Monday, February 23, 2009
This American Crisis
Last year, "This American Life," the loved-or-hated NPR show, took an in-depth look at the forces that created the mortgage crisis. Even if you are pretty certain you know what caused it all, you owe it to yourself to download the podcast or the transcript. I promise you'll learn something.
Tuesday, February 3, 2009
Map Makers
Check out the map published this day at SFGate.com. The accompanying article is worth a read, too. Bear in mind that the data comes from Zillow, which is not always the most reliable source. But in this case, since they're drawing on actual past sales figures, rather than trying to predict possible future value, we're inclined to think it's pretty accurate.
The bad news? The Bay Area real estate market is in bad shape. The good news? Marin and San Francisco are in better shape than almost anywhere else. This accounts, in part, for an odd phenomenon we're seeing lately. Namely, a larger-than-usual disconnect between buyers and sellers. Buyers, even in Marin and SF, seem to think that every seller is desperate and eager to sell. Thus, they're tending to write really (often unreasonably) low offers. Meanwhile, sellers, especially in Marin and SF, are not in particularly dire straights and are disinclined to sell for below what they believe their house is worth.
The result is something that we've been talking about for years. In "destination" markets, like Marin and San Francisco, we historically see large swings in the number of units that sell during a given time period, while the median price remains flat or even increases. Why? Because people simply don't sell if they can't get what they think their house is worth. This limits the inventory on the market and helps stabilize prices.
Unfortunately, there are many other markets where sellers have no choice but to sell (or banks have foreclosed and are selling for dimes on the dollar). In these cases, inventory outpaces demand and prices fall dramatically.
There's no guarantee that Marin and SF will continue to perform so well. This crisis may be without historical precedent. But based on the past 30+ years of sales data (we checked), chances are we should be alright.
The bad news? The Bay Area real estate market is in bad shape. The good news? Marin and San Francisco are in better shape than almost anywhere else. This accounts, in part, for an odd phenomenon we're seeing lately. Namely, a larger-than-usual disconnect between buyers and sellers. Buyers, even in Marin and SF, seem to think that every seller is desperate and eager to sell. Thus, they're tending to write really (often unreasonably) low offers. Meanwhile, sellers, especially in Marin and SF, are not in particularly dire straights and are disinclined to sell for below what they believe their house is worth.
The result is something that we've been talking about for years. In "destination" markets, like Marin and San Francisco, we historically see large swings in the number of units that sell during a given time period, while the median price remains flat or even increases. Why? Because people simply don't sell if they can't get what they think their house is worth. This limits the inventory on the market and helps stabilize prices.
Unfortunately, there are many other markets where sellers have no choice but to sell (or banks have foreclosed and are selling for dimes on the dollar). In these cases, inventory outpaces demand and prices fall dramatically.
There's no guarantee that Marin and SF will continue to perform so well. This crisis may be without historical precedent. But based on the past 30+ years of sales data (we checked), chances are we should be alright.
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