Condo Prices Drop 13% in San Francisco, All-Time Record Inventory Glut Piles Up

The glut is in neighborhoods with condo towers, particularly where the construction boom has been. Neighborhoods with low-rise buildings are less impacted.

By Wolf Richter for WOLF STREET.

The situation in the San Francisco housing market is getting increasingly curious. Even as there is a veritable land rush in many parts around the US, including in parts of the San Francisco Bay Area, San Francisco is now facing historic record high inventory of condos for sale, and sharp drops in condo prices. Inventory of single-family houses is also up and prices are mixed.

There were 2,532 homes listed for sale in San Francisco at the end of October, up 77% from the same week a year ago, according to data from Redfin. About two-thirds were condos. According to data from Compass, inventory of condos for sale was up 85% year-over-year. Inventory of single-family houses was up 25%:

This inventory of homes for sale does not include the condos in new towers that developers are trying to sell through their own sales offices, following the construction boom. That supply of new condos is difficult to quantify since it isn’t listed, but it’s significant.

Condo prices are heading lower. According to the California Association of Realtors, in October the median price of condos in San Francisco dropped 12.8% year-over-year.

By a different measure, over the three-month period through October, according to Compass, the average price per square foot fell 9% to $1,061/sqft for one-bedroom condos, and to $1,076/sqft for two-bedroom condos. The median price of one-bedroom condos over the same period fell 8% year-over-year to $850,000; the median price for a two-bedroom condo fell 9% to $1.295 million.

There have been numerous deals where condos sold below their prices from years ago. San Francisco real estate site SocketSite just reported on another such sale, unit #6G at the Lumina tower; it has now sold below its 2016 price. And it took over a year to sell it.

Back in July 2016, when the Lumina tower was completed, the 1,401-square-foot two-bedroom two-bath condo was purchased for $1.697 million. It was listed for sale in September 2019 at $1.975 million, reduced to $1.925 million in October, and to $1.895 million in November. But it didn’t sell and was pulled off the market. It was relisted in June at $1.795 million, reduced to $1.695 million in August, and has finally sold and is now in escrow with a price of 1.633 million. That’s a decline of $64,000 or 3.8% from the purchase price four years ago.

Tack on the closing costs on a $1.633 million deal, plus home owners association fees for over fours years, which Zillow lists at $1,216 a month, plus property taxes, and insurance, and pretty soon you’re talking about some real money.

Price reductions in October were running about double the highest rate in the 2012-2019 period, according to Compass, with listings of condo and TICs (Tenancy in Common) accounting for about 80% of the price reductions, and houses accounting for about 20% of the price reductions.

With prices of single-family houses, the situation is more complex. House sales are strong, and accounted for about half of total sales, according to Compass. The median price of 3-bedroom houses ticked up 1% to $1.62 million in the three-month period through October, compared to a year ago. But for four-bedroom houses, the median price fell 3% to $2.12 million.

Sales volume has fully recovered from the collapse in April and May. Pending sales over the past four weeks were up 8.6% from a year ago, according to Redfin data. But inventory was up 77% from a year ago. And that’s the problem.

For years, there was talk of a “housing shortage” and an “inventory shortage” in the City, when in fact there was all this shadow inventory waiting to come on the market, and now it has come on the market, particularly condos that have turned this market into a condo glut.

In the neighborhoods were the high-rise condo construction boom was most pronounced – South Beach, South of Market, and Mission Bay – there is now 9.5 months of supply of condos, according to Compass. There is 8.0 months of supply in the Russian Hill, Nob Hill, and Telegraph Hill neighborhoods. And there is 7.5 months of supply in the Van Ness, Civic Center, and Downtown areas. There is much less supply in low-rise neighborhoods, with 2.7 months of supply in the Richmond District, Lake Street, Noe Valley, Eureka Valley, and Cole Valley.

As we head toward the holidays, normally much of the inventory for sale would be pulled off the market, and then be relisted in the spring, so that there’s very little inventory listed for sale over the holidays, which gives the real-estate media opportunity for a few weeks to rave about the extreme “inventory shortage.”

This would be the normal seasonal pattern. But seasonal patterns have been disrupted this year, with the peak selling season in the spring getting wiped out by the Pandemic, and with inventory then pouring on the market when it shouldn’t have. Sales have picked up too in the fall when normally they would slow down going into the winter. But inventory will still get pulled off the market before the holidays. So we should see inventory decline over the next seven weeks.

Unemployment and work-from-home or work-from-anywhere are massively shifting where people want to live. Read… US Apartment Market Splits in Two, 100 Cities: Where Rents Jumped or Dropped the Most, Are Highest or Lowest

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  112 comments for “Condo Prices Drop 13% in San Francisco, All-Time Record Inventory Glut Piles Up

  1. drg1234 says:

    I sure am curious about the new inventory. Real estate prices generally move slowly, but condos can crash quickly as has been outlined here before, and as happened famously in the early ’80s in the South.

    • 2banana says:

      New inventory?

      This place, like many other condos, were purchased as an “investment” to flip.

      Never lived in. But taxes, insurance, utilities, HOA fees paid for four years. Plus costs of buying and selling.

      Added up, probably a $150,000 loss.

      “That’s a decline of $64,000 or 3.8% from the purchase price four years ago.”

    • Mary says:

      There were condos in the South during the 1980s? Blimey!

  2. andy says:

    Do they still sell parking spots separately?

    • Sam says:

      In PDX, you would be charged a fee per indoor vehicle per month.
      An electron wrangler i use pays $187 a month for parking and he does not own a car.
      I hearing of creative pricing with regards in leasing apt/townhouses is accelerating to include: free parking/cable/garbage + $1k gift card (to what/where i’ve no clue) and two (rumor of three) months ‘free rent’ (for a year long lease).
      Happy Motoring….

