It starts here: evictions of tenants in San Francisco during the 12 months through February 2014 rose to 1,977 – the highest since 2001-2002. At the time, the dotcom bubble was disintegrating unceremoniously. Everything these days gets benchmarked against the last bubbles: the dotcom bubble that blew up in 2000, and the housing bubble that blew up in 2007, and whether we are either almost there or long beyond it, and why there is never anything to worry about.

Evictions can take place for a variety of reasons, but “Ellis Act” evictions, which occur when the owner of a rental property wants to get out of the landlord business, jumped to 216 during that period, up from 116 in the prior 12-month period, and up from 64 two years ago. According to the SF Examiner, “City officials and tenant advocates say most uses of the Ellis Act are by real estate speculators who have just purchased a rent-controlled building.” Board of Supervisors President David Chiu called it an “affordability crisis.”

It’s the outgrowth of the new housing bubble in San Francisco – and in the Bay Area – where home prices have become gravity-defying phenomena. But something else is happening too: sales volumes are crashing.

The industry can’t blame the weather. This rainy season, which started in the fall, has been warm and gorgeous.

In the nine-county Bay Area, according to San Diego based DataQuick, February home sales volumes plunged to 4,963, the worst February since 2008 and the second worst February in the history of the data series going back to 1988. By comparison, the highest volume February occurred in 2002 with 8,901 sales.

It’s not a fluke. January had been the worst January since 2008, December the worst December since 2007, just months after the prior Bay Area housing bubble peak which occurred in June and July 2007 (there’s that benchmark again). The simple fact is sales are drying up.

But the median price soared 33.3% in February from a year ago to $525,000. It was the 23rd month in a row that the median price has risen year-over-year, and the 16th month that it has risen 20% or more. At this rate, it’ll hit the prior bubble peak of $665,000 in about 9 months.

Adjustable-rate mortgages – the landmines that blew up during the collapse of the last housing bubble – made up 24.8% of all purchase mortgages in February, a notch down from 25.1% in January, but more than double the 11% last year, as homebuyers, not all of whom are sudden IPO millionaires, surprisingly, twist and stretch to finance the incredibly ballooning cost of their homes.

Meanwhile, absentee buyers – “mostly investors,” DataQuick points out, including those Ellis Act speculators in San Francisco – bought 24.5% of all Bay Area homes, same as in January. While that sounds like a lot, it was way down from 32.3% a year ago. The collapse in investor interest is even more stunning in absolute numbers: they bought 2,118 homes in February last year versus 1,216 in February this year. That’s a 42.6% dive. While total sales dropped by 441 units, sales to investors plummeted by 902 units. The smart money is losing interest, given these prices – while the dumb money is still piling in.

My beloved and crazy San Francisco has an uncanny knack for inflating bubbles further than other places and keeping them inflated longer, only to watch them end in tears all over again. The peak of the prior housing bubble in San Francisco occurred in November 2007, long after the hot air had started hissing out of bubbles in other cities. That month, the median home price hit an all-time phenomenal record of $814,750. The $1 million mark was on everyone’s mind. San Francisco would be immune to the collapse of the housing market that was playing out across the rest of the US. Everyone knew the reasons for this immunity. It all boiled down to the fact that San Francisco was different than any other place. And by February 2011, the median price had plummeted to $589,000, and sales were drying up. That was the bottom.

But for the last two years, prices have been skyrocketing. In December, the median price hit $813,000, nudging up against the 2007 peak, continued to soar in January to an all-time high of $884,500, and then, in February to $945,000. Up 34.9% from a year ago. By other measures, including RealtyTrac’s, the median price in San Francisco already exceeds the one-million mark.

Hard-to-get mortgages – try to get one for a median home costing $1 million on a median San Francisco household income of $74,000 per year! – and affordability “certainly play a role today,” said DataQuick president John Walsh. “It’s going to be fascinating to watch how things play out between now and June. At some point rising home prices will trigger a more significant increase in the number of homes on the market. It’s just a question of when.”

That’s what they thought at the last bubble. And that’s exactly what happened. I remember walking down the streets, dodging two or three realtor signs on certain blocks. On weekends we went to open houses in our neighborhood just to see how other people lived. The only problem was: there weren’t enough buyers to mop up these homes. And prices began to dive.

So who the heck is going to buy these super-pricey homes this time when, as Mr. Walsh speculated, they will finally show up on the market as current owners want to cash out? The bedraggled and strung-out denizens of the middle class? Forget them. They’ve long ago been priced out of the market.

Teachers are a symbol of that middle class. In California, they earn on average $69,300 annually, fifth highest in the country. Not exactly a pittance. But it is a ludicrous pittance if they’re trying to buy a home. Read…. California Housing Bubble: Now Even Teachers Can No Longer Afford To Buy A Home

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