For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – October data is released in December).
Here are the basic Case-Shiller stats for the San Francisco area* as of October:
October 2008
Month to Month: Down 4.2%
Year to Year: Down 31.0%
Change from Peak: Down 36.1%
The following chart shows the San Francisco HPI scaled such that the May 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the San Francisco HPI was at or lower than it was in the latest data (June 2002).
October’s large price drop in San Francisco effectively erased almost an entire year of price gains. In September, San Francisco’s Case-Shiller HPI was at the same level as May 2003. In October, it was at June 2002. Ouch.
Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare San Francisco’s performance to other areas across the country:
And here’s one more chart, in which I have lined up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.
With October’s steep drop, San Francisco’s total decline of 36.1 is now just barely behind San Diego’s drop of 36.4%, having reached that level six months sooner.
Looking at this latest data, there still does not appear to be any bottom in sight for San Francisco home prices. In fact, price declines are gaining steam. If you are a seller that took your home off the market for the winter hoping for a rebound in spring, the current trends point toward continued disappointment. Of course, for buyers continued price drops means continually better deals to be found.
*[Case-Shiller defines San Francisco as the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area, which includes all of the following counties: Alameda, Contra Costa, Marin, San Francisco, and San Mateo.]
While the number and speed of price reductions is certainly interesting information (to some), what really matters to folks out there in the market right now is the size of price reductions. Better yet, how receptive are sellers to accepting an offer below their asking price?
Let’s get down to the nitty gritty. Where are buyers currently getting the biggest discount off the asking price in San Francisco? Knowing which neighborhoods are softer in terms of sale price discounts off list price will better equip you when making an offer.
In the charts below, we have taken all sales data from the last two and a half months in San Francisco and sorted it by zip code. We calculated the overall difference between the sale price and the list price. Note that this reflects the final list price, after all price drops in the listing. Any zips with fewer than ten sales are excluded from the top and bottom ten rankings, but interested readers may download the full data summary in Excel format (xls).
Unfortunately, this data is only for the actual city of San Francisco. There are many different MLSes here in the Bay Area, and we’re still working out the kinks in trying to integrate the data from all of them to bring you a better picture of the area as a whole. For now though, I thought I’d at least share what I have for SF proper.
Here are the top ten zip codes with the largest overall discount:
Discounts are relatively rare here in SF proper, with no neighborhood averaging over 1.5% off the final list price. This could mean that either sellers are doing a good job of pricing their homes according to buyers’ expectations, or that they’re just not willing to negotiate.
Here are the ten zip codes with the smallest discounts:
Of the 749 sales we tracked in the 2.5-month period, only 18 homes sold for more than 10% off the asking price, while 348 homes sold for more than asking.
It will be interesting to keep an eye on this data once we have been able to run it for a number of months, to see which neighborhoods are trending toward larger discounts and which are trending toward selling at full price.
Buyers should be aware that not all neighborhoods are created equal. While an offer 10% below list price may have a good chance of being accepted in a few neighborhoods where buyers are few and far between, many parts of San Francisco are still seeing enough interest to command full price or more.
Note: I believe we have finally worked out the kinks in getting some more in-depth data from the various Bay Area MLSes, and we are currently working on posts for sale-to-list ratio and inventory trend data that will be coming soon. In the mean time, here’s an update for our neighborhood price reduction data.
Let’s take another look at which cities and towns have the most price reductions.
The following charts show the percent of MLS, FSBO or REO listings that were price-reduced at some point before leaving the market (either sold or removed unsold from the market) in the past 90 days. Cities/towns or neighborhoods in which the number of homes taken off the market was too small to provide believable estimates are excluded from ranking.
For those that are interested, I have uploaded the full data set in Excel format here. In order to keep from overwhelming you with charts, I am leaving out the top ten cities/towns/neighborhoods with the least reduced-price listings from the post, but you can still see that chart in the downloaded file.
First up are the top ten cities with the most price-reduced listings:
Of the 132 cities/towns we ranked in the Bay Area this month, 48 had price-reduced ratios of fifty percent or more. Aptos held the top spot again, while East Foothills, Seven Trees, Alamo, Danville, Gilroy, Rio del Mar all made the top ten last month and this month, with a consistently high volume of price reductions.
