The media has a huge bias to push a dominant narrative, and it's hard for actual data to get through.
So the early, and false, narrative about population density posing an insurmountable challenge to preventing disease spread got a ton of play. Now, when it's clear that density is not driving spread, it will be rare to see a news article countering that narrative.
I also think that reports like this Zillow data will not see nearly as much media attention as the initial truths reports about people fleeing cities.
Same with the "techies are all leaving SF" stories; I'll wait for actual data before listening to the narrative that serves the interests of a huge factional divide in SF.
epistasis is correct. Very few people live in the mountains and only come to town every six months.
Density mattered a little bit early on, but SARS-CoV-2 is so infectious that it gets around no matter what, unless the strictest possible measures (such as the police-enforced lockdowns in parts of Melbourne at the moment, or the earlier reports of Chinese buildings' doors being welded shut) are adopted.
You'd do well providing some studies to support your assertion. Best I can tell, urban centers have suffered disproportionately from C19, and they present an epidemiological nightmare with their shared public infrastructure and public transportation.
The thing that is really strongly associated with covid cases is housing overcrowding, that is the number of people in each dwelling, and not with density. This paper concludes that "Our most important finding is that density is unrelated to confirmed virus infection rates and inversely related to confirmed virus death rates, after controlling for other variables."
Lots of verbiage easily refuted by a simple statistic: NYC has C19 death rate of 2279 per million. 19K people died out of 8.337M. In comparison, NY state, as of today, has a death rate of 1693 per million, and it'd have a much lower death rate if NYC was excluded (1253 per million), and lower still if you only consider rural areas.
Not the same ball game, body count is so low you probably wouldn't get a reliable signal. And even then, I bet rural Japan and Korea are affected far less. It's simple common sense. R0 depends on fanout exponentially. On average, the higher the density, the higher the fanout.
Until you get to a extreme rural most people do the same things with the same density. Grocery stores and the like tend to have similar densities everywhere because if you get any more dense someone else opens while any longer less and someone goes out of business. This is my observation in towns from as small 3000 to as large as 2 million.
Similar for other activities, there are less people at the school games or theater, but the density is the same.
Edited to add: and in case you continue to misconstrue my point, New York has _tons_ of overcrowded housing. I am by no means using density/crowding argument to wave away NY's problems. They have a severe housing crisis there.
Glad we've come to an agreement: high density urban living ("overcrowding" in your terminology) is an epidemiological nightmare with death rates ~40% higher than less dense areas.
Churches are a common place for superspreading events. These are uncorrelated with density.
Your conception of Dan our does not match people's actual behavior.
You seem to think that NYC is primarily facie evidence that density is somehow something that can't be overcome when trying to stop spread, but don't even consider other dense places that have not had the same problems. In Italy, rural towns were hit as hard as dense cities.
NYC could have been stopped if the governor and mayor collaborated to institute policies to reduce social contact. Instead they delayed a week later than they should have, and testing failures didn't give them evidence of how far it had already spread, leading to tens of thousands of unnecessary deaths. We are seeing the same phenomenon in rural tourist towns in mountain areas, that had lots of early travelers.
Social contact is the primary cause of spread. And density does not prevent one from limiting their social contact.
No, public transit is not a common source of super-spreading events, you are just making up stuff that feels right to you and plays the dominant narrative.
Seriously, find the prevalence of public transit superspreading events, if you even can.
Spread happens at social places: conferences, nursing homes, churches, medical centers, meat packing plants.
There are vanishingly small superspreading events from public transit.
This whole thread is a perfect example of the media selling us a false narrative but persisting because is "feels" right. Public transit as a primary means of transmission runs counter to the data, but because it was one of the first things the media focused on and it "feels" right, people become so certain of their feelings that no amount of data will counter it.
Sounds like you're comparing dense areas with lockdowns to less dense areas with little or no lockdowns. Because churches would obviously cease to be a factor if they implemented the same restrictions as done in NYC.
Yes, that is precisely the point, because lockdowns and social distancing are the ways to stop spread. Avoiding density doesn't stop the spread at all! Living in a non-dense area but continuing to come into contact with people (at church, at work, etc.) does not protect anyone. And it is as easy to protect yourself via social distancing in dense areas as it is in non-dense areas.
You should compare them fairly. Lockdowns in both or no lockdowns in both. Social distance should be higher in the less dense areas in both situations.
Were those deaths in the dense areas or the less dense areas? Turns out that living in a denser area was "protective." But it wasn't actually protective because density is unrelated. It's socioeconomic status and being forced to work versus being able to shelter in place.
Plus all the counter examples where dense places have quickly stopped the spread. What killed NYC was terrible leadership that told people to go out and enjoy social settings, which launched the initial spread, and then people forced to continue in essential jobs where it could continue to spread. Not density.
From TFA: "In San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings. This divergence of active inventory is not evident in cities like Miami, Los Angeles, Washington, D.C., and Seattle."
