Thursday, November 23, 2006

Turkey Time

It looks like I am the turkey this time around. Back in October there was a poll on this blog to see where the Marin HEAT Index would be come Thanksgiving, 2006. At that time the Index was at a new all-time low of 0.42; today it's at 0.60. Well, when you're wrong, you're wrong and you just have to admit it; clearly the poll's scale went in the wrong direction.

Here is what those who responded to the poll thought:


And here is where the HEAT Index is at today:


Granted, 0.60 is far from impressive and is still lodged well into "buyers' market" territory but it is significantly higher than the 0.35 which the majority of respondents predicted (but in all fairness to the respondents, the scale was, in retrospect, biased in the wrong direction).

Maybe the current activity implied by the Index is the result of all those houses that didn't sell (as they normally would and so would not be on the market now) this past year and are still on the market, slowly getting sold.

Or maybe it is the result of all those year-end bonuses one commentor (mktmakr) said (in a previous post) was scheduled to be granted to money managers and the like this year:
Don't mean to rain on everyone's parade, but check out the flood of cash that's about to hit (mainly)Wall Street, but also San Francisco/Marin:

http://tinyurl.com/soqag

I know it's hard to comprehend, but the AVERAGE bonus for ALL 25,647 employees of Goldman Sachs will be $397,707! Check out the numbers. $36 billion in bonuses from just the 5 largest investment banks!

Don't be surprised if you see an uptick in prices and sales in Marin real estate in January!
Here is what the RE agent and keeper of the Marin HEAT Index has to say:
The San Francisco Market HEAT Index (SFMHI) has had an incredible upward surge in the last two months, especially in the city’s upper end price ranges. In that time the Index rose a remarkable 41% for all of San Francisco, and now stands at 1.01. In the city’s upper end price ranges, truly staggering rises are recorded: a 225% rise in the above $4 million range, a 207% rise in the $2-4 million range, and a 186% rise in the $1-2 million range. These statistics are measuring what appears to be a radical shift in market activity in San Francisco.

What significance does this have for Marin? Marin’s upper end tends to follow San Francisco. When things heat up in the city, market spill-over usually happens in Marin a few months later. If this San Francisco market surge holds up and continues then it could be the harbinger for a genuine rebound for Marin and, likely, for other regional real estate markets.

For Marin itself, the Marin Market HEAT Index (MMHI) is 24% higher (warmer) than one month ago, and is now at 0.56. Remarkably, with one exception, every price range measured rose. The rise was 21% in $2- 4 million properties, and a substantial one-month jump of 46% in $1.5-2 million properties. Oddly, the above $4 million range has simply collapsed and reflects a 67% decline in market intensity from two months ago. This contrasts sharply with the same price range in San Francisco noted above.

These markets are back in a state of flux after 15 months of steady, gradual activity decline. Any assumptions that market conditions are flat, stable, and/or predictable need to be shelved for awhile. All that we really know is that big changes are in process. Whether you’re a buyer or a seller, the next few months should be an interesting ride.
I hope everyone had a great Thanksgiving. My family and I sure did.

8 Comments:

Blogger sf jack said...

I didn't vote in the COLD INDEX (tm) poll, so I can't recall what I was thinking at the time.

I do know that 0.60 overall for the County is still cold.

I find this comment interesting:

"For Marin itself, the Marin Market HEAT Index (MMHI) is 24% higher (warmer) than one month ago, and is now at 0.56. Remarkably, with one exception, every price range measured rose. The rise was 21% in $2- 4 million properties, and a substantial one-month jump of 46% in $1.5-2 million properties. Oddly, the above $4 million range has simply collapsed and reflects a 67% decline in market intensity from two months ago."

Does this mean, since I looked at the below $1.5 million segments, that the move up buyers (into the $1.5 million to $4 millin range) have seen enough price reductions to "make their move"?

The equity gains, the nagging spouses, the second or third kid, the big promotion/bonus/payoff/backdated options have come through - and... "it's time to move!"

Could this segment represent the first evidence in Marin of a deadcat bounce? (if the earlier slowdown at those levels were even enough to enable a call now... of a "bounce")

Since the market still appears slow at the "entry level" or lower level market in Marin (see links below for prices below $1.5 million), apparently its hardly changed from earlier.

And what does it say that the $4 million and above is "collapsing" (quoting the HEAT INDEX (tm) author)?

See here:

http://www.marinheatindex.com/historical-views/price-ranges/index.html

Or:

http://tinyurl.com/yjkkdv

Nov 24, 2006, 9:37:00 PM  
Anonymous Anonymous said...

Was this upswing of real estate activities tied to the recent internet acquisition frenzy? Last time I heard, few people got really rich by selling You Tube to Google. Maybe this explains the phenomena of "a 225% rise in the above $4 million range, a 207% rise in the $2-4 million range".

Nov 24, 2006, 9:50:00 PM  
Anonymous Anonymous said...

Was this upswing of real estate activities tied to the recent internet acquisition frenzy? Last time I heard, few people got really rich by selling You Tube to Google. Maybe this explains the phenomena of "a 225% rise in the above $4 million range, a 207% rise in the $2-4 million range".

Nov 24, 2006, 9:50:00 PM  
Anonymous Anonymous said...

Hi. I don't usually read this blog, but I thought the most interesting thing about this topic was that EVERY reader who responded to your poll predicted that the HEAT index would stay the same or trend lower.

I think that all housing bubble blogs need to keep in mind that most of their readers have a similar point of view and that can affect the balance of your discussions.

Nov 25, 2006, 3:16:00 PM  
Blogger sf jack said...

anonymous #111,765 (11/25/2006 03:16:45 PM):

Go back and read what marinite wrote.

Note the scale provided in the poll went in only one direction - so that's where the "answers" were given.

It's not obvious from my earlier response (in trying to be kind to marinite), but I didn't do the poll because in most other years the INDEX got warmer toward the holidays... and that's what I had considered could happen again.

Let's count the number of readers who didn't respond at all (hundreds? or perhaps thousands?). What did they think?

No one said this was a scientific poll.

Your statement:

"I think that all housing bubble blogs need to keep in mind that most of their readers have a similar point of view..."

Would be much more accurate in this case if you had said:

"... need to keep in mind that 89 respondents to this poll, of perhaps hundreds or thousands of readers at this blog, have a similar point of view... "

Nov 26, 2006, 12:27:00 PM  
Anonymous ross valley local said...

I think that all housing bubble blogs need to keep in mind that most of their readers have a similar point of view...

It's bit of a straw man to suggest a blog represents a group voice. In fact, one could say opinions here are more diverse than many topical blogs. Btw--I happened to vote for a lower heat index because the trend at the time suggested so, vs. following any herd.

Nov 26, 2006, 2:23:00 PM  
Anonymous marinite said...

The bias in the poll was my fault...my own bias showing. I thought I had made that point clear. I should have added higher numbers as poll options. Live and learn.

And there has been no shortage of dissenting opinion on this blog.

Nov 27, 2006, 4:32:00 PM  
Anonymous marinite said...

jack -

in trying to be kind to marinite

No need, but thanks for taking my feelings into consideration...my skin has significantly thickened as I operate this blog.

Yes, I committed a classic response bias error by only allowing the poll's options to go in one direction. It was for fun anyway, not scientific, not to be particularly useful.

And as for number of visitors...the last I checked this blog had well over 1000 unique visitors each week day and many thousands of not-necessarily-unique visits. Not a lot but then this is a small and insignificant county. I have not checked my site statistics in months however as it really means very little to me.

Nov 27, 2006, 4:41:00 PM  

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