      • Joe Saba says:

        because financing requires certain rent per unit and by front loading it with freebies the lease will meet requirements financing needs

  3. Educated but Poor Millennial says:

    Hi Wolf,
    How about in Los Angeles? I am preparing to get married and looking to buy a place. I can wait 1 to 2 years if things are fishy now. Any information? Thanks a lot.

    • Mike Durk says:

      I have a 3-bedroom 2.5 bath townhouse on the creek 1300 sq. ft. Remodeled Kitchen & baths. new windows, New carpets, Central forced air heating , 20 Minutes away from downtown San Francisco & S.F.O. in the costal town of Linda Mar/Pacifica. No bridge to cross. Work in the city Live by the beach. For only $850k…..Re/max Star Properties 650-245-1380

      • Bob says:

        Funny. 20 minutes to downtown SF at 3:00 am in the morning. Sometimes it takes 20 minutes to go from Pacifica to Daly City.

        • Tony22 says:

          One of the foggiest places in the U.S., right on top of the San Andreas earthquake fault, constant wind, your neighbors are mostly Phillipino bus drivers and there’s nowhere to shop excep 7-11s, or the hideous Serramonte Shopping Center, or maybe the Stonestown Center, which is going bankrupt.

          Anything south of Sloat Boulevard is cheap cheap cheap tract housing.

          One of the most depressing and boring parts of the San Francisco Bay Area, that’s why it’s so cheap.
          Other than that, it’s still better anywhere in the Midwest in January, or the south in August.

      • Happy1 says:

        Yes, great location, especially if you love 60 degrees and fog 9 months of the year!

    • Trinacria says:

      And so it begins….gradually at first, then possibly suddenly? Could this be a harbinger? Maybe starts in these larger and overpriced areas with condos going first, then starting to trickle down? When does reality sink in…extend and pretend to infinity? Job losses….what a “mell of hess”, but somehow bullets keep getting dodged, at least for now?

    • John Taylor says:

      I’m also working in Los Angeles. To me the whole area seems crazy expensive, but I can tell you that construction never slowed at all, even in Mach and April. Lots of apartments and condos are being built, there are a lot of projects bidding, and we’ve got tile contracts going out through the end of 2013.
      Hopefully prices come down some day, but who knows.

    • Old School says:

      If I remember correctly median housing plus transportation expense in the USA is 57% of people’s income. When there is an economic shock to ones life, location is the life preserver you have to try to keep your head above water.

      • cb says:

        Yes, that’s the travesty of financialization in America. Americans are debt slaves.

        San Francisco, as most of America, is still hugely overpriced, all due to our corrupt FED/Bankster/Wall Street system.

        • Lee says:

          Yes, lots of places are overpriced in the USA. I look at some of the house and condo prices in certain areas and wonder given the level of income in the USA how people can afford them.

          People think that Japan is really expensive in terms of housing costs, but there is a huge range of real estate that can be rented or bought in many areas that is way cheaper than anything in Australia or even the USA.

          One person that I know rented a reallly nice apartment outside of the big cities in a nice area for the equivalent of $US300 a month.

          And you can find lots of apartments within reasonable commuting distance of the big cities there for around US$600 or less depending on the area.

          Renting in Australia is expensive and the closer you get to the CBD here in Melbourne the more it goes up or that was the case until the virus hit. With the lack of international students and tourism, rents are starting to fall, but they need to fall a lot more to get anywhere close to reasonable.

          A nice two bedroom apartment half way between where I live and the CBD will run about A$2000 a month which would rent you a decent 3 or 4 bedroom house in my area.

        • Trinacria says:

          will be worse than debt slaves once this unhealthy attachment to real estate is brought to end end by market forces beyond anyone’s control. By the way, I believe the Chinese have a more unhealthy addiction to real estate than even Americans.

        • cb says:

          Also, concentrated ownership is a factor. Those in early, get to squeeze those that come late.

          Eliminating foreign ownership, regulating corporate ownership, removing tax advantages in multiple ownership situations, throttling the FED, prosecuting Wall Street, and eliminating government backed subsidizations to debt and incentives to be a debt society would pull the rug out from under rentier level prices. Won’t happen though, because the system is designed to support a society where one class gets to extract the labor and productivity of a lesser class.
          .

      • Jdog says:

        Anyone paying 57% of their income on housing and transportation had better figure on a pretty dismal retirement. Ideally, you want to have your home paid for in your late 40’s so you can concentrate on building your retirement nest egg.

        • Ethan in NoVA says:

          The house is the nest egg.

        • SuzeB says:

          When having 1 million is just “average” and no longer considered enough for retirement, and one considers just how many people in the U.S. have reported they can barely scrape together $400 for an emergency expense…..it appears we have a problem.

          In a perfect world, one does everything by the book: College and you better pick the right major!! Conversely, become a plumber or an electrician. Yeah, get your hands dirty, you wuss! Then marriage, house, children, a well-paying secure job with longevity and upward mobility, a well-positioned 401K (preferably managed by your financial advisor), and that house – your dream house – that you bought at exactly the right time – and you dutifully paid off in your late 40’s.

          But, but, BUT…don’t get sick or…old. Don’t get injured. For the love of God, please… just don’t do that.

          Some people did not follow this script at all (yours truly….but don’t worry, I’m a weirdo frugal saver and I do have cash).

          If I had known then what I know now, I never would have pursued the creative, fulfilling and dare I say “fun” life that I did. Music and the arts? That’s just fluff. Pure fluff. A mere hobby. Just forget all that – Real Estate is where it’s AT, man! Even John Lennon (or Yoko, that beeatch) figured that out. Truthfully though, who needs the Beatles or Beethoven or Van Halen? Woodstock? What a waste. Who needs the Impressionists? All those “greats” of literature, art and music – LOSERS all.