I'm not in San Francisco, but if we were to experience a doubling of inventory here in Seattle, it would be evidence of a big shift in the market. We neighbor-visited an open house on our block in the autumn that was attended by at least a person a minute during the half-hour that we were there.
The article is super interesting for its incongruence with local anecdotes, but it would also suggest that the "techie exodus" in SF has some roots in reality.
One thing people seem to forget is that leaving SF doesn't mean leaving the Bay Area. A lot of the people leaving SF are going to end up in the surrounding cities, which were always cheaper and considered more boring than SF. Now that SF is locked down, all of the Bay Area is equally boring, so you might as well live in San Mateo and cut your rent in half.
I think that's stretching... It's still very expensive in the burbs due to their proximity to big tech companies. I am not seeing rent be half in the peninsula compared to SF.
Yeah definitely not San Mateo, but east bay will do that. My realtor says her business in SF and the peninsula is drying up, but east bay is hotter than ever.
Well let's see if it's techies moving pretty if it's other people. In my Bay Area adjacent town, there's toooons of homes for sale but they are not newly purchased within the last 10-15 years, but homes that have been held for decades.
There's also a huge exodus of people from SF that have lost jobs.
It could be techies, but I'll wait and see the numbers to judge that, a mere overall exodus does not equate to a techie exodus for a city where techies are such a small part of the population, but which dominate so much of the discussion.
>Same with the "techies are all leaving SF" stories; I'll wait for actual data before listening to the narrative that serves the interests of a huge factional divide in SF.
Anecdotally, I know a good number of people who've left the Bay Area to be closer to family for at least the duration. So it's not purely a press narrative.
From the article, data seems to show sellers flooding the market in San Francisco:
> In San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings.
> When comparing the principal city to its surrounding suburbs, the San Francisco metro area does break the mold. Higher levels of inventory, up 96% YoY following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs.
> In San Francisco [...] the softening is clear as sellers inundate the market and buyers have not changed their pace to match — newly pending sales in the city are up only 1.7% YoY.
Looking at it doesn't even make sense to me. I'm looking at "For-Sale Inventory (Raw, All Homes, Monthly/Weekly)" and getting the same numbers for the previous year in June. (Around 5,000-6,000) Where's this huge 96% increase...?
Not only that, but listings plummeted with Covid. I'd be interested to see how the cumulative inventory compares to this time last year.
If all those people who were going to sell in March, April and May just delayed until now, you'd see a big jump in inventory, but the overall number of homes changing hands might not have changed.
I said no to Amazon for this Defense startup. Tons of options, cash, and fringe benefits. I am now, after seven or so years of calling myself a Gay San Franciscan Techie (immigrant) in a position of deciding whether buying a home in San Francisco is opportune seeing that I cannot seem to leave the city and could use the motivation. I have a big percentage of leverage in terms of implied income/cash flow/credit etc. Just don’t know if I’d be better off elsewhere maybe 70 miles upward of SF.
I love Portland, it’s cheaper than here. Seems unexplored, in spite of how eponymous they’ve become. Portland ticks all my boxes. I have family with me here and they do not like the cold weather (we’re from Miami).
Note that a doubling of inventory in SF still leaves SF with only half the per-capita inventory of New York. Even right now the market is ridiculously tight.
Note also that current inventory levels fall between 2009-2010 levels. Those were not years during which SF lost population.
If you look at Redfin, the majority of the increase in inventory is downtown. Everyone who owns a smallish condo, is selling it, or attempting to right now.
Look at the places sold last month downtown, you'll see prices go under asking, or well below what they would have been at 6 months ago.
This is in stark contrast to the rest of San Francisco where inventory looks normal, but prices are 10-20% higher than they would have been 6 months ago.
What this tells me is this, people have more purchasing power because of lower interest rates and are selling their downtown condos to move out to the spacious parts of the city. (or moving further south)
I don’t think sellers will be able to dictate the terms. I don’t think you understand what the collapse of this nation looks like: it will be a gradual process; a gradual drift from the reserve currency into more appeasing debt, from some unemployment in certain regions, to the clustering of wealth elsewhere, private islands in Nicaragua, Singapore, Vietnam, New Zealand, Canada, I can definitely see places like the Basque Country essential locations with a good combination of European standards and the outdoors.
If Trump gets relected Kiss the cities goodbye. If Trump gets relected we’ll devolve to some banana republic with fancy gated communities for the few and massive homelessness. To quote
Huckaby, a vote for Republican Maverick unfettered capitalism would be a vote for Trump.
No doubt Zillow’s data must be fascinating and deep and extensive.
In general, I’m curious about how an individual could use this type of data to their own benefit—to “game the system,” as it were, by surfacing / finding “outliers”, by which I mean properties that are renting / selling far below their “market-calibrated” price.
