Frequent readers are aware that the one US housing market which we follow the closest because it is perhaps the best proxy for global liquidity but even more importantly, Chinese excess liquidity (and capital outflows) is that of San Francisco - a mecca for not only the beneficiaries of the second tech bubble, but the favorite spot to park cash for thousands of uber-rich Asian and, until recently, Russian oligarchs.
This is what we said last June when describing what was then the start of the inflection in San Fran housing:
When it comes to critical housing markets in the US, none is more important than San Francisco.
Courtesy of its location, not only does it reflect the general Fed-driven liquidity bubble which is the tide rising all housing boats across the US, but due to its proximity to both Silicon Valley and China, it also benefits from two other liquidity bubbles: that of tech, and of course, the Chinese $25 trillion financial debt monster, where since the local housing bubble has burst, local oligarchs have no choice but to dump their cash abroad.
It is no surprise that during ever single previous bubble peak, San Francisco home prices managed to post a 20% annual increase, starting with the dot com bubble in the year 2000, the first (not to be confused with the current) housing bubble peaking around 2005, and then the European sovereign debt bubble.
Since then this happened: June
... October.
Then things normalized for a bit, as the rate of both annual and sequential decline slowed down.
Until today, because in today's Case-Shiller update for the month of January housing prices across the US, it was none other than San Francisco which posted the largest sequential drop in home prices.
As the chart above shows, it was not only the annual growth rate of only 7.9%, matching the lowest since the European debt bubble burst in 2010, but also the sequential rate of price drops, at -0.9% - the biggest monthly drop in three years, or since January 2012 - that will once again be a subject for concern of housing watchers. Because should the price decline resume its acceleration without any emerging tailwinds to prop up the local housing market, then there will surely be some severe fallout such as this peak housing bubble example, in which as Curbed reported last week, a run down shack which listed for $799,000 sold for 50% more, or $1.2 million a few weeks later!
From Curbed:
In late February, a very run-down four-bedroom house along the Outer Sunset's Great Highway listed for $799,000. The listing warned that the property was "in a deteriorative state" and that it was "not for the novice" to fix up. The property looked to be almost ripped apart, with carpeting torn off the stairs, drawers and appliances pulled out of the kitchen, and a boarded-over hole in one door. None of that mattered to the buyers, who saw potential in the ocean views and paid $1.21 million in all cash. The final price came in at $411,000 over asking.
When the home last sold back in 2008, it was well kept and very livable. Listing photos showed a stained glass front door, a vintage but tidy kitchen, and a neatly kept backyard. It sold for $935,000 back then. The state of disrepair that the property fell into during the ensuing years is sad, and it's hard to see how it deteriorated so quickly without some very destructive use.
All of the above real estate splendour could have been yours for the modest sum of $1.2 million. Now, it's too late.
Let the RESET begin!!
The last thing people pay for when they are hungry or sick ....is housing.
Add in 70% DTI ratios and housings fucked.
RIPS
that 70% DTI is why the FED is gunning for inflation. Their banking buddies have a shit load of bad debt that they don't want to write off. So, they next best thing is to devalue it via fiat. Gotta get that M2 through the roof.
For sale: million dollar shack with no water.
can you say 'crack shack'?
So ... are we going to be forced to bail out all these dupes again?!
Of course.
That used to be Pelosi, Boxer & Feinstein's drug & dykes den.
Bankers & Hasbra had the entire place rigged from top to bottom with surveillance recording devices.
I am ready PAPA!
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.nettrader2.com
Sucking cocks for a living is not a good way to go about life, son.
San Fran housing is crazeeeee.
The people as well!
Seems to me that if the state faces a water supply crisis, people should be getting the hell out...? Notice the lack of general press coverage about local water restrictions. Suppose that wouldn't go over well for prospective buyers: "Don't discuss it; don't say anything; just hook and reel in one more wave of schmucks."
200 Years Of Scorchitude: Professor Warns California To Brace For A "Mega-Drought" (ZH, 2014) <- (Notice they don't blame Putin)
Freheit - Keeping the Dream Alive (c/o YouTube)
The hopes we had were much too high
Way out of reach but we have to try
The game will never be over
Because we're keeping the dream alive
"Don't discuss it; don't say anything; just hook and reel in one more wave of schmucks."
That's the RE rule, never disclose anything that the law doesn't demand. I suspect Southern California, if the next year does not bring the rains, we shoudl start to see the water crisis reflected in home prices. No matter how beautiful San Diego is, it does not run well without water. The military will build plants to desalinate sea water for it's bases, but that privilge will not extend to the general population. California can build these plants too, but people water bill will be prohibitive for the bottom 75% of citizens. The first hint will be a drop in working class middle range houses, the rich never have a problem so ignore their house prices, that refects global liquidity, not local conditions.
I thought it was all Bush's fault, even the San Andreas....
http://www.cbc.ca/news/canada/british-columbia/vancouver-house-sells-for-567k-over-listed-price-1.3012604
From the CBC article: "...Eviston stands by his strategy on the property, and in the end, he said, it's the market that dictates price."
I KNOW PEOPLE IN THAT NEIGHBORHOOD. THE REASON PRICES ARE SO OUTLANDISH IS BECAUSE EVERYBODY IS LEVERAGED UP TO THEIR EYEBALLS. THEY'RE SWIMMING IN DEBT. MORTGAGES, REVERSE MORTGAGES, LINES OF CREDIT. THE AMOUNT OF DEBT IN VANCOUVER IS MIND-WRENCHING. WHEN RATES START TO MOVE, THE GROUND WILL OPEN UP.
That article has a great comment thread, most amusing.