          Forget playing your dumb instrument or painting your stupid pictures or writing your silly novel that no one wants to read. Everyone should become savvy real estate “investors” in their 20s, goddammit. Learn how to “flip” and you’ll be all set. None of this silly “follow your bliss”, “do what you love the money will follow” B.S. What a load of crock. Buy a house, work for the man, pull yourself up by your bootstraps and STFU.

          ZIRP? What’s that, you say? Yeah, I don’t know it means either! The Fed? I dunno either. Don’t worry, it won’t bother you if you did everything right and you followed the rules!

          Ideally, everyone would be sitting pretty on their house bought in 1998 that is now worth 1 million plus and gazing at their forever increasing in value portfolio, ready to cash out at another 1 or 2 million. Hey, maybe 5 million. That’s doable, right?

          Aaaargh, if only everyone did what they were *supposed* to do! The world would be a better place.

        • Lee says:

          SuzeB:

          The fastest way to become a millionare in Australia by working is to become a plumber, bricklayer or electrician………………….

        • leanfire_Queen says:

          EXACTLY! My spending on housing is under 10% of income: rent a cheap 2 bedroom/2bathroom + work remotely. Transportation: under $1k / year thanks to a used Honda Civic I paid cash for.

          Being a debt slave is still OPTIONAL. I’m not going to worry about not having enough savings for retirement. People make their choices, they lay on the bed they set themselves.

        • SuzeB says:

          Lee,

          Yes, I’ve heard that here in the U.S., plumbers can make more than medical doctors. Not sure about electricians but my dad was an electrician, he was able to support 5 kids with my mom who did not work outside the home, and we had a summer home. Neither parent went to college. But things were “different” back then it seems.

  4. lenert says:

    Any idea of the percentage of these condos that are owner-occupied?

    • Wolf Richter says:

      No. But a lot of them are investment properties. Some might be rented out or might have served as vacation rentals when there were still tourists. The Lumina — the tower where the condo is that I used as an example — was marketed to overseas Chinese investors.

      • David Blake says:

        So here is an asset class that took me ages to figure out, Untenanted Real Estate ex China, with Chinese acquirers buying generally CBD apartments in various international locations regardless of ongoing occupancy. Its not the income that matters but the potential capital gain with the simple ‘downside’ of title being the perfect hedge against arbitrary Chinese government decisions concerning locally held assets in China or HK. More of a thesis really, without hard data at hand to validate the proposition. In the State of Victoria, Australia, there is a modest tax imposed on vacant rentals, which to date has not raised much revenue over many boom years, but that might change in the next few years, if both Australian short and long term immigration numbers continue to be relatively low.

        • hidflect says:

          I attended 11 auctions in Melbourne before the lock down and 9 of them sold to Chinese buyers. Many of them obviously proxies for the real buyer. Little student girls bidding with their handler standing over their shoulder. The effort to get money out of China is immense. They all paid well above the asking price (40% in one case).

  5. Zantetsu says:

    Forget exiting San Francisco, I am very ready to exit the USA altogether. Tonight I wrote to my ex-wife and asked if we could consider forming an exit plan. If I didn’t have two kids to coordinate over, I’d be gone already.

    I am thanking my lucky stars that I didn’t pull the trigger on any of the townhouses I was looking at in Cupertino last year. I’d hate to have that weighing me down as I make my exit plan.

    • Old School says:

      I am not sure you have to leave the country. There are some really cheap places to live in the US. The US has good distribution system for food and needed materials.

      In my opinion the cheapest places are rural but not extremely so. You get cheap housing but you are still close enough to the Walmarts, Home Depots, Cosco to get your required things cheap.

      • Zantetsu says:

        At this juncture I would refuse to move to a red area. I will just leave it at that.

        • nick says:

          If you are open to Old School’s suggestion but want to avoid Republican governed areas, check out black belt counties in VA, NC, or GA. Plenty of rural areas in New England and NY too.

        • IdahoPotato says:

          I live in a blue pocket of Boise, Idaho and my neighbours of all political persuasions seem to get along fine.

        • Zantetsu says:

          Thank you IdahoPotato. Perhaps I am over-reacting. I imagine that when people of opposite political views as mine watched protests/looting all summer they probably felt the same way I do right now – disbelief that people would act that way, concern that it represents a larger viewpoint that if so would mean the country is no longer a tolerable place for them. I need to convince myself that these extremes don’t actually represent the majority of people.

        • IdahoPotato says:

          As a woman of colour I don’t quite fit in Idaho, but I have not encountered hostility or disrespect. I have lived here for 15 years.

        • Lee says:

          Well then leave the USA – nobody cares if you stay or go.

          Your chances of getting into Australia are slim to none depending on your age (over 40 and forget it) unless you have millions to invest.

          New Zealand – lots of people always look at New Zealand as an escape fantasy from the USA. Well, I’m not up to date on their requirements as people with Australian PR and Australian citizenship get automatic New Zealand PR when they land in the country. As an investor you could get in, but bring lots of bucks as a requirement.

          (So yes, I can say that I’ve had NZ PR!!!)

          You’ll find that there are many nice places in New Zealand, but their housing costs are even worse than Australia overall and in nice places very, very expensive. Overall cost of living compared to wages in very high.

          What about Japan?

          Well, if you want to there you’ll need some qualifications and more than likely a job or family connections .Oh, you can go as a tourist for a short time, but the last time I checked the Japanese consulate here they wanted confirmed liquid assets of A$400,000 to issue a 6 month tourist visa rather than a 3 month visa.

          Don’t read or speak Japanese? You can probably still get by these days, but what kind of life can you have if you can’t communicate?

