Doctor Fed, You Are Wanted In The San Francisco Housing Ward, Stat

Tyler Durden's picture

We have previously explained why the San Francisco market is such an important bellwether of overall liquidity and prevailing economic euphoria, directly supported by not only the Fed's "wealth effect" printing and the second tech bubble, but also Chinese capital flows out of the mainland and into US real-estate. Which is why the latest update on San Fran housing dynamics should make those looking for the housing inflection point somewhat nervous as said inflection point now appears to be almost a year old.

Specifically, after posting a 25.7% Y/Y increase in home prices last September, as of June the pace of home price increases is precisely half that, or 12.9%, and also a signfiicant drop from the 15.6% reported in May.

Why is this notable? Because the only three previous times when there was such a sharp contraction in the pace of San Fran home price appreciation, either the dot com bubble, the housing bubble, or the European sovereign debt bubble had just burst. For now, we leave what is going on in San Francisco as merely a question mark, because clearly the Fed's grand "reflation at all costs" experiment is nowhere near over...

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BandGap's picture

Like a drowning man struggling to reach the surface.

clade7's picture

Good description of your average working stiff...Watched my old man do that for 40 yrs...He should have tried out for the SEALS the way he could tread water..

Vampyroteuthis infernalis's picture

Yes, one day those bankster will own all of the Bay Area real estate and have no tenents because the rent is TOO HIGH!!

PartysOver's picture

I tried to have sympathy for anything Californian, water, broken wine bottles, imiigration, public schools.....  No, seriously, I really tried.



The Big Ching-aso's picture

Lotta queer rumblings coming outta San Fran lately.

knukles's picture

Maybe it's the bursting of the "Everything is just fucking hunkie-dorrey propaganda bulllshit bubble"
Long overdue

Pool Shark's picture



Here come the new tenants:

And, they can stay in the home rent-free; after all, they're not 'burglars,' they're merely "undocumented house guests."


Statetheist's picture

"My tax farm is better than your tax farm"

WOAR's picture

You didn't fail that.

Dr Strangemember's picture

But there's a drought in Cali... nobody is drowning these days.  

tarsubil's picture

Like an addict struggling to keep getting high.

q99x2's picture

It won't matter once the Ebola pandemic hits the US.

astoriajoe's picture

or once Californians can no longer flush a toilet, wash their hair, or drink a glass of water.

Statetheist's picture

Or the rest of the western US.

seek's picture

Actually most of the western US except california isn't too bad off. Better water management policies plus they're not getting bitchslaped by the mythical hand of god on a daily basis the way Cali is.

This will be a huge crisis when the California division of the FSA decides to invade other states. The irony is cloward-piven could actually kill the welfare state when a group of locusts that concentrated descends on a much smaller and less blue state.

Dr Strangemember's picture

Perhaps letting even MORE illegals in will help boost the housing numbers for SF.  8 families to a unit, as long at the landlord/bank gets paid, who cares.  (but where you gonna park all those Dodge Diplomats and Olds Delta 88s???)

Dr Strangemember's picture

Ahhhhh, EEEEEEEEE-BOOLAAAHHH!  I can't wait until that happens.  Looking forward to driving go-carts anywhere I want and not worrying about the fuzz!

Freddie's picture

I want to be Ken Block in a 650 bhp Ford Fiesta rally (cross) car driving through an empty San Fran.

Carpenter1's picture

Diminishing marginal returns.

Cocomaan's picture

How about a 'water bubble'?

Cangaroo.TNT's picture

Speaking of SF, I heard the only people to escape the earthquake unscathed were the gays because they had their shit packed the night before.

quasimodo's picture

That joke would be well received over at huffpo!!

oh wait...........

clade7's picture

The FED is needed in San Fran?  Why?  Isnt there enough ass drilling going on there enough as it is?

Shooting fish in a barrel!

Comte d'herblay's picture

You never learn.  It's different this time.

Dr. Engali's picture

No worries, the iPhone 6 is almost here to save us.

Cangaroo.TNT's picture

I'm holding out for the iPhone Googolphonic with the moon rock screen.

JimboJammer's picture

 Calif.  has  three   huge  concerns  >>>>  Radiation  in  the  Air  and  the  Ocean  ( Fukushima )

                                               >>>>  Drought . .  

                  >>>>          >>>       Nancy  Poloci  is  there....

Emergency Ward's picture

Beep.  Beep.  Beep.  Beep.  Beeeeeeeeeeeee

CHX's picture

And it's sitting on a major fault line that could literally rock the state pretty much at any time.

Freddie's picture

Don't forget Boxer, Feinstein, Honda and endless more DemoCreep fascists. 

youngman's picture

Must be all the old gays dying of Aids....

luckystars's picture

San Fran is where the rich Chinese park their money. They own buildings that are totally empty now, they don't rent out and local realtors say they buy them sight unseen. That coupled with Airbnb has caused rentals to skyrocket.

