I’m a realist, but not a fan of blank-check doom and gloom. That’s why I wrinkled my nose a bit to read Robert Shiller’s recent New York Times article entitled, gloomily enough: “A new housing boom? Don’t count on it.”
While he doesn’t predict a tanking of prices, he is uncertain on whether the rebound we’ve seen will sustain itself. But before anyone tears out that article to show to their friends, they should look at the statistics on a hyper-local level and study what’s going on relative to San Francisco. It’s important to add current market conditions to the mix.
And what are those conditions? Well, since the beginning of the year, we have seen a flood of buyers show up at our open houses. We seem to be back at a market similar to what we saw last summer, with multiple bidding and rising prices. This is in sharp opposition to Shiller’s assertion that “the unfortunate truth is that the tea leaves don’t clearly suggest any particular path for prices, either up or down.”
To counter that, let’s look at a metric that Shiller himself cites: the S&P Case-Shiller 20-City Index. (As you might be able to tell by the name, Shiller helped formulate this.) Case-Shiller just released their November report, which is for the top third of sales price-wise in the five-county San Francisco metro statistical area – keep in mind that the city itself has recovered more quickly and dramatically than the five-county area as a whole.
Each month, Case-Shiller recalculates the price ranges of the low, middle and top tiers of sales by the number of units sold. One indication of what has happened over the past year is that in December 2011, the top third (“High-Tier”) of sales began at a sales price of $573,000. In November 2012, the top third of sales started at $685,000. Looks like an upward trajectory to me.
Paragon’s in-depth analysis of the Case-Shiller index can be found here.
Dreaming of San Francisco? Cece Blase offers local advice to San Francisco buyers, sellers and owners-- and feeds the dreams of those who wish they could live in Tony Bennett's 'City by the Bay.' Call 415-577-0809 or email cblase@paragon-re.com. www.ceceblase.com
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