          How about one of the nice islands down south of the USA? BVI is nice, but to live there you have to buy a place and apply for a permit which can take months and months. Other islands are probably similar and may have better packages for investors,but again you’ll need some bucks as a real estate investor and in most cases you WON’T be able to work.

          Mexico?

          Well, still probably cheap compared to the USA, but the safety factor has to come into play. And sorry, I’m not up to speed on current long term residence permits or visas as I was there as a student many, many years ago.

          So go ahead and do your research, but most of those sites that flog ‘escape from the USA’ are built for people with money.

        • Happy1 says:

          Lots of great places to go. Panama and Costa Rica if cheap is priority. I have a friend in Portugal who loves it there.

    • 2banana says:

      Ok. I’ll bite.

      To where?

      And why with the ex-wife?

      • kitten lopez says:

        why with the ex-wife? because he’s a good father.
        and funny as hell; still chuckling at Paolo building his own shopping center.
        x

      • Zantetsu says:

        Top three choices:

        1. Canada
        2. New Zealand
        3. Australia

        The events of the past few days have left me with zero confidence that the United States will ever recover from its current political crisis. Things are only going to get worse from here on out.

        My friend told me a while ago that some study had been done that showed that once a country crosses a certain threshold of political/social animosity, it never recovers. There are numerous examples in history I guess, small, large, in between.

        As a result, I don’t think that the United States is likely the best chance my kids have for a good life any more.

        • Zantetsu says:

          By the way, I’ve lived in New Zealand previously. We moved there on Jan 1 2007. The process was set in motion by the Bush re-election.

          At that time it felt like disappointment at the political environment of the USA leading us to want to try something new.

          This time feels different. I genuinely feel a palpable sense that the USA is heading for disaster and that I need to get out to save my family’s future.

          I’ve calmed down a bit since I made my initial post last night but … still feeling it.

        • Fat Chewer. says:

          Brother, do not come to Oz. We are the same as the US, just crammed into a smaller area. (Most of Oz is uninhabitable desert. Although, if you are desperate enough…) Our current government has destroyed us. You will lose your mind here. I am. Imagine trying to argue against something that makes no sense, no one supports except a small group, is supported by the RWNJ media and having it forced on you by a political party that does not need any form of logic to make decisions. If their donors want it, it becomes law.

          Do so at your own risk. I qualify for an EU passport and I have never felt the need to apply for it until recently.

        • kiwi Pete says:

          You are welcome here NZ , but untill there is a effective vaccine you wont be allowed in , stay out of Auckland , head south .

        • Harrold says:

          Those 3 are very difficult to move to. You might look at eastern Europe. Cheap, westernized, and easy to get to. I think Albania allows you to remain in the country for 12 months before you need to make a visa run.

        • Lee says:

          See my post above: you can cross Australia and NZ off your list.

      • Zantetsu says:

        Oh and – ex-wife — I would never leave my kids behind and therefore we kinda all have to go as one unit.

    • JLS says:

      I am thinking the same way. Which country would you to?

      • Zantetsu says:

        I have lived in New Zealand previously, it’s a known quantity. Some very good things about it, and some not so good things. Many, many days I wish we’d never returned to the USA (not to get too personal, but I’m pretty sure we’d still be married if we’d stayed in NZ, but that’s a whole different story).

        We travelled in Australia a good bit, I could see living there too – it was very nice but less of a known quantity for me, and I think there may be a political undercurrent a bit too similar to what I am trying to get away from.

        Canada is my top choice because it’s still close and I always liked Canada. I can still visit family reasonably easily from there. I would go to BC probably.

        • Paulo says:

          Zan,

          If you move to BC there are a few posters here that Wolf might share contact info with you.

          My parents did the ‘leaving thing’ from Walnut Creek to Vancouver Island in 1968. I grew up here and it is all quite okay, to be honest. Look, I have lots of rifles and shotguns at my house but give profound thanks that the Cdn Feds outlawed semi auto assault style wannabe weapons this last year. Profound thanks. Handguns are restricted as well. If a person has a restricted permit it allows one to take hand gun from home in a locked storage box, go to target range by vehicle with weapon secured, and take same gun back home with no stops…even for gas. If you have a restricted license the RCMP have the right to search your vehicle on any traffic stop. If there is a domestic call, all guns are confiscated from the home owner.

          People here like these laws. Currently, restricted weapons are coming in through the border in exchange for drugs, but there is a concerted effort to get them removed at all costs.

          Here is the smile. We just had a Provincial election last month. Corporate and Union donations are outlawed. There is almost no outside advertising and no PACs. I voted in person because Covid was low and did not even think about anyone packing a gun. I went to show my voter ID and the poll worker just laughed at me as I have know her for years. The full results were known in an hour.

          Federal election results are usually known by the time polls on the west coast are closed. There is a Federal election process that is exactly the same across the land. A person in the high arctic has the same voting process as a voter in Toronto or Vancouver. No one even considers there might be hanky panky and scrutineers from all parties watch the proceedings throughout.

          You will find most interactions polite and friendly. You will really enjoy the medical system and the lack of fees or premiums. In some places masks are mandatory until Covid is contained. No mask? No ride on BC ferry.

          However, a person cannot just move here. There is a rigid application process and the entrant has to bring something to the table. If you have family here it is easier. If the applicant has a trade certification or technical skill then entry is painless. Medical background is the same. Other professions not so much. It just depends on the applicants training and experience. If one does not have suitable qualifications then there is always refugee status to consider. As upset as you are this does not yet apply to the US. If the Draft is reinstated, or……maybe. But not yet, and this is a good thing. :-)

          The usual hourly wage for a tradesman/woman is between $35-$40 per hour. Union construction is between $60-65 per hour plus OT and shift differential. While medical is covered for everyone, many if not most companies provide other benefits as well; dentistry, vision, etc. WCB is mandatory and paid by employer.

