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Old 12-30-2008, 11:28 AM
 
Location: New York City
3,998 posts, read 5,157,723 times
Reputation: 3513

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According to the just released Standard & Poor's/Case Shiller Housing Index, home prices fell 31 percent in San Francisco. Does anyone have a theory as to why? I know why prices are plummeting in Phoenix and Vegas, but San Francisco has so much more to offer, and is much more urban, than the overbuilt, sun-belt cities.

My real reason for asking is because I live in New York and the two cities seem similar as far as real estate goes. Both are expensive, costal cities that attract well-educated professionals. Why is one city experiencing a correction whereas the other remains stubbornly expensive?

I (selfishly) dream of falling prices in Manhattan in the hope that I would be able to afford to buy something. Are there any lessons/trends in the San Francisco that would applicable to New York?
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Old 12-30-2008, 12:37 PM
hsw
 
2,067 posts, read 4,351,995 times
Reputation: 1363
Data is misleading as SF region (as defined by most real est stats) incls the vast foreclosure land of SF's EastBay suburbs/exurbs...areas that tend to have rather different education and income stats from City of SF's Pac/PresidioHts and upscale suburbs in SanMateo and SantaClara Counties (SF's versions of UpperEastSide and Westchester/Fairfield)

That said, even in SF region's most elite areas, asking prices of >$5MM houses are softening (easily 10-20% lower vs yr ago); not many transactions are closing (esp since Sept financial meltdown)....so not enough data yet to really know how much selling (not asking) prices have already fallen

More affluent people can hold onto their house and ask a silly price for longer than less affluent people....but many affluent guys' net worths are down ~20%+ in past yr b/c of stock mkt, and both tech and financial industries of SiliconValley are just starting 5-10% layoffs, so prices in elite areas will prob start to show real weakness later in '09
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Old 12-30-2008, 01:06 PM
 
409 posts, read 1,278,365 times
Reputation: 258
Prices were vastly overinflated. There is tremendous need for them to come down.
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Old 12-30-2008, 01:14 PM
 
2,987 posts, read 4,792,711 times
Reputation: 1388
Agree with hsw's take on things. The foreclosures and or corrections to the market are happening more in the neighboring cities and not in SF. A lot of reports combine SF, Oakland, Berekely, Richmond, etc all together as part of a report giving untrue figures.

SF and parts of LA I hope go down but I doubt that some areas will go down any time soon. I think some places like NY will remain to be expensive as it always has been.
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Old 01-01-2009, 11:06 AM
 
90 posts, read 310,682 times
Reputation: 66
All areas will see correction, at least some. The heart of SF that has only seen slight softening will see further correction in 2009. The outlying areas will affect the heart, it just takes a while for the ripples to travel inward. The younger more vulnerable areas corrected fastest first because of the percentage of non-fixed financing prevalent there, and those in SF that took 90% or higher financing to buy (most) will have pressure as their 5 or 7 year fixed loans come due (more A and Alt-A paper took these perceived more stable financing routes, and these take longer to show up as going bad); there will be those that do not walk away and pay to stay to save credit, but many will be forced to walk away still. I know a former investment banker who earned 350K plus a year who now earns about 50k; I know another sales exec who earned up to 400k a year that now earns 45k; these people bought the 1.5mil plus homes with more stable financing yet will feel the pinch in the coming couple of years.

SF's heart will not drop by half as some outlying areas have, but they will drop. It just takes a while for the "illness" to spread. NYC will likewise soften, but because of world prominence will likewise have neighborhoods that only have minor correction.
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Old 01-01-2009, 07:15 PM
Air
 
150 posts, read 377,902 times
Reputation: 63
This website recently revised its RE predictions and it looks like you are going to get your wish about NYC

New York Housing, Manhattan, Albany, Rochester, Buffalo, Syracuse

As for SF,

California Housing, Los Angeles, San Diego, San Francisco, San Jose

Their previous reviews of the housing markets around the US were rather moderate and not at all incendiary, so for them to have changed to this extent really says something.
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Old 01-01-2009, 07:25 PM
 
Location: San Jose, CA
6,849 posts, read 16,840,509 times
Reputation: 2568
The bad and marginal parts of San Francisco have experienced sharper declines than the desirable areas. Surprise, right? $200,000 homes in SF 94124 are a reality, and sub-$400,000 detached houses are a dime a dozen.
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Old 01-01-2009, 07:26 PM
 
567 posts, read 1,687,502 times
Reputation: 255
SF use to be a nice place and is no longer a desirable place to live or vacation to. What it means is there are more people leaving then moving there.
My City is going thru the same thing less coming here and more leaving. http://www.newtohavasu.net/ (broken link)
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Old 01-01-2009, 08:30 PM
 
373 posts, read 778,301 times
Reputation: 193
There are some great deals in Bay View.
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