Archive for April, 2009
April 28, 2009
It’s time once again for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI).
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. – February data is released in April).
Here are the basic Case-Shiller stats for the San Francisco Bay Area* as of February:
February 2009
Month to Month: Down 3.2%
Year to Year: Down 31.0%
Change from Peak: Down 44.9% in 33 months
The following chart shows the Bay Area 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 Bay Area HPI was at or lower than it was in the latest data (August 2000).
The Bay Area HPI is now up to approximately an eight and a half year rewind. Even if we accept the premise that this is due in large part to the broad geographical area covered by the Case-Shiller data, that means that there are likely some places where prices are comparable to the 1990s.
Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves, so you can compare the Bay Area’s performance to other areas across the country:
And here’s our final chart, in which we line 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.
Of the 20 cities tracked by Case-Shiller, only Phoenix, Las Vegas, and Miami have fallen further from their respective peaks than San Francisco has. The decline here has been swift and stunning, and as of yet has shown little sign of easing. Yikes.
*[Case-Shiller defines the San Francisco Bay Area 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.]
April 24, 2009
Time for another update on where buyers are currently getting the biggest discounts off asking price. Our goal in sharing this data is to help potential buyers to know which neighborhoods are softer in terms of sale price discounts off list price, to better equip you when making an offer, and help you know where to look for potential bargains.
In the chart below, we have taken all sales data from the last two months in the Bay Area 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).
For a quick look at where a given zip code is located, just type it into the Redfin search box, or drop by the handy USNaviguide.com zip code map.
Here are the top ten zip codes with the largest overall discount:
At 5.0%, the overall discount for the Bay Area came in well above last month’s 3.2%. Unfortunately there was not much consistency in the top ten from month to month. Apparently the discount trends in individual neighborhoods is in somewhat of a state of flux.
Here are the ten zip codes with the smallest discounts:
Of the 4,221 sales we tracked in the 1.5-month period, 1,066 homes sold for 10% or more off the asking price, while 483 homes sold for 5% or more above the asking price.
We’ve been tracking the discount trend for four months now, and aside from our first update (for which I suspect our data may have been incomplete), we have seen the Bay Area’s overall discount bounce between 3.0% and 5.0% off. It will be interesting to see what the spring and summer bring to these stats.
April 16, 2009
Redfin’s superstar team of Bay Area agents noticed a couple of interesting phenomena just in the past few days:
- Demand is way up: 57 clients made offers last week. Many of these are either in the $400K – $600K (folks buying the most affordable properties they can) range or above $1M (folks with plenty of money). Not much in between. A lot of the demand is in the East Bay, where prices have fallen the most.
- FHA loans – which are government-insured loans for folks who can’t afford a 20% down-payment or who are self-employed — are putting buyers at a disadvantage because sellers prefer buyers with conventional loans. The problems sellers have with FHA loans are that the appraisals are more strict — a deal can fall apart if the house doesn’t appraise at the purchase price — and the loans take longer to fund. Banks selling foreclosed properties (aka REO listings) balk at FHA financing because the FHA guidelines require the listing to be in working order, and many foreclosed properties need repairs. If you’re bidding on a property and you have FHA financing, you may need to offer a bit more.
- Many REO listings appear in the MLS — and thus on all the brokerage websites — as active on the market but have been off-market for days. The agents who work with banks to sell REO properties, may list 50 – 75 of ‘em at one time, and they get behind. It may also be that the bank takes a while to consider all offers, so the listing agent has good reason to leave the property as active. Now, before we even tour an REO listing, we now confirm with the listing agent that it’s still really on the market. Of those 57 offers we got last week, about 15 were on REO listings that were no longer taking offers.
- Competition is intense in the Bay Area right now. We’re seeing a lot of bidding wars that result when the seller — often a bank — intentionally under-prices the listing to create an auction-effect among buyers. Listings that get 3 – 7 offers often seem to go for 5% – 6% over list, and listings with 10+ offers are going for 10% – 20% over list. Totally unscientific, but it’s what we’re seeing. Again, we like to call the listing agent to see what has come in, and to hold off on making our offer until we’re right at the deadline, so our client has the most info.
Anyway, that’s what we’re seeing. Anyone out there planning to use an FHA loan, let us know what your experience has been!
Update: Redfin’s Chelsea Mitchell notes that there’s a good discussion in the Seattle Redfin Forums about new (as of April 1) FHA guideliness for appraisers in a declining market — almost all markets are now considered declining — which explains why the FHA process has gotten more cumbersome and sellers have gotten more leery of offers funded by FHA loans.
April 13, 2009
We’re kicking off a new series on San Francisco Sweet Digs called Redfin By The Numbers. In this series, we’ll take a look at our brokerage stats to see how what our clients are doing right now reflects what’s happening in the market.
Let’s take a look at Redfin’s March numbers from the San Francisco Bay Area.
Our Clients Love Our Fanatical Service
We survey every client and track every transaction in a central customer database. For the surveys we received in March from our Bay Area clients:
- 20 clients responded to our customer-satisfaction survey and posted a review online, down from 28 February.
- 19 of those clients, or 95%, would recommend Redfin to a friend, down from 97% in February.
- A first-time home-buyer blogged about how much he liked working with Redfin agent Miawand Bayan.
In these surveys, Redfin asks customers to rate the likelihood that they would recommend Redfin to a friend on a 0-to-10 scale. Customers who rated 6 or higher count as people who would recommend Redfin to a friend.
People Are Kicking Tires
In March, our Bay Area clients were busy touring homes:
*In the previous post with the February numbers, we reported the number of unsigned offers we received from Redfin clients. Starting with this post, we’re tracking the number of signed offers our clients submitted to listing agents.
We also had a great home-buying class in March. About 50 people came to our Palo Alto class to learn about the home-buying process and meet our agents. There were a lot of questions about the first-time home-buyer tax credit. Check out the slide deck from the class.
It’s Taking 35 Days To Close On A Home
In March, the time it took our Bay Area clients to close on their homes was slightly shorter than in February:
- For our clients who bought re-sales, the average time from initial agreement on terms to the close of the deal was 35 days, down from 36 days in February.
- 1 of our clients failed to get financing, up from 0 in February
- 2 of our deals failed the home inspection, the same number as in February.
- Of our closed deals, the average discount off list price for homes sold was 5.93%, down from 6.64% in February.
Look For Our April Report
We’ll be back next month with a report on what happened in April. What numbers would you like to see in our April report?