          Oh yeah, it helps if you speak both French and English. Those are our two official languages.

          Good luck.

        • Zantetsu says:

          Thanks Paulo, very insightful.

          I have to admit I’ve generally assumed I’d have to ride the coat-tails of my ex-wife if I wanted to go to any of those places. Which would involve convincing her to go, and convincing her to include me … a long shot probably.

          She is a doctor and when we moved to NZ it was very easy for her to get in. We were married and they immediately offered the both of us an option for full citizenship should we want to take it. Unfortunately we did not.

          I am a “tech worker” (software developer for 25 years now). My skills are generally not viewed favorably because even if I could prove them, they tend to just be viewed as competitive with any local developers, and one wants to bring someone in just to displace local developers (well, except for the USA and its H1-Bs of course).

          I have travelled to Canada several times throughout my life – growing up in northeastern Ohio, Toronto was a fairly close “international” city and made for exciting summer trips. I few years ago I drove with my kids up pretty far into BC and then to Calgary then back into Canada in Michigan all the way up the St. Lawrence to Quebec City. I cannot stress how much I like spending time in Canada.

          Unfortunately, the problem is, as others have pointed out, actually getting in …

    • joe2 says:

      Good for you. I would be gone if I was single. I lived expat 9 years in Korea.
      I am partial to Asia. Thailand, Vietnam, Cambodia are inexpensive. Korea and Japan are nice but expensive. Parts of Italy are also very nice and not expensive.
      I do recommend you become very familiar with visa, banking, and RE laws as you can get taken for a ride. You will need some legal help.
      And I don’t know how it works now with all the COVID restrictions.
      I suggest you connect with some expat support organization like International Living (not an endorsement).

      • Zantetsu says:

        I’ve lived overseas before. I lived in China for 9 months. I got tired of not being able to communicate well (although my Chinese was getting better and better) and not being able to read or write anything (in Chinese; learning to speak that language is not terribly difficult, but the reading/writing – forget it!). So after that I decided to stick with English speaking countries.

    • MCH says:

      Cupertino? School district or job location? That’s usually the reason people buy there. It is also convenient with 85 and 280 right there.

      There is also Vallco park going up, that’s still happening right? Well, your timing is good… continuing to rent makes sense at this point.

      • Zantetsu says:

        School district. My kids are all set up to go to the “grinder” which is Monta Vista high school, for better or worse. It’s where my ex-wife went.

        • MCH says:

          OMG, you realize that Monta Vista and Lynbrook is exactly what people called “UCLA” back the late 80s/early 90s right?

          Where UCLA stood for United Caucasians Lost among Asians. Meat grinder doesn’t begin to describe the pressure being put on these kids. It has gotten to the point where Cupertino is all about making sure your kids are tutored along the way, it’s almost like paying for private school on top of Cupertino prices in some cases.

          I’m surprised that the suicide rate in those high schools hasn’t matched what’s coming out of Palo Alto high schools these days.

          One thought, you realize, you do NOT have to move to a “red area” to find a cheaper place. I mean literally, there are so many options, think Austin, Portland, Seattle. Yeah, sure, prices are high, but still very affordable relatively speaking compared to the bay area.

          As for a place like Wyoming… I heard some someone suggested to Bloomberg that he pay for 50K Democrats to move there for a few years just for a few years to take the state. It’s utterly laughable how much politics has become so dominant when for the most part it is so irrelevant to our daily lives.

          To me, politics is way overrated, generally, people tend to agree on 80% of things, the fact that we’re all forced to focus on the 20% difference is just asinine. It boggles my mind how families can get into fights over something as idiotic as who the president is. Like I said earlier, in the long run, who cares.

    • DeerInHeadlights says:

      Exit to where?

    • California woman says:

      From what I am reading, the rest of the world is not in much better shape. In fact, in some places it is worse.

    • Bobber says:

      If you take the time to get to know your neighbors, any place in the world is going to be a LOT better. Turn off the smart phone and computer (except WolfStreet), as media brings out the worst in people, creating conflict where there is none.

      Go take a walk outside and talk to people on the way, organize a get together, ask someone if they can use some help, etc.. Everybody needs to be part of a community to be happy. Make an effort.

      • Zantetsu says:

        I appreciate that for sure but … I live in the bubble of Silicon Valley right now. It’s an echo chamber, I’m not going to find anyone around me that wouldn’t agree with my political stance I do not think. Of course I ‘stumped’ for Bernie Sanders in summer 2019 and was surprised at the number of people who … let’s say … didn’t agree with his politics.

        It’s not that everyone has to agree with me either. It’s just that when people brandish guns as a way to show that they “mean business” about enforcing their views, it’s downright scary. When they essentially say, “if we don’t win this game of checkers we’re just going to burn the house down”, that it gets scary. I don’t mind competition for political ideas, good discussion, coming to agreements, cooperation and compromise … but when my opponent is willing to just call me a cheater and blow us both up if they don’t win, I really just would rather get out.

        I often thought while stumping for Bernie in the Bay Area (a pointless exercise if ever there was one) I should have taken a road trip to the middle of Kansas and set up a booth with a sign saying “Hi, I’m a California Democrat, let’s talk”. Just to try to see if there could be anything gained by trying to reach out. But I am now worried that I would have been shot.

