Urban markets like New York and San Francisco are bulletproof to housing slumps. Both housing economies are overly dependent on one business sector and a few bad quarters on Wall Street or a tech bust would cause them to slump.
This goes against the current grain of thinking, but I have said here repeatedly that while the city of San Francisco has certain factors that will tend to support prices more strongly than elsewhere in the Bay Area, it will not be entirely immune to the collapse of the bubble, which ballooned prices here as much, if not more, than anywhere else in the country.
In particular, the signs are not good for for the business cycle in general. The current cycle has peaked, and more than just the housing market are contributing to the gradual erosion of the boom economy. Look for unemployment, particularly in the tech sectors, to grow over the next three quarters, and look for the stock market to contribute by entering its own slump. These two factors, coupled with the growing influence of housing on consumer spending and confidence, are likely to lead to at least a quarter or two of recession, probably as the 2008 election draws close.
When all is said and done, I'm looking for a drop of 15-20% overall in the median price of a SFO in San Francisco before the worst is over.
On the other hand, the way things are changing, you may find such a drastic step unnecessary. What with the new online-oriented RE outfits - who are currently in a commission-slashing war with old-line agents as well as with each other - it may not cost you an arm and a leg to let somebody who knows what they're doing peddle your place for you.
The markets expected to be particularly resilient next year will be those positioned as 24-hour cities with easy access to international markets, the survey said. The hottest city for investment will continue to be New York alongside cities such as Seattle, San Francisco and Washington.
As I said, there are factors that insulate The City - including its commercial market - from the worst of the real estate downturn.
Even as Bay Area home values weaken, a new report shows rents are soaring - indicative of the curious mix of a sturdy economy and a faltering housing market.
Average monthly rents in the region's financial and high-tech hubs have jumped more than 10 percent in the last year, and occupancy rates hover around 95 percent, according to a quarterly rental survey by RealFacts.
While robust hiring is boosting apartment prices, the purchase side of the market languishes amid the subprime crisis and a supply of homes for sale that far outstrips demand.
"We have very strong employment, and typically it increases demands for rentals and raises home prices," said Michael Carney, director of the Real Estate Research Council of Northern California. "But because we've had these problems with the mortgage market, the shift is toward rentals."
The average rent for an apartment in San Francisco stood at $2,243 in the third quarter, up nearly 12 percent from one year ago;
Would-be SF residents continue to be caught between a rock and a hard place, as far as housing costs go. While real estate prices are holding steady high in the stratosphere, or falling only slightly - real estate itself is much harder to buy thanks to the utter destruction of the sub-prime mortgage option. Yet rents are beginning to skyrocket again.
What it all boils down to is that in the SF Bay area, people are going to find themselves allocating more and more of their income to keeping a roof over their heads. Which means they'll be spending less and less on all those things that create "strong employment."
The implosion of the mortgage and housing industries has caused the East Bay's job market to stall.
The East Bay economy, which as recently as a year ago was bolstered by the startling growth of the housing industry and its satellite sectors, now is struggling to produce jobs on a consistent basis, according to a state labor report released Friday.
"We are in a housing recession in Northern California," said Scott Anderson, a senior economist with San Francisco-based Wells Fargo Bank. "I see the fingerprints of the housing slowdown in a number of industries."
Despite all the rosy economic forecasts circulating for California these days, I don't expect any economic sector to remain unbruised by the collapse of the enormous housing bubble that ballooned here. We are still pushing into the collapse. The worst isn't over. It is yet to come.
San Francisco, D.C., San Diego Cited as Best Job Markets for High-End Execs
Odds are if you’re an employer doing business along the Atlantic or Pacific Coast, you’re having to dig deep into your compensation coffer to attract white-collar workers, according to the third-quarter Executive Job Market Trends report, put out by New York-based job board TheLadders.com.
Well, now we know who is buying those multi-million dollar mansions on Pacific Heights....
The firm's services, which include managing auctions, are sorely needed in today's soft housing market, Gollinger suggested in a statement.
"A paralysis exists within the current real estate market, and our strategies will create movement through the use of conventional and accelerated marketing programs, releasing the paralysis and accelerating absorption for our clients," Gollinger said in a statement.
Throwing residential properties onto the auction block could, I suppose, technically be called "marketing," but I doubt many of the sellers will really appreciate the method.
Then there are the communities within suburban communities that draw Dwell-reading design snobs (that magazine, by the way, is about to publish its first-ever suburbia issue), like the meticulously rehabbed fifties tract homes east of Los Angeles and San Francisco designed by Joseph Eichler, George and Robert Alexander, and other fussed-over architects. “Once your house has some architectural appeal and your neighbors care about aesthetics, it raises the experience above suburbia,” says Paul Costa, who lives in an Eichler home in Sunnyvale, Calfornia, and rides his Segway to work at nearby Apple, where he designs iMacs. “Suburbia,” he says, “is a state of mind. It’s as cool as you want it to be.”
Well...except that owning a Sunnyvale Eichler is considerably more expensive than owning a decent condo unit on the Embarcadero in San Francisco.
For hard-core city types, the idea of settling in suburbia is a death sentence. Life without 24-hour Thai delivery, backstage passes to the Buckethead show, and the occasional Stan Brakhage retrospective is hardly a life at all.
Frankly, if this is what cities depend upon for their survival, then the inner urban areas are truly doomed.
SAN FRANCISCO—The Hearst Corp. is considering selling the San Francisco Chronicle's downtown building and adjoining properties to take advantage of the area's real estate market, a company official said.
I suspect that a couple of years down the road, we will look back on this as a superb example of selling at the top of the market.
As Economy.com says this week, “The market for new homes is dead for all practical purposes. Eighteen is the lowest rating in the history of the index. The seasonally adjusted numbers are also the lowest on record for October for every subcategory, as they have been for each month since spring began. The bottom of this market will not be reached until there is another significant decline in the cost to prospective buyers, both in house prices and mortgage rates.”
All the happy talk about having reached the bottom of the housing crash is just that: Happy talk. We have a long way down to go yet. Next stop?
I love mid-century modern, but I can't afford any of the Eichlers for sale in San Francisco. Still, you know what? San Francisco isn't the only place in the world you can choose to live.
The residential real estate market may be troubled, but property-focused Web sites are still attracting visitors and investors.
Curbed.com, a popular real estate blog network with sites in New York, San Francisco and Los Angeles, has obtained $1.5 million in financing to expand into new cities and add staff members. According to Lockhart Steele, the network’s publisher, traffic is growing 10 percent a month and the site is drawing national advertisers.
Congrats to SF Realblog's blogroll member Curbed. The SF revamp is looking pretty good, too.
But just because you can bargain hard on commissions doesn't mean you always should. Think of it this way: A commission is prize money. All things being equal, a buyer's agent will show a home paying a 6.5 percent commission to one paying 4 percent.
That's why I sweetened the pot by offering an extra 0.5 percent for the buyer's agent. Compared with other homes for sale in my neighborhood, my commission was the highest.
Less than two weeks after my agent and I signed the contract for 6.5 percent, we had a deal on my house. An acquaintance living nearby who offered 4 percent hasn't sold his house in a year.
You tend to get what you pay for. Even in real estate.