4th time lucky?
"It's a great time to buy a home!" -NAR
Wonder if they still use, "Real Estate never goes down....got that one in NJ in 2003"
Did you happen to be gambling at the now 3 cents on the dollar BK sold Revel Casino at the time?
"It's a great time to buy a shithole!" -NAR
It's all good cause "Suzanne researched this."
https://www.youtube.com/watch?v=20n-cD8ERgs
Pretty clear to see that reinflating housing prices was/is critical to the FED.
Critical to banks. Just an objective to the Fed.
Major asset base for the general population as well. And affects mobility.
Lehman totally would've bought the mortgage on this fixer-upper, then pre-shred it into a subprime MBS, an then marketed it to yield hungry European pension funds supporting former firemen. Knew a gal from their mortgage unit...they would've gladly bought this piece of shit and securitized it.
what a dump!
sometimes we get what we ask for, eh?
and the reality is, despite what people honk out of their mouths to rationalize, the weather is shitty cold to boot...
"In late February, a very run-down four-bedroom house along the Outer Sunset's Great Highway listed for $799,000. The listing warned that the property was "in a deteriorative state""
No one bought the house, someone bought the acreage (lot) to build a "dream home" i.e. an IKEA inspired, silicon chipped place to eat take-out, shower and sleep.
The Outer Sunset was a useless place to live for decades - except for retirees fleeing the inner city of SF - but after FB, Google etc construct the retina-image I.D. controlled direct mass transit system for their employees, areas such as Outer Sunset will indeed become tres recherches... it's obviously happening already.
"In Every Dream Home A Heartache":
https://www.youtube.com/watch?v=LSniBxXjK_8
"Ocean front property in Arizona...if you'll buy that I'll throw the Golden Gate in free..."
No doubt those mortgage payment sized health insurance premiums go to fund the insanity in San Fran! I doubt there is much, if any, honest money feeding that frenzy. Ponziconomy! Amurika!
USA is now just one big crime syndicate
"...Learn to swim, see you down in Arizona Bay"
the coldest winter I ever spent was summer in san francisco- confucious
Lived two years in Pacifica Ca, just south of San Fran and it sucked, foggy, damp and everything rusted lol.
Jesus H Christ, you live by the ocean you deal with rust...
Breaking bad and cooking meth....
Yeah sure, I might have overpaid a bit, but in 20 years time when the ocean level rises this will be WATERFRONT BITCHEZ!!
Who will want 'waterfront' anything when the coast becomes infested with pistol packing Mexican pirates?
"Mexican pirates" Sea-faring Mexican pirates? A downvote for that? Are you insane? To who the fuck ever you are: smooth sailing mate and I hope you very soon find yourself in the sights of the fucking Coast Guard.
What an idiot you are.
Waterfront also means this:
http://www.komonews.com/news/local/Landslide-continues-to-threaten-homes...
Enjoy the view...
But, but, the realtor told me the views were to die for. I didn't know he meant that literally...
What a beautiful shitbox! Now that's a place to be proud of.
I believe I would put a sign in front telling everyone what a bargin I got.
Fucking morons!
I bet a black\gay couple is moving in. There goes the hood!
All of the poor people should just move out of SF in protest. Granted, I don't know where they would go.......but it's pretty clear they are not wanted there.
"All of the poor people should just move out of SF in protest."
No they shouldn't, ask Jo the crossing-sweeper from Dickens' 'Bleak House"
https://www.youtube.com/watch?v=CGRCjjYvrE4
No more "move on, move along, move out". Who the hell will keep things in order after the working poor are truly gone? What sort of society do you want to live in anyway? Since when have we become so ... oh forget it.
No one wants to admit everyone else has needs, no one wants to pay for anyone else's services. Ask J.S. Bach, who was denied fair pay wherever he went and for whomever he 'worked'...
https://www.youtube.com/watch?v=h7qtyCl7ysE
His music is still the best you've ever heard.
And if you don't get hard listening to Bach your dick is dead.
More bad news: the Bernstein/Gould performance you just saw was brought to you by: Ford Presents...
America used to make good cars/trucks and that fortune used to participate in its weird tax dodging way toward a certain cultural standard as well.
Not any longer. Ask Apple for its contibution to the arts... a huge silence.
Steve Jobs was an asshole compared to the American scions of the 40's and 50's.
Gay Luciferians!
Come on! They didn't buy the building, they bought the property!
Probably a Chinese developer who wants to subdivide it and build six midget McMansions.
"They didn't buy the building they bought the property"
That's what I said. Acreage for fuck's sake.
Wait until the 9.0 quake hits SF...you ain't seen nothin yet
In best announcer voice: "Call Super Corruption. She'll save it the day--for those that pay. By day she presents herself as just a CONgresswoman, but by night, her mighty corruption comes out to subdue nature and economics for the benefit of power, wealth, and Zion. Only she, for their benefit, can stop this bubble from popping. Call Super Corruption. The poor and American people will need to continue to rely on Uncle Scam."
The funny thing is, I told a woman that is taking on an au pair contract in SF in October, not to go. I told her that all is not rosy in the DC US. That the SF area, with its reliance on NSA spy laden high-tech, would suffer badly in the renewed fall of the DC US. We'll see if she will even have a contract come October.
The banksters need to repay us.
Someone can start a capital misallocation blog and kick off with this piece of shit then move right into tech share buy backs.
Still not seeing this reality on the ground. It's defitley a bubble, but I don't think it's reached it's peak quite yet.
It hasn't reached its peak yet but you've got to be ultra-rich to get in now...
"Pigs get slaughtered". Get out now, at the top.