Then again, I guess developing that into a product is (ostensibly) the entire job of an analytics PM somewhere like Zillow...
Still, we (collectively) are close to it being straightforward to scrape this data, train a model, and score new listings as they come in. The tools are all there, the tooling to orchestrate it off-the-cuff for personal use is still a bit far off.
One reality of liquid markets is that, whenever someone discovers an edge, it is (generally) only viable for a limited time. Either the original observer arbitrages the advantage into oblivion or multiple observers notice the same thing and do so together.
A more-reliable way to go is to determine whether a particular property is selling for less than it is worth to you. If it is, and there isn't a better option, hit it.
This is good advice. In economic terms, you always have an edge for your own personal purchases since you have superior access to information about your own preferences.
From what I see, as a compulsive zillow-with-24hr-filter-scout, the market is a lot less liquid than one might believe. There are a lot of economists' $20 bills laying around. (Especially during COVID, but also generally). Even some $100 bills. And they almost always sit on the market for at least 12, if not 24 hours.
My explanatory theory is that people who are very interested in getting great deals on apartments are also the same kind of people who sign long-term leases.
IMO, the biggest barrier to arbitrage, that allows these good deals to float on the market for several days, is that most people are not interested in pouncing on an apartment that's come on the market <8 hours ago. Breaking your lease (the rental market equivalent of "selling", a requirement for "selling up") is just way too expensive.
Brokers (the people who are ostensibly paid to arbitrage) are also not super interested in getting their client the best arbitrage deal, because their commission will usually come out lower.
All this to say: next time you're moving, consider hounding zillow in the mornings and evenings every day, with a 24hr filter, in the 5-6 weeks prior to your move. Your patience will usually be rewarded.
>Brokers (the people who are ostensibly paid to arbitrage) are also not super interested in getting their client the best arbitrage deal, because their commission will usually come out lower.
AFAIK it works the other way around. The commissions might be say... 10% lower, but if you save time (by not having to maintain the listing and attract buyers), you can more than make up for it in volume. This was covered by freakomics a while ago https://youtube.com/watch?v=aFYlgqv3T-w
I believe that GP was referring to buyer's brokers. In their case, if the client pays more, their commission grows. Furthermore, if they can close quickly, by making a higher offer or purchasing something that isn't quite the right deal, the buyer's agent increases volume, leading to the same effect.
I don't want to be the economist who doesn't pick up the $20 bill but the entire real estate market is based on trying to identify dislocations in price. Plus even if you write a python script that finds underpriced houses on average how many losers can you afford to finance and how long can you hold out for a buyer?
In another life when I was a consultant, I did work for a startup that scraped public data for exactly this sort of use.
They still exist and use nonpublic sources now, but built a nice subscription business scraping lis pendens notices and such. No reason someone else can't do the same.
>> "In United States law, a lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Recording a lis pendens against a piece of property alerts a potential purchaser or lender that the property’s title is in question, which makes the property less attractive to a buyer or lender. Once the notice is filed, the legal title of anyone who nevertheless purchases the land or property described in the notice is subject to the ultimate decision of the lawsuit."
Whatever is going on is not restricted to coastal cities. We bought a cheap house in a college town in Michigan last year. Within 24 hours of listing it 10k over what we bought it for we had an offer.
I suspect low inventory in certain price points as well as low interest rates are driving people to buy whatever they can.
Also, being able to buy a house while you have an income in case you are predicting an increased chance of being terminated in the future.
Once you’re in a house, being removed from it due to missing mortgage payments is much less stressful than trying to secure housing when you have unstable income.
I'm sure you meant, "worrying about being removed from it due to missing mortgage payments", right? Because I would definitely find foreclosure to be more stressful than getting a loan in the first place if it ever happened.
Foreclosures take time, and you have a roof over your head during all of that. And the government frequently bails out homeowners. Renters have no protection.
When you apply for a mortgage loan, having a steady income is one of the requirements for getting approved for the loan.
Suppose you are planning to move into a home soon. It's worth jumping in ASAP while you still have consistent income to show on your W-2 and loans are still being handed out. You can worry about making ends meet afterward (and doing odd jobs if you have to), but the hardest part is getting qualified for the mortgage.
The alternative is you keep renting, and then your income disappears. Now, it's hard to find rental housing because landlords ask for your W-2 and paystubs also, and you have few protections as a renter not paying their rent versus a homeowner not paying their mortgage. And mortgage payments and rental prices are not far off from each other in any market with half decent economic prospects.
Also, as history has shown, the US government will always go to bat for asset owners in order to prop up asset prices, and leave non asset owners out to dry.
Try getting a house that is very much within your means when you happen to be between jobs.
It does not matter if you have several years of expenses including mortgage payments saved up - if you don't currently have a job, good luck getting a mortgage.