  6. Anthony says:

    One thing that is noticable when you talk about US housing is the quite amazing costs of owning in some areas. My own small house, in Manchester England, which I own outright, has a property tax of £100 a month and house insurance of £220 a year. Its value now is only £190,000 but that’s not bad as I paid £33,000 for it 20 years ago… Regarding housing costs that’s it, roughly £1450 a year or around $1700.(apart from heating and electricity which is £50 a month)
    When I hear the housing taxes some people pay in the USA I find it hard to believe….but it appears to be true…. You do pay less tax on many things over there (yes I am jealous of that, especially running your cars [petrol/gas] lol) but not on housing…

    • Anthony says:

      For any who thinks £50 a month for heating and lighting is expensive, we are 53 degrees North lol

      • Paulo says:

        I have an elderly tenant who I rent a small 650 sq ft cottage to. I kept hydro in my name because it was easier. Now he does use wood heat for the most part, but also uses in wall electric fan heaters, has an electric range and clothes dryer. He just paid me for 2 months. $62 for two months. $1 per day.

        confession: I kept the hydro in my name in case I ever have a problem with a future tenant. If I do, I’ll just pull the meter right before I have a visit with a few friends for that when will you be moving? chat.

    • Jdog says:

      It is crazy in some places, other places it is reasonable. In some places the decision on whether you can afford a house or not, is not the purchase price, but the property taxes. Especially when you are nearing retirement.
      That is just wrong…

      • lenert says:

        We could have lower property taxes with higher federal spending on public education.

        • Lisa_Hooker says:

          With higher federal spending on public education we will need higher federal taxes – to pay for the education – and whole new layer of federal management salaries.

        • Lee says:

          Geez………….

          Then you’d have to raise taxes at the federal level!!!

          Somebody always has to pay.

      • MooMoo says:

        the government beast is insatiable. That is why Communism is coming to the USA.

    • lenert says:

      We pay an obscene healthcare tax so that insurance company CEOs, medical device maker CEOs, pharma CEOs and all their CFOs, COOs, CTOs, CMOs, CIOs and all their VPs can make billions a year in income while doing nothing but manipulating the share price while not having to worry about any of that icky competition. And then we want to stick it to everyone else in the world with our trade deals.

      • sunny129 says:

        AS long as the affordability of health insurance tied the jobs of the companies ( unlike in Canada) in America, absolutely NOTHING will change. America is ‘democracy’ in name only it is really CORPORATOCRACY run top 1%, who incidentally own nearly 50% of Wall ST, wealth. The next level below, top ((9?)10% ( who own nearly 90% of WT wealth) are serving the top, to keep & continue the status quo!

        AS George Carlin said’ there is a club and you ain’t in it’!!

        • Lee says:

          Sorry, but the USA has never been a democray.

          It is REPUBLIC.

          When will people ever learn?

    • stan6565 says:

      Anthony,

      Your council is ripping you off, my council tax is about 2.5 times higher, but property value much more so. This is in Kingston, SW London.

      Do you get a private medical service in your local NHS?

  7. joe2 says:

    “Tack on the closing costs … and pretty soon you’re talking about some real money.”
    You do have to do your homework. I was looking at a high rise condo on the strip in Vegas after the crash and I could pick up a nice unit for about $800K that sold the year before for $1.5M (3 unrelated guys, bet there’s a story there). BUT, the condo fees were enormous, tax assessment was on the 1.5M on a 3 year reval schedule, rents were very low, and since it was a new building there were rumors of lawsuits against the builder and/or association.
    I couldn’t make it make sense. An old RE pro once told me – if you can’t gross +20% on cash in, forgetaboutit.

    • Gordian knot says:

      A old real estate pro told me ” you make money in real estate when you buy not when you sell.

      • Jdog says:

        True, people are always excited to buy into a boom market, when that is exactly the wrong time. The best time to buy anything, is when no one else wants it.

        • SuzeB says:

          Thank you! This has been my reply in recent memory to people/”owners” when I’m repeatedly asked “when are you going to buy a house (or condo)?”

          I politely reply – after receiving their unsolicited advice – “Thank you, respected “owner”. You are a better, stronger and more worthy human than I, the lowly serf renter. (Well, I leave that part out, LOL) I do reply non-confrontationally and rather respectfully, “If I buy now during bidding wars and when everyone else is rushing in, would I not thus be buying at the top of the market? Isn’t it better to buy when perhaps interest rates are higher and thus, reportedly, prices are lower?”

          No, no, NO, R.E. grasshopper…you are WRONG… “they” say, this is Boston/Greater Boston and R.E. never, never, EVER goes down here. Interest rates, forget about that. R.E. here just goes UP so you better get in while you can. We’ve got colleges, world class hospitals and cul-cha and wicked pissa Boston accents not to mention awesome New England weather. They aren’t building more land! You’re throwing your money away on rent!

          That’s when I slink away or try to change the subject:
          “Hey, how ’bout them Red Sox?”

          One of the very few things I, er… like…about the pandemic is less interaction with these well-meaning owners and being forced to justify my renter status ad nauseam.

        • lenert says:

          Have seen people recommend price-to-rent ratios
          (avg sales price / avg annual rental price) where:

          1 to 15 = typically better to buy than rent
          16 to 20 = riskier buy
          21 or more = better to rent

  8. Buyers market for the middle to lower income, sellers market for high income. Not sure what the holiday season means, and the weather this year in SF is unseasonably warm?

  9. DR DOOM says:

    Beans and tater’ hillbilly people like me do not understand condos. We lack,the orthogonal spatial mental ability of the visualization of where my walls would be and who owns what. We do understand splitting fire wood and greasy back beans.

    • Jeff Fandell says:

      Condo….upgraded name for an apartment with few benefits!

      • Jdog says:

        The problem with Condo’s is mostly the associations / fees. I have owned a few in the past as rentals, but that was a while ago when average fees were below $100. I see some today that you would have to be on LSD to agree to.
        In addition, you really need to do your homework into the management. I have seen many Condo’s which were poorly managed and the management used them to do corrupt deals with the vendors, or even embezzle the money all together. People do not realize as members of the association they are on the hook if the funds are stolen.

