But until then... below is a chart of the median Marin County SFR sale price per square foot, adjusted for inflation, for each July since 2001 to the present. This is a year-over-year comparison so "seasonal variations" are accounted for. I chose July for no particular reason other than it is usually an active month for housing. Adjusting for inflation allows for a more valid comparison of each year's price/sq. ft. dollar value. I found the inflation data here and the median sales prices and square foot data came from the Marin Assessor's Office (their data only goes up to August, 2006 by the way).
Enjoy.
18 comments:
I saw something similar on Money Mag online or something. What a farce. According to the same analysis LA and Seattle were "bubbleproof" too. More sheeple to the slaughter IMO.
that long term SF and other cities will still outperform other locations
No duh. Part of why it's fallacious (assuming you really read it). Speculative bubbles aren't "long term" events so pointing out the longevity of the market is beside the point. No one questions the long term trend; it's the short to medium term that is in serious doubt which is especially relevant since most people only own over the short term.
This chart implies that prices have only risen 20% psf in the five years that ended august 2006? Does that seem too low to anyone else?
It's inflation adjusted
"...long term SF and other cities will still outperform other locations"
That tells me that SF was targeted by investors, and they're still holding their cards and hoping for a better market in 2007.
Something wonderful is going to happen.
So here's what fred's article said about San Francisco:
"Income trends and development restrictions have made each of these top cities safe bets for investors.
San Francisco
Average annual home price appreciation (1949-2006)*:
4.2%
If developers were allowed to go all out with building on San Francisco's Treasure Island, Presidio and the Marin Headlands across the Golden Gate Bridge, the price of housing would fall close to the cost of construction. But those pristine natural amenities are the product of one of the most anti-development political cultures in the country - and a perennial magnet for the highest earners."
True. Though income trends did not keep up with inflation the last five years. And I wonder how the NASDAQ's annual returns looked in April of 2000.
I have to ask - anecdotally, wasn't Tokyo real estate going for $1 million a square foot in 1989 - and then prices dropped for 15 years in a row there?
I'm not saying we're headed for Japan-style deflation, because it's certainly an extreme example, but isn't it obvious that "there's no more land" arguments are rather bogus in bubble situations?
The article makes a claim about "investing in bubble-proof markets."
Bubble-proof? The writer must have some local property to sell. Either that, or they expect the market to turn around rather quickly, as noted here by others.
And I like the mention of "magnet for highest earners". Yeah, that's right, the highest earners who's median income is only 1/8 the price of a median **itbox home... and where a decent place is probably more like 12x the median.
Anyone buying now, investor or not (unless money is no object), isn't really paying attention.
Note that I'm using the Marin household median income (around $100K) as a proxy for the median income of the group of possible homebuyers in SF.
In SF (where 2/3 of citizens are renters, the inverse situation of almost all US cities), the median household income is just under $60K.
1-800-sell-now,where desperate sellers connect with buyers! heard it 5 times on the radio this am.oh,and they say it's a buyers market too,who'd a thunk it?
I don't buy this " bubble-proof" theory at all in the context that the article was written. If you break it all down, the only thing it is saying is what has been true here for years: People generally make more, hence the prices on homes are generally higher. Hmmm... amazing mathematics huh? The way I look at it is that SF might as well be in a different country. The cost of living is higher, the wages are higher, and so on... but what about the actual quality of life? I seriously question that last aspect.
To put things into perspective, I will say that I do earn a decent income that places me in the upper 10% of the earning population. It took me years to get here and lots of hard work, but at the end of the day, the money simply doesn't translate into what you would expect it to: Me and my wife are still priced out of the market here, and by a good margin. If we were to buy, it would at the most be a 1 bedroom tiny loft, a crappy house in West Oakland, or a small house an hour outside of the the region. We are both very frugal, careful, and financially savvy people, but even by buckling down to the bare minimum, the most we could afford would be in all honesty a lower income level house in a not-so-great neighborhood.
I fail to see how this is at all close to meeting the quality of life one would expect from this level of finance. To think that most people make less than we do is even more baffling because they can't afford. period. That's pretty sad.
So.. I don't buy this ridiculous piece of journalistic garbage. All one has to do is drive up and down my street and look at all those houses that just simply sit there month after month with fading " for sale" and "reduced price" signs.
I also look at another city, in another country that is very similar to SF: Sydney Australia. Yet another beautiful city with beautiful architecture, a diverse economy, great weather, snobby people, art, etc etc... prices were just as out of reach there and suddenly they are down 40%... and this is with a national economy that is doing very well with lots of exports and tech research. So.. if SF is bubble-proof, then what evidence do they have to back up this claim?
"I don't buy this ‘bubble-proof’ theory at all in the context that the article was written."
I agree with you completely. There is a good article from Financial Sense website:
http://www.financialsense.com/fsu/editorials/2006/1030.html
People like to see things with rosy glasses. They tend to forget real estate properties are very illiquid. When someone buys a $1 million house, he is carrying $1 million debt if he uses 0 down payment mortgage.
"...the money simply doesn't translate into what you would expect it to: Me and my wife are still priced out of the market here, and by a good margin"
So true. I don't care about the SFBay "lifestyle" anymore--the rewards for hard work simply don't add up, and these exorbitant may just kill our local economy. I'm out of here at my first opportunity.
Here's a histogram of monthly sale prices since 2003 for Marin County from the Chronicle sales data: http://n0sl33p.org/extra/marin.html
Hey, did you ever see that one where the family buys a house that was built over a cemetary and their children's rooms turn into vortices to the afterlife?
Pretty darn scary. And talk about declining real estate!
Missing you, Marinite! Hope the new job is going well.
Fantastic blog you've got here!
I was looking for Marin County related information and found your site.
I have a German Vehicle site.Dienstwagen
It covers everything about Vehicles, News, and more. Stop by and check it out when you can. Enjoy!
Marinite?
Where art thou?
This site is languishing.
Send some fuel or let us post stuff.
If anyone has something to post, email it to me and I'll consider it.
I am very busy these days. Besides, what more is there to say? I really don't know what to post on anymore without being repetitious. I am disinclined to spend the next couple of years making blow-by-blow posts on Marin's decline. On the other hand, I have started to collect Marin foreclosure data and I hope to post some of that soon (but it takes time to collect historical data).
Here's something new:
I have noticed that the IJ now has a real estate blog. The blog is actually run by the Marin Assoc. of Realtors and is clearly biased pro-RE -- just more proof that the MAR is in bed with the IJ (or is that the IJ is in bed with the local RE industry?). Lots of "Marin is special; Marin is immune" sorts of platitudes. The rest of it is just news summaries. It seems to be a reaction to this blog (or am I just being arrogant?).
Marinite,
As the market drops, please continuing posting your stats. You're one of the best unbiased sources of information on the Marin market. This will keep all of us in the loop as things unfold.
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