Not to mention that the money printers have been running like crazy through this pandemic business, which means that the increase in prices is largely down to currency value decline. Modern economic policy pushes inflation to fixed assets rather than consumables, which is why it doesn't show up in CPI figures much, but anything you might normally consider to be an investment have all be jumping in price alongside each other. Same reason they stock market is pushing record highs.
First, take everything Zillow says with a grain of salt. Sure, they have the data, but they are not objective. Not saying they are lying, but they might not show the full picture. (edit: I must say the post seems very detailed and looks like they put a lot of effort into it. Maybe I should read it first...)
The trend seems to be rent prices are dropping in all major cities but home sale prices are not. In fact they are even going up. In my opinion it's too early to tell. Remote work would have a big impact on where tech workers live. But it would take some time until it starts to negatively impact home sales. People who move to new cities usually don't buy houses right away. Many of those people who were supposed to move to SF/NYC/Boston in the next year and potentially compete for houses in the next 5 years might now go elsewhere.
I agree with this largely. More importantly we won’t know the full impact of anything for another 6 months. There haven’t been foreclosures, or evictions yet.
To me there's nothing really surprising here. Prices in SF are down just 5%. The pandemic is a massive negative economic event. You would think it would impact markets like SF much stronger (50%+ drops in value considering the insanely high prices), but that just goes to show how in demand living there is. I also don't see any companies leaving, so why would residents leave? Just because of remote work? I don't buy it.
Additionally, it seems there's some underlying mechanism sustaining the economy from completely collapsing. Whether it's just a factor of time, or something else I don't understand. But the stock market is sustaining, and the housing market seems to be even improving in certain areas.
The bottom has to fall out from under this thing at some point, but who knows when. Impossible to tell.
I think it's worth acknowledging the mental lag involved in falling home prices. If you are selling a house in SF, you're not going to sell for 50% below what the market was in Feb, six months into this crisis. Ever. It doesn't matter what the buyer thinks the fair price is -- that house is going to stay on the market for a while.
Even a 5% drop is 50k or 100k at current prices. That HURTS to admit. Expecting someone to sell a house at -30% is crazy, if they have any hope of a market recovery. It will drop 5% at a time, as inventory piles up, and sellers a year into selling realize -- maybe they're not actually going to sell that house at the price they expect.
Or hey, maybe none of this will happen, and the market will rebound by January. Who knows.
Which is a reason for downward-sticky moments to end in a capitulation: psychological denial prevents early sale, liquidity crunch and insolvancy necessitates a later one. Even non-distressed asset classes can be swept up in the quest for liquidity, an observation of J.K. Galbraith's in The Great Crash: 1929.
The few who can't are those who sell for 5%, supply and demand, price drops make the supply drop. Those who can afford carrying costs seems to be selling but in practice are not because they won't accept any offers.
You don't put your home up for sale in a falling market unless you understand where the market rate is headed - your realtor will surely discuss this early on. Home owners who "hold the line" on their home value don't have a FOR SALE sign posted during a recession! For those that are selling in a dismal market, they have surely accepted the new market dynamics. Look at it from a buyer's perspective - there's just no reason to overpay.
It's hard for many people to leave. They already built a life and probably like it in SF. But that's not the key factor. The key factor is how many new people will move in to SF in the next few years. That's a number that would be highly impacted by remote work. I don't know anything about SF but I assume it's a nice place to live. The weather is not bad, there are great universities in the area, etc. Hence it's likely that we won't see any huge drop in demand. But we're likely to see some drop in the next few years. In all major tech hubs.
Right now assets valuations are sustained at least partly because the wealthy still have wealth to inveset and There Is No Alternative(TINA).
If you don't buy stocks, bonds or real-estate, the only other option is to hold cash. Holding very large amounts of cash can be inconvenient for various reasons. Gold is often proposed as an alternative, but it's value is already quite high, and it's an inflation hedge, while recessions tend to be deflationary.
The fact that the majority of US taxpayers got a big check, and are expected to get a second one soon is also a boost to the economy. However, mortgage delinquencies more than doubled this past quarter, so we are getting close to the point where foreclosures will happen, which will lower the prices of real-estate.
Gold investors (like myself) assume that The Fed can only stimulate further in order to stave off deflation...but (crucially) with no hope of raising rates later, even in the face of the inevitable resulting inflation.
A rise in rates would simply crater everyone who has come along with The Fed so far - virtually all consumers and corporations holding high levels of debt. In such an environment of obvious inflation and Fed paralysis, gold could go much, much higher.
The Fed is paralyzed in both directions though. They can't really lower the rates much either. Obviously the fact that you hold a lot of gold and I hold little gold tells a lot about which direction we think is going to matter, at least in the medium term.
It's still sort of hard for me to believe after all the growing inequality how much things have truly bifurcated in the past 6 months. A huge chunk of the country is broke, and their extra unemployment money and govt bonus checks are going to those that already own lots of assets (e.g. landlords, mortgage holders, Amazon, etc.) while people with stable jobs that hold assets are essentially getting richer.
