low income, low credit score, unsteady employment, little or no down payment money
These were the "sub prime" borrowers who borrowed what they could not afford, and as hordes of them hit certain neighborhoods and parts of the country, prices went up unnaturally.
The above description did not happen in the wealthier parts of San Francisco. People here have very high incomes, very high credit scores, great jobs and a LOT of cash. But sub prime borrowers did bid up some of the poorer parts of our city.
Now.... from everything I see and hear about the areas that have been slammed with 40% price reductions, while loans are still difficult to get, investors are pouring in and buying the "REO" (real estate owned by banks after a foreclosure) properties. Sales are trending up in many areas where investors are buying more than one property each.... and to me that's a concrete sign of the bottom. These aren't the wanna be investors of the past few years... these are the investors who know what they're doing.
Here in the nicer parts of San Francisco, there are TONS of Buyers asking the question you are asking. Unfortunately the answer is largely that the market has not gone down overall... but if you look closer, some properties have gone down or stayed flat, while the best properties, the ones that "have it all", are selling immediately at the upper end of what they are worth which is higher than it was a year ago.
Meanwhile, there could be a property next door that doesn't have it all (no parking, or no in-unit laundry, or a weird layout, or not remodeled, or the unit or home is dark, etc, etc) and those are going through price reductions before they sell. Most aren't "down", but the Sellers thought just because the were next door to an "have it all" property they could get the same price. But buyers are being very picky right now.
So people with money are still buying... but they are being picky and are often competing for the same properties (hence the multiple offer stories) while skipping over the others until they're priced more reasonably.
So... if you're looking in an area that is down, it's unlikely to go down further as investors start to buy up the bargains. In areas that haven't gone down, don't expect it to drop now. And overall, with a TON of buyers swirling around waiting for the market to "drop further" and discovering it hasn't dropped at all.... you may see yet another uptick in prices.
That said, there's only one I can think of that's been sitting on the market for a while longer than usual, and that's at $2MM+ on Diamond Street.
I'm not a Realtor, but honestly, I don't know if anyone can time the market perfectly but I do think you can make yourself crazy trying! I got a piece of advice a long time ago that a house is **not** an investment, it's an investment in your lifestyle. While it can make you some money down the road, the primary purpose of owning is to live there - fluctuations in price should be immaterial if you're in it for the long haul.
I think the only way you'll have an indication for sure that things are turning around is when the Fed raises the interest rates signaling the end of a downturn/recession.
Hope that helps somewhat, even though it's not very scientific!
I agree with Jed... perhaps in 94124 or 94134. The rest of the City is doing well despite what you read in
the Chronicle. They aim for the sensational headlines. If you read their articles you will note at the end, the Chron says SF is seeing a plus in prices and a negative in number of units (homes, condos, etc) sold as compared 2008 to 2007. So did the article in the New York Times if you saw that as well.
Sales were going well at SOMAGrand a little while back so they raised their prices. Our market is crazy! But I do not feel you can go wrong purchasing today as long as you hold on to the property from 4-7 years at a minimum. Real estate is cyclical. If you read the quarterly report from First Republic Bank just out today, it shows a positive for San Francisco. That same report also shows San Diego and Los Angeles.
I think you should go for it. Just remember to have all your ducks in a row for the financing.
It's impossible to time the market (the only way to know if we've hit bottom is in the rear view mirror, meaning you'll have missed it). The only thing you can time is your life. If you plan to live a new home for 5-7 years, and can qualify for the necessary financing, go for it! In that time, the market will have shifted and you will likely have enjoyed some equity gain. And as a world-class City surrounded by water on 3 sides, we tend to be insulated from the fickleness experienced by other locations.
The "new jumbo" are starting to come in line with the "old jumbo" lending criteria is still much more strict than it needs to be.
If you are a good credit risk, have a down payment and have documentable income now is a good time to buy.
Your question about pricing is a very popular one at the moment. The answer really depends on the area/neighborhood and the type, