,000 | $578 | ||
| 1st Half 08 | $1,217,186 | $865,000 | $697 | ||
| Change | -21.21% | -16.99% | -17.02% | -18.41% | Avg Using 3 Methods |
| Condos | |||||
| Avg SP | Med SP | Avg PPSF | |||
| 1st Half 09 | $779,023 | $669,500 | $646 | ||
| 1st Half 08 | $921,474 | $800,000 | $741 | ||
| Change | -15.46% | -16.31% | -12.80% | -14.86% | Avg Using 3 Methods |
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The numbers here are pretty compelling. Any way you slice it, whether you’re looking at medians, averages, or price per square foot, prices are down and local real estate is on sale. The difference one year makes is quite substantial. The market has changed so quickly that many are still scratching their heads wondering what happened and what’s to come.
There's a sale going on... 15-18% off! (Image courtesy of zimbio.com)
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The change to loans is what really hurt the market. There are still the well off buyers who don’t need financing and they are surprisingly holding things together, but there is a noticeable lack of competition across the board. The number of people previously ‘approved’ to purchase homes >$1M has essentially been reduced to those that can actually ‘afford’ such a home. Run a screen on the % / total # of homes In Escrow below 800k and above 800k to get a sense of what is going on in the market. I’m advising buyers to tread cautiously and make intelligent offers. Downside exposure still exists here in our beloved city (for buyers and owners!).
There’s no doubt that the lack of action on the high end has played heavily into the decrease in averages and medians. And it looks like it could remain that way for a while. Most of the action is taking place below $1M, and under the jumbo limit.
Another thing that jumps out to me from these stats is that condos are holding up better than SFH’s. I think there are a couple reasons for this.
1) Condos at new developments are not reflected in the stats.
2) The bulk of foreclosures in SF are concentrated in neighborhoods south of I-280, and there aren’t many condos down there… it’s mainly SFH’s.
3) Condos tend to be cheaper than SFH’s, and the cheap stuff is selling right now. The high end is primarily SFH’s, and since the high end is hurting, it is affecting the SFH average and medians more.
Not sure if you saw this article I wrote but it breaks down sales volume by price bracket, year over year:
http://spedr.com/n878
Lending on the high end is definitely a culprit to the lack of activity.
Arrian: as you know I’m a big fan of the data-crunching you do — funny, I kinda do the same thing! — but I have a quibble and a comment for you.
Quibble: It’s true, of course, that different neighborhoods perform differently. At the same time, I’ve been constantly surprised at how the supposedly “immune” neighborhoods, like my beloved Noe Valley, end up pretty much where the city as a whole is. It just might take a little longer to get there. Here’s a link to my own analysis from a couple of months ago on Noe Valley specifically: http://www.pegasusventures.net/wordpressblog/2009/05/05/noe-valley-goes-down/
Now the comment: If you just compare June 09 median prices to June 08 prices, rather than taking the full six month period, it’s worth noting that prices are off just 5.7% for homes and down 15% for condos/tics: http://www.rereport.com/sf/pv/index.html — my data service feed. I’m not arguing with your conclusion, but the it might suggest that the pace of decline is slowing.
Keep up the great work!
Hey there Misha! Thanks for the note. I’ve got to agree with you that the bulk of the depreciation has already occurred in the marketplace, and that the pace of decline has deteriorated. Barring any majorly bad economic news, the worst is probably behind us (although I do believe the luxury market has some significant correction left).
The reason I looked at 1st half 08 vs 1st half 09 is to get a nice lonnnnnng string of data. While it’s true that the first quarter of 09 was completely different than the second quarter, many of the effects of Q1 are still being felt (not the least of which is psychologically). I wonder what the quarter over quarter numbers look like? Maybe I’ll take a look tonight if I get some time.
Didn’t you also find that condos were holding up better than SFH’s in this article: http://spedr.com/39z6r. Really enjoyed the analysis in your article… nice to have a fellow stats nerd out there trying to figure out the puzzle. And oh, what a puzzle it is. It’s like trying to throw darts at a moving dart board. The real estate market rarely changes this rapidly, so maybe your year over year monthly indicator is a better measure of “up to the minute” changes.