I just don't see how this ends well, for the economy or society.
I really fear we're getting close to a breaking point. The absurdity of a market hitting all-time highs while unemployment figures are in the tens of millions isn't lost on the broke and the unemployed.
The value of hard assets like real estate has to be tied to the money supply to some extent.
I can understand that CPI inflation is not directly tied to money printing, partly because both the velocity of money and the demand for consumption items are dropping right now, but simple accounting would dictate that this money still end up somewhere. I can only see it bidding up hard assets, again because TINA, and because money tends to flow upward rather than trickle down if left to itself.
I have been greatly surprised by home prices since the start of the start of the pandemic. Back then I thought for sure prices were going to drop. Right now I am thinking home prices haven't dropped because of combination of mortgage forbearance and the quick drop of interest rates.
I do wonder what the effect will be when the mortgage forbearance runs out. I would imagine there would be a backlog of delinquencies that would flood the market.
Indeed foreclosures are the lowest in 15 years because “as the federal government has banned lenders from pursuing most delinquent loans until at least the end of August 2020” [1]
Exactly. The government has spend ~$3 trillion on virus relief. Most of that ends up in the hands of wealthy people and thus the pumped stock market and pumped real estate.
(and the rich get richer of course)
Just FYI, people have seen headline numbers in this Zillow report for SF market. But it is misleading. The overall housing market in Bay Area is actually stronger than pre-COVID [1] Even within SF, prices in condos are dropping but SFH are rising. So the narrative is people are moving from dense units to units with more space within the same MSAs. Which makes sense for me, as it allows people to WFH 2-3 days a week, and be in good school districts, while still commuting to office a few days
Even with those caveats the narrative is complex. Some condo prices are dropping, but I'm also seeing some 3BR condos listed (not necessarily selling) for $1.6-1.7M, which is about $300K over what they were a couple years ago. Also, with the conventional COVID narrative you'd expect that houses in the hills or away from civilization would do better - but many of those houses (some in very prestigious locations like Saratoga or Los Altos Hills) are going for < $2M and sitting on the market for 6-8 months, while prices are rocketing up in Mountain View and it's getting hard to find a SFH for < $2.7M, even if it's on a tiny 6-8K ft^2 lot.
It also looks like both inventory and prices are rising, which is contradictory to standard economic theory but would make sense if we're nearing a market top.
Wouldn't Los Altos Hills be more desirable than Mountain View? Regardless of COVID or not. It's still centrally located, larger homes, larger lots, etc.
I agree with you. Some fundamentals don’t shift dramatically. A condo in Pac Heights or Marina or downtown Palo Alto will continue to hold value compared to a SOMA condo
> while prices are rocketing up in Mountain View and it's getting hard to find a SFH for < $2.7M, even if it's on a tiny 6-8K ft^2 lot.
Well, it's hard to find a home on such a large lot period (size is relative). Newer SFH tend to be built on 2k-3k square feet lot sizes and go for $1.5M to $2M (Mountain View median is $1.8M actually).
Prices generally have been going down in Mountain View (https://www.zillow.com/mountain-view-ca/home-values/) and remain considerably below their mid 2018 peak. (And still remain a bad deal relative to renting, but that's another story)
Size is absolutely not relative. Size in California and the rest of the country is measured in feet. That said, I single out this comment to prove the obvious abuse of the English language.
This was my primary question as well with the Zillow report. I could have missed it, but I didn't see how they define "urban" vs. "suburban" markets. I mean, in Austin TX, only the very downtown urban core has typical high rise apartments and condos that, anecdotally, I've seen become much less desirable in coronatimes, while there are lots of single-family-home neighborhoods (which were already getting exorbitantly expensive pre-Covid) that are still very centrally located. If those neighborhoods are considered 'urban' it would throw off the whole analysis.
Looks like not much has changed yet, but I'm still really interested to see how things are different 5-10 years from now. If big tech companies like Facebook actually follow through with shifting large numbers of tech workers to fully remote, there could be a lot less demand for housing in tech cities, which could lead to big drops in home prices, which could cause tech companies to pay less.
I love how this is a national survey, and none of the first three threads even acknowledge that it was about anything but San Francisco. Very HN of you all.
While 2020 has certainly shown me that anything can happen, this is feeling eerily similar to Great Recession in SF/Bay area, where housing prices didn't bottom out until 5 years from their peak [1]. The economic devastation that's happening is _not over_, but many signs point to this one being considerably worse than the last one.
While SF looks like it's doing pretty well now, prices did drop ~25% during the last recession, and they didn't recover until ~2013 [nominally]. Remember, a home that fell by 1/4 in price needs to appreciate by ~1/3 to be back in square one, which is considerable and shows that even the hottest markets are not immune from downturns.