The beatnicks moved in during the 50s because rent was cheap and businesses empty, people were moving to suburbs.

SF housing was the cheapest after the freeway system was built in the mid sixties and and opened access to the newly built suburbs. Also in 1967 the city was flooded with hippies. White flight and only the poor remained. That is also when the Chinese bought RE in SF, the old group.

In 1984 I worked in the first California Cuisine restaurant in SF, I heard the word "Yuppie" for the first time. All of a sudden whites wanted to return to the cities.


Bastiat's picture

There's also significant money coming from dotcom 2.0. 

combatsnoopy's picture

THe EB-5 Visa incentive to invest in US is limited to real estate and construction, the Chinese Americans are really trying to open it further into American oil research and exploration.  They SHOULD be trying to get the EB-5 to buy marketable common and preferred shares in U.S. companies since we have too much of Chinese government money in the U.S. Treasuries giving the U.S. government way too much control over the people.   We could really use corporate tax breaks.  The US has the weakest private sector investments/GDP for developed nations.

And of course Venture Capital isn't the best option with all the red tape set up by techies protecting themselves from badly needed competition. 

The "investors" "buy" complexes and rent out ONE unit at a superhigh price, then use that money to finance the maintennace of that entire complex.

The Chinese are not the only ones doing it, Indians and of course American Hedge Funds got into that game.  I've seen the books. And of course those who can blow $3000+/month on a rental are the most unhappy tenants.  
If you find out who the landlords are, Yelp is chock full of fun reviews.   

CheapBastard's picture

The new leader in China is cracking down on "corruption" serious Big Time which means much less loot sneaked out of the country. Singapore RE is already plunging and even their luxury market is tanking due to the crackdown the Singapore news reports. If he continues his crack down, it may very well result in lower Cali McMansion sales/prices as demand shrivels up from the cahs buyers in the PRC.

yogibear's picture

Baby-boomers are retiring and downsizing as well as eliminating expenses. In the meantime the Federal Reserve is printing like there is no tomorrow trying to keep the reflation up. Seems like poorhouse economics.

SillySalesmanQuestion's picture

I suppose they can blame this on the earthquake... or the weather...or the drought...or the corrosive salt air...or...

Dr Strangemember's picture

What, no more fools left to boost it higher??  Oh, we're talking about SF... I doubt that!!!

khakuda's picture

I keep getting the mental image of Yellen shouting to the guys running the printing presses and ZIRP machines, "Faster, just a bit more for a bit longer...don't stop just yet...needs...more....bubble...Must. Reach. Escape. Velocity..."

Downtoolong's picture

It’s one of the oldest self-promoting ploys in the publicity playbook. Act the hero by claiming you will do something good for others which is dependent on something else which you know can’t possibly happen.

“I’m going to invest $100 billion in the Palestine economy, just as soon as their war with Israel ends.”



Al Huxley's picture

Based on the chart, the implication seems to be that there's a good 6 months to 1 year of rising stock prices before the equity markets catch up with SF housing.

Hongcha's picture

A crackerbox in the windswept, desolate outer Sunset (aka Outer Mongolia) with a cemented backyard presently runs around a million.  The skyline SOMA is as they say "dotted with cranes" much like Bangkok was in the late 1990's.  There are hundreds of building permit applications on the desk at City Hall and hundreds of new condos in the works in SF, Oakland, Emeryville.  They always overbuild.  Absolutely the top as I have been pounding the desk about for some time.

Freddie's picture

I wonder if SF will be affected when more and more companies and people outside the USA stop buying USA technology filled with En Es Aye spy shit?  More and more hosting is moving away from US companies to Switzerland, Iceland, Russia and other places.

rosiescenario's picture

Yeah..the "Sunset"....more like the Fogset. Some realtor in the '40's must have come up with that name Sunset to lure in the unwary.

Hongcha's picture

You are correct Rosie but it was shortly after World War One that the subdivision began in earnest.  It was just sand dunes then and to sand dunes it shall return.

novictim's picture

I keep reading that young people are being forced into rental servitude for life.  Making the landlord business model harder through taxation would help correct this.  The higher taxes on rentals could be funneled into more tax breaks for owners. 

Oh, if you libertarians don't like "more taxes" we can agree to call it a "home ownership fee", you know, just like on those privately run bridges and toll road "fees/tolls".  You like those, right?

So the solution to the nations housing problem is to "fee" the crap out of homes or apartments not occupied by the owner.  Empty or rented out units or homes would place a real crimp on Chinese bandits trying to park their money in US housing. And we could make a national U-Turn on our current policies that mistreat people who work and the younger generation forced to rent.

joego1's picture

What about people who are in real estate to avoid the stock market bubble? Fee the crap out of yourself tard.