        • MarkinSF says:

          And add to that the fact that you may get in and have excellent management and then boom; a new company takes over and they’re lazy and corrupt.

    • IdahoPotato says:

      During this pandemic I was so grateful for my sunlight-filled house and yard.

      • joe2 says:

        Our condo is in a 40 acre gated community with 24 hour guards. I chose this instead of a house when we can back from overseas because my wife was used to 24 hour security. So lots of room for the dogs and roaming in private woods even during the lockdown. Only problem is the elevator – dogs are too short to push buttons. I so wish I had a doggy door.

  10. Seneca's cliff says:

    The thing I have noticed lately is that new condos arrange the financial structure to make the hated HOA fees very low. But this setup never lasts and you can examine the same size, style and quality of building 10 or 15 years later and the HOA fees get very high.

    • Lee says:

      In Japan with condos they structure the fees so that in the early days the sinking fund portion is low – too low so that in later years there is usually a big hit when fees go up and then additional payments for things like elevators.

      Japanese condos also have a wide range of what Americans call HOA fees. Some are quite low, but overall these are very high and often accrue to the builder of the project – another source of profit after the project ends.

      Then you have the other fees that you find in addition to the HOA fees and the sinking fund fees:

      1. Parking – cars: usually the owners don’t own the parking lots and these remain with the builder so you have to pay for parking. Again some are reasonable, but most are over the top.

      2. Parking – bikes: yes, some places will charge for parking your bike.

      3. Rooftop balcony or ground floor garden: if your condo has one of these there is usually an extra charge per month for the ‘privilege’ of using these spaces which you own.

      4. Heating: in Hokkaido many of the condos will charge extra fees for heating during winter and spring.

      5. Spas: in the resort areas many of the condos charge a fee for the fact that you can use a spa or ‘onsen’ at the condo. These are charged even though you don’t use them.

      6. Water: some charge fixed fees for water.

      7. Land rent: some condos especially ones built on reclaimed land in Chiba will charge you rent or a lease charge for the % of the land that your unit has. You don’t own the land, but lease it for 99 years. Just another cost of owning the unit.

      8. Neighbourhood Association Fee: some have these fees and usually less than US$10 a month

      9: Utilities: CCTV fee, internet fee,and elevator fees. Yes, some will charge you extra for these as well.

      These are just some of the fees and costs of a condo in Japan. There are others and some of them can be quite ridiculous.Some will also require a lump sum payment to the building sinking fund when buying the place as well.

      And the one that really gets you is taxes and fees on purchase. Various fees and taxes you have to pay when you buy the place and can easily add another 10% to the purchase price or more.

      In regards to annual real estate taxes in Japan on property – the way that they calculate them is a ‘mystery’ to most people.

      Your taxes on the property will usually bear no relation to the price that you actually pay for the property, but will be based on some ‘notional value’ in the tax books.

      If your condo was built during the bubble period in Japan it could have a ‘tax value’ of say US$500,000 and you’d pay tax on that value even though you only paid US$100,000 for it. Ouch.

      Now for one example:

      In Atsumi, a resort area in Shizuoka Prefecture, there are numerous resort condos. Some of them have ridiculous prices, but you can find ones with relatively cheap prices. However, you have to be really careful as the ongoing costs can be over the top.

      A nice 4 LDK with a huge 197 square meters of interior space (2100 square feet) and another 57 square meters of balcony (610 square feet) can be bought for aound US$330,000.

      That is a huge condo regardless of where one lives!!

      The costs:

      1. HOA Fees per month: US$550
      2. Sinking fund per month: US$250
      3. Water per month: US$53
      4. Parking per month: US$100
      5: Taxes: Unknown

      This one also has the ‘option’ of joining the spa facilities at the condo. I couldn’t find the current information, but the join fee was something like US$15,000 (Refundable ??) and then some ridiculous monthly charge as well. If you don’t join then you can’t use the spa facilities at the project.

      The sinking fund fees for this project given the type of its construction and layout seem way too low. I’d be very wary about that aspect of this project. Owners are probably going to get hit for a huge assessment in the future.

      I haven’t put up a link to the property as the owner of this site might not allow it.

      If okay, I’ll be more than happy to post it later.

      There are a lot of nice condos in Japan some with reasonable prices and costs, but there is one big worry for these type of properties especially in resort areas and areas with falling populations.

      In Japan when a person dies and leaves property to an indivdual, that person has the right of refusal. If the person dies and leaves a condo with a declining value and high costs, the person getting the property through a will probably wouldn’t want it. So the person refuses the property and in effect there is no “real” owner……………………

      The fees and costs on the property accrue and are not paid. Even if the government takes the property for non payment of taxes, the fees still accrue.

      You can see these types of condos for sale with a price tage of $1000 or even $100. The outstanding fees are more than the value of the property.

      What happens when 20 or 30% or more of a project is empty and no one is paying the fees and costs associated with them………………….

      Houses are a much better option in Japan.

      • Wolf Richter says:

        Lee,

        OK to place link. In general, if you want to place a link, do it, and let me decide what to do with it. If I delete it because it promotes something or whatever, it’s no biggie.

        • Lee says:

          OK,

          Here is the link to the condo I was talking about in my post.

          No relationship with the website, RE agent, or owner of the property.

          It is in Japanese and unfortunately doesn’t have all the information about the spa and fees at the project. To find those one would have to find another listing at another site with the data.

          As can be seen from the photos the construction and layout of the project is quite interesting as is the type of the “elevator” in the building.