SF has certainly recovered from much worse, and long term it will recover just fine, but for many the appeal of the city currently missing, and will continue to be missing for a not-insignificant amount of time. The price-to-rent ratio is currently widening as rentals continue to flood the market, as many are not finding the SF-premium worth it at the moment. All these downward pressures will surely [imo] put significant downward pressure on SF housing.
The wild card here is the Gov't, which has allowed many to put their mortgage on forbearance, and because of that I'd expect the real price movements to happen after that. However, that only applies to conforming loans, and not jumbo loans, which are on a case-by-case basis.
One more thing — with a grain of salt because I don't have a better source —, while this report says list prices have fallen 4.9% yoy, that's still 5% above contract prices [2].
Zillow's conclusions seem wildly inaccurate for Boston - it is most definitely a buyer's market. Time to sell has increased drastically across all price ranges. Price cuts are rampant as well. I've seen apartments listing at 1.1m in April finally just sell this month in the low 900s. So take the report with a grain of salt!
I see this zillow report inline with what I am seeing in and around DC area. Especially Suburban. Prices are soaring for both new and old homes. Given the mortgage rates are record low, prices are going up. It is definitely seller's market.
I made an offer on a home in Providence this month and it is most definitely a seller's market. Inventory is very low, properties do not last long, and (after watching the market closely all summer) we eventually made an offer substantially above asking.
I live in NY and created my own version of the case-Schiller price index just for Manhattan. The July 2020 index shows a 10% YoY decline in condo prices, which is worse than a 6% decline in Q2. Please see my analysis for backup: https://github.com/ivoytov/manhattan/blob/master/NYC_price_i...
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[ 3.2 ms ] story [ 170 ms ] threadSo the early, and false, narrative about population density posing an insurmountable challenge to preventing disease spread got a ton of play. Now, when it's clear that density is not driving spread, it will be rare to see a news article countering that narrative.
I also think that reports like this Zillow data will not see nearly as much media attention as the initial truths reports about people fleeing cities.
Same with the "techies are all leaving SF" stories; I'll wait for actual data before listening to the narrative that serves the interests of a huge factional divide in SF.
That's not "clear" in the least.
Density mattered a little bit early on, but SARS-CoV-2 is so infectious that it gets around no matter what, unless the strictest possible measures (such as the police-enforced lockdowns in parts of Melbourne at the moment, or the earlier reports of Chinese buildings' doors being welded shut) are adopted.
https://www.tandfonline.com/doi/full/10.1080/01944363.2020.1...
https://www1.nyc.gov/site/doh/covid/covid-19-data.page
Downvote all you want, you know I'm right. :-)
Similar for other activities, there are less people at the school games or theater, but the density is the same.
Edited to add: and in case you continue to misconstrue my point, New York has _tons_ of overcrowded housing. I am by no means using density/crowding argument to wave away NY's problems. They have a severe housing crisis there.
Your conception of Dan our does not match people's actual behavior.
You seem to think that NYC is primarily facie evidence that density is somehow something that can't be overcome when trying to stop spread, but don't even consider other dense places that have not had the same problems. In Italy, rural towns were hit as hard as dense cities.
NYC could have been stopped if the governor and mayor collaborated to institute policies to reduce social contact. Instead they delayed a week later than they should have, and testing failures didn't give them evidence of how far it had already spread, leading to tens of thousands of unnecessary deaths. We are seeing the same phenomenon in rural tourist towns in mountain areas, that had lots of early travelers.
Social contact is the primary cause of spread. And density does not prevent one from limiting their social contact.
So is public transportation.
Seriously, find the prevalence of public transit superspreading events, if you even can.
Spread happens at social places: conferences, nursing homes, churches, medical centers, meat packing plants.
There are vanishingly small superspreading events from public transit.
This whole thread is a perfect example of the media selling us a false narrative but persisting because is "feels" right. Public transit as a primary means of transmission runs counter to the data, but because it was one of the first things the media focused on and it "feels" right, people become so certain of their feelings that no amount of data will counter it.
Some data on super spreading events, for example:
https://medium.com/@codecodekoen/covid-19-superspreading-eve...
https://disrn.com/news/image-shows-packed-new-york-city-subw...
Don't be a smooth brain.
Plus all the counter examples where dense places have quickly stopped the spread. What killed NYC was terrible leadership that told people to go out and enjoy social settings, which launched the initial spread, and then people forced to continue in essential jobs where it could continue to spread. Not density.
I'm not in San Francisco, but if we were to experience a doubling of inventory here in Seattle, it would be evidence of a big shift in the market. We neighbor-visited an open house on our block in the autumn that was attended by at least a person a minute during the half-hour that we were there.
The article is super interesting for its incongruence with local anecdotes, but it would also suggest that the "techie exodus" in SF has some roots in reality.
I think that's stretching... It's still very expensive in the burbs due to their proximity to big tech companies. I am not seeing rent be half in the peninsula compared to SF.