Getting a little more granular, let’s look at the top ten Bay Area neighborhoods for price reductions:
47 of the 143 neighborhoods we ranked in the Bay Area had a price-reduced ratio of fifty percent or more. Only Millsmont and last month’s #1 The Village carried over from last month’s top ten as well.
There is a slight tendency for neighborhoods and cities/towns with lower listing prices (per square foot) to have a larger share of reduced-price listings. If you’re looking for sellers that might be more willing to negotiate a lower price, these would be the places to look.
Starbucks is an excellent choice as well as the several cafes on main street.Favorite Restaurant in the Area:
La Tosca in downtown San Carlos and just a short drive to San Francisco’s finest!
Favorite Places to Go:
Local restaurants and San Carlos main street events.Best Features of the Home:
The open floor plan and view to the garden courtyard bring you into the heart of the “Home”.
Has there been any remodeling since you purchased the home?:
No, floorplan has been very family friendly! Normal routine maintenance and minor interior/exterior updates for decorating have been completed.
Favorite Room:
Great Room…which invites family friends to gather and socialize.
Most Romantic Spot:
Can be sitting in the secluded garden courtyard with a fine glass of wine and good company.
What’s in the neighborhood?:
Wonderful Parks, great schools, local dining close by, senior center, library and wonderful neighbors!What you will miss most:
The wonderful small town atmosphere within the bay area!
While most of us were out enjoying the holiday break last week, the folks at S&P/Case-Shiller released the latest data for their home price indices, which provides the most accurate measure of single-family home price trends for twenty markets across the country. Since S&P’s coverage conveniently includes each of the eight markets that Redfin provides service in, let’s take a look at the home price data from the S&P/Case-Shiller Home Price Indices (HPI).
I apologize for my tardiness in this post. Future posts regarding the Case-Shiller data will be more timely.
Before we get to the charts, let me give a brief explanation of what the Case-Shiller HPI is. To calculate the index, they look at repeat sales of single-family homes over an “arms-length” period of time. Home sales that include things like major remodels, property splits, and sales between family members are disregarded, and sale pairs are weighted based on the length of time between each sale. After all this, the current month’s data is used to calculate a three-month rolling average which is the reported HPI. Data is released on the last Tuesday of every month, for the period two months prior (i.e. – September data is released in November).
Here are the basic Case-Shiller stats for the San Francisco area* as of September:
September 2008
Month to Month: Down 3.9%
Year to Year: Down 29.5%
Change from Peak: Down 33.4%
The following chart shows the San Francisco HPI scaled such that the May 2006 peak is 100% on the y-axis. Data on the x-axis is scaled to display the last time (pre-peak) the San Francisco HPI was at or lower than it was in the latest data (May 2003).
Home prices in San Francisco have been in rapid decline since late last year (after starting out the decline slowly), and according to the September data, that trend does not appear to be slowing down soon. San Francisco’s drop of nearly 4% was the largest month-to-month decline among the twenty cities tracked by Case-Shiller.
Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare San Francisco’s performance to other areas across the country:
And here’s one more chart, in which I have lined up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.
Price declines in San Francisco have been surprisingly large, considering that home prices did not get as ridiculously high as other California cities such as Los Angeles and San Diego. At the peak, San Francisco’s HPI was right in the middle of the Redfin-serviced pack, with an HPI higher than Boston, Chicago, and Seattle, but lower than Los Angeles, San Diego, and Washington. As of September, San Francisco now has the lowest HPI of the bunch.
Home sellers in San Francisco would do well to price their homes accordingly in the area’s especially harsh market. Compared to a couple years ago, home buyers can find some amazing deals, but anyone looking to buy right now should definitely go in with a full awareness that continued price declines are highly likely at this point.
*[Case-Shiller defines San Francisco as the San Francisco-Oakland-Fremont, CA Metropolitan Statistical Area, which includes all of the following counties: Alameda, Contra Costa, Marin, San Francisco, and San Mateo.]