          From looking at other units that have been for sale in this building, it appears that two units were combined to form it.

          https://www.athome.co.jp/mansion/6971882699/?DOWN=1&BKLISTID=001LPC&sref=list_simple?DOWN=1&BKLISTID=001LPC&SEARCHDIV=1&sref=list_simple

        • Wolf Richter says:

          Ha, I got a couple of those “elevators” (little rail car pulled by a cable) across the street in the condo complexes going up the hill. But they’re not as long. And here I was thinking that only in San Francisco would a condo complex have a cute (and surely expensive to maintain) thing like that.

        • Lee says:

          Wolf,

          Yeah, if and when that ‘elevator’ needs to be fixed or replaced the owners in that building are going to hit for a huge assessment.

          The views from some of the units in that building are outstanding, but I always wonder what in the world is going to happen if a really, really big earthquake hits the area……………..

          Will the entire building slide down the hill?

      • joe2 says:

        Thanks for the very valuable accounting of risks. You do need to keep your wits about you. These vary greatly by country. In Korea you would rent a condo by Key money, which was about equal to 1/3 of the purchase price. The owner kept this and paid it back at the end of the rental period. Some people got stiffed by damage claims, forgetting to legally establish a lien, and other scams. You have to know the laws and scams and hopefully find a lawyer you can trust.

    • Stan Sexton says:

      Yes, when the condos are being built and still selling, the vendor is the builder, and so HOA expenses are low. After sold, the HOA has to hire all the vendors, and not such a good deal as the builder has using his own employees.

  11. Micheal Engel says:

    1) SF one bedroom rent is down 20%. Condo prices dropped 9%.
    2) Real bargains.
    3) Timing is key. In the energy sector hit #1 was in 2008. Hit #2 came in 2014/15. The bargains start to emerge in mid 2020, with no
    recovery insight after 12 years.
    4) Use them or lose your vacation days after Sylvester.
    5) SF economy is doing much better. Those on two weeks furlough, for
    three months, are now only on one day furlough per week, or one week per month.
    6) Those on who were one day per week are now full time job, WFH
    7) Furlough is not a vacation. Thanksgiving and Xmas are for most.
    8) SF employee who saved 30 days vacations, are losing six days, have a balance of 24 days left.
    9) The 24 vacation days must be taken now.
    10 SF economy is getting better, but many employees will take a hike.
    11) Unemployment is up, but working hours plunge, even with few conference calls for free.

  12. sunny129 says:

    No matter how much hopium and hype is WAll St spewing through MSM, Covid 19 is here to stay and the great RESET is on the way.

    There will be NO ‘effective’ vaccine ( there will be a lot claims in the press) either this year or even next year.

    For those existing home owners in the bottom 90%, how many their jobs coming back in spring? Will Fed bail them out too?
    Who is going to holding the empty or semi-empty office towers, malls, and other commercial enterprisers’ RE in the center of cities?

    Every one is betting things will be improved or almost normal by spring!
    Will it be? Or more QEs right?

    Without QEs since ’09 S&P would be 45% lower!

    without-qe-the-s-p-500-would-be-trading-closer-to-1-800-than-3-300-says-societe-generale
    MW

    • Jimmy Pen says:

      Relax man/woman.
      You know the new stimulus is going to be like 3 TRILLION dollars as soon as new administration gets settled in at the White house?

      They’re gonna pump so much money, your eyes will spin out.

      New stimulus, will forgive rents for the proles and mortgages money people, heck even for airbnb investors.

      all Student debt will canceled and paid for with tax moneys from suckers with high incomes in all the desirable cites, SF, LA, NY, Boston, etc.

      3 TRILLION Dollars – Plenty of government Jobs for those people with women studies/environmental … degrees, with great benefits..

      you see things will just go back to what they were in a few months. Lots of Airbnb rentals and hotels rooms booked and lines at restaurants…

      -Universal Basic Income,
      -Higher minimum wage,
      -Free College,
      -Universal Health care.

      Taxes/health care and all living costs are gonna shoot up for all the productive middle class people..

      Time to Move out the country and just working remotely even if one gets a 20-40% salary cut is way better to be GONE.

      • Anthony A. says:

        “Taxes/health care and all living costs are gonna shoot up for all the productive middle class people..”

        You really mean what’s left of the middle class people….?

      • Stan Sexton says:

        And Biden/Harris will bail out the extravagant Pension funds like CALPERS where the top pensioner (Curtis Ishii) makes over $418,600 a year.

        • cd says:

          time to get off grid of taxes, open llc and pay nothing…..the city and county govts of the left are in complete shambles, a patchwork of corruption, lies and theft…..

          if you live here ya know….

      • Lisa_Hooker says:

        “Money for nothin'”, sure. My concern is an implementation of “chicks for free.”

    • Happy1 says:

      I’m amused by your certainty that a viable vaccine is not in the cards. How on earth do you know this?

    • cd says:

      it has begun and will move rapid from here on out…
      better be careful with hope, a national shut down as advertised by Biden will take America out….the fed won’t be able to stop it…it will kill more than cv19…..

  13. Tony22 says:

    After the BIG ONE hits, any day now, most of those high rise buildings will be tweaked and the special assessment for earthquake repair will probably exceed the cost of the condo.
    The area south of Market is a souless transit corridor for people rushing to drive to the east bay, it has no parks, it’s windy, views are blocked by other buildings and unless you’re from Topeka and like living with other out of towners, who think the Chronicle Bay to Breakers™ is an authentic cultural event, thrilled by that view of the Bay Bridge for the first 6 months, these places are a dead end investment. Ideal places to install the homeless. San Franciscans laugh at people who live in these vertical hives, they are suckers with too much money and no taste.

  14. cb says:

    9% off of ridiculous, still leaves prices at absurd levels.

  15. c1ue says:

    So much for: build more to reduce prices.
    Quite clear the real solution was: reduce VC capital to money losing companies to reduce prices.

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