There's also a huge exodus of people from SF that have lost jobs.
It could be techies, but I'll wait and see the numbers to judge that, a mere overall exodus does not equate to a techie exodus for a city where techies are such a small part of the population, but which dominate so much of the discussion.
Anecdotally, I know a good number of people who've left the Bay Area to be closer to family for at least the duration. So it's not purely a press narrative.
> In San Francisco, list prices have fallen 4.9% year over year and inventory has risen 96% with a flood of new listings.
> When comparing the principal city to its surrounding suburbs, the San Francisco metro area does break the mold. Higher levels of inventory, up 96% YoY following a flood of new listings during the pandemic, are sitting on the market in the city proper, a significantly larger jump than the surrounding suburbs.
> In San Francisco [...] the softening is clear as sellers inundate the market and buyers have not changed their pace to match — newly pending sales in the city are up only 1.7% YoY.
Looking at it doesn't even make sense to me. I'm looking at "For-Sale Inventory (Raw, All Homes, Monthly/Weekly)" and getting the same numbers for the previous year in June. (Around 5,000-6,000) Where's this huge 96% increase...?
If all those people who were going to sell in March, April and May just delayed until now, you'd see a big jump in inventory, but the overall number of homes changing hands might not have changed.
I love Portland, it’s cheaper than here. Seems unexplored, in spite of how eponymous they’ve become. Portland ticks all my boxes. I have family with me here and they do not like the cold weather (we’re from Miami).
Note also that current inventory levels fall between 2009-2010 levels. Those were not years during which SF lost population.
Some might consider it relevant that I had two eggs before that.
Look at the places sold last month downtown, you'll see prices go under asking, or well below what they would have been at 6 months ago.
This is in stark contrast to the rest of San Francisco where inventory looks normal, but prices are 10-20% higher than they would have been 6 months ago.
What this tells me is this, people have more purchasing power because of lower interest rates and are selling their downtown condos to move out to the spacious parts of the city. (or moving further south)
If Trump gets relected Kiss the cities goodbye. If Trump gets relected we’ll devolve to some banana republic with fancy gated communities for the few and massive homelessness. To quote Huckaby, a vote for Republican Maverick unfettered capitalism would be a vote for Trump.
In general, I’m curious about how an individual could use this type of data to their own benefit—to “game the system,” as it were, by surfacing / finding “outliers”, by which I mean properties that are renting / selling far below their “market-calibrated” price.
Then again, I guess developing that into a product is (ostensibly) the entire job of an analytics PM somewhere like Zillow...
Still, we (collectively) are close to it being straightforward to scrape this data, train a model, and score new listings as they come in. The tools are all there, the tooling to orchestrate it off-the-cuff for personal use is still a bit far off.
A more-reliable way to go is to determine whether a particular property is selling for less than it is worth to you. If it is, and there isn't a better option, hit it.
My explanatory theory is that people who are very interested in getting great deals on apartments are also the same kind of people who sign long-term leases.
IMO, the biggest barrier to arbitrage, that allows these good deals to float on the market for several days, is that most people are not interested in pouncing on an apartment that's come on the market <8 hours ago. Breaking your lease (the rental market equivalent of "selling", a requirement for "selling up") is just way too expensive.
Brokers (the people who are ostensibly paid to arbitrage) are also not super interested in getting their client the best arbitrage deal, because their commission will usually come out lower.
All this to say: next time you're moving, consider hounding zillow in the mornings and evenings every day, with a 24hr filter, in the 5-6 weeks prior to your move. Your patience will usually be rewarded.
AFAIK it works the other way around. The commissions might be say... 10% lower, but if you save time (by not having to maintain the listing and attract buyers), you can more than make up for it in volume. This was covered by freakomics a while ago https://youtube.com/watch?v=aFYlgqv3T-w
They still exist and use nonpublic sources now, but built a nice subscription business scraping lis pendens notices and such. No reason someone else can't do the same.
For others who thought this was a typo: https://en.wikipedia.org/wiki/Lis_pendens
>> "In United States law, a lis pendens is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Recording a lis pendens against a piece of property alerts a potential purchaser or lender that the property’s title is in question, which makes the property less attractive to a buyer or lender. Once the notice is filed, the legal title of anyone who nevertheless purchases the land or property described in the notice is subject to the ultimate decision of the lawsuit."
I suspect low inventory in certain price points as well as low interest rates are driving people to buy whatever they can.
Once you’re in a house, being removed from it due to missing mortgage payments is much less stressful than trying to secure housing when you have unstable income.
Do you actually think like this yourself? Or are you just positing that others do?
You do realize that foreclosure has very negative long term consequences?
You do realize there are available forms of housing for every income bracket that allow you to live within your means?
Suppose you are planning to move into a home soon. It's worth jumping in ASAP while you still have consistent income to show on your W-2 and loans are still being handed out. You can worry about making ends meet afterward (and doing odd jobs if you have to), but the hardest part is getting qualified for the mortgage.
The alternative is you keep renting, and then your income disappears. Now, it's hard to find rental housing because landlords ask for your W-2 and paystubs also, and you have few protections as a renter not paying their rent versus a homeowner not paying their mortgage. And mortgage payments and rental prices are not far off from each other in any market with half decent economic prospects.
Also, as history has shown, the US government will always go to bat for asset owners in order to prop up asset prices, and leave non asset owners out to dry.
It does not matter if you have several years of expenses including mortgage payments saved up - if you don't currently have a job, good luck getting a mortgage.
The trend seems to be rent prices are dropping in all major cities but home sale prices are not. In fact they are even going up. In my opinion it's too early to tell. Remote work would have a big impact on where tech workers live. But it would take some time until it starts to negatively impact home sales. People who move to new cities usually don't buy houses right away. Many of those people who were supposed to move to SF/NYC/Boston in the next year and potentially compete for houses in the next 5 years might now go elsewhere.
Additionally, it seems there's some underlying mechanism sustaining the economy from completely collapsing. Whether it's just a factor of time, or something else I don't understand. But the stock market is sustaining, and the housing market seems to be even improving in certain areas.
The bottom has to fall out from under this thing at some point, but who knows when. Impossible to tell.
Even a 5% drop is 50k or 100k at current prices. That HURTS to admit. Expecting someone to sell a house at -30% is crazy, if they have any hope of a market recovery. It will drop 5% at a time, as inventory piles up, and sellers a year into selling realize -- maybe they're not actually going to sell that house at the price they expect.
Or hey, maybe none of this will happen, and the market will rebound by January. Who knows.
If you don't buy stocks, bonds or real-estate, the only other option is to hold cash. Holding very large amounts of cash can be inconvenient for various reasons. Gold is often proposed as an alternative, but it's value is already quite high, and it's an inflation hedge, while recessions tend to be deflationary.
The fact that the majority of US taxpayers got a big check, and are expected to get a second one soon is also a boost to the economy. However, mortgage delinquencies more than doubled this past quarter, so we are getting close to the point where foreclosures will happen, which will lower the prices of real-estate.
A rise in rates would simply crater everyone who has come along with The Fed so far - virtually all consumers and corporations holding high levels of debt. In such an environment of obvious inflation and Fed paralysis, gold could go much, much higher.
https://www.jmbullion.com/kilo-pamp-suisse-gold-cast-bar/
I just don't see how this ends well, for the economy or society.
I can understand that CPI inflation is not directly tied to money printing, partly because both the velocity of money and the demand for consumption items are dropping right now, but simple accounting would dictate that this money still end up somewhere. I can only see it bidding up hard assets, again because TINA, and because money tends to flow upward rather than trickle down if left to itself.
[1] https://www.worldpropertyjournal.com/real-estate-news/united...
In my area you can get a 95% LTV 10/1 ARM for 2.75%. I don’t know when the bubble pops, it’s obvious that the markets are being propped up.
[1] https://www.sfchronicle.com/business/networth/article/North-...
It also looks like both inventory and prices are rising, which is contradictory to standard economic theory but would make sense if we're nearing a market top.
Well, it's hard to find a home on such a large lot period (size is relative). Newer SFH tend to be built on 2k-3k square feet lot sizes and go for $1.5M to $2M (Mountain View median is $1.8M actually).
Prices generally have been going down in Mountain View (https://www.zillow.com/mountain-view-ca/home-values/) and remain considerably below their mid 2018 peak. (And still remain a bad deal relative to renting, but that's another story)
While SF looks like it's doing pretty well now, prices did drop ~25% during the last recession, and they didn't recover until ~2013 [nominally]. Remember, a home that fell by 1/4 in price needs to appreciate by ~1/3 to be back in square one, which is considerable and shows that even the hottest markets are not immune from downturns.
SF has certainly recovered from much worse, and long term it will recover just fine, but for many the appeal of the city currently missing, and will continue to be missing for a not-insignificant amount of time. The price-to-rent ratio is currently widening as rentals continue to flood the market, as many are not finding the SF-premium worth it at the moment. All these downward pressures will surely [imo] put significant downward pressure on SF housing.
The wild card here is the Gov't, which has allowed many to put their mortgage on forbearance, and because of that I'd expect the real price movements to happen after that. However, that only applies to conforming loans, and not jumbo loans, which are on a case-by-case basis.
One more thing — with a grain of salt because I don't have a better source —, while this report says list prices have fallen 4.9% yoy, that's still 5% above contract prices [2].
[1] https://www.bayareamarketreports.com/trend/san-francisco-hom... [2] http://socketsite.com/archives/2020/08/400-percent-more-redu...
Family friend had a home listed for almost 100 days and finally pulled it after dropping around 15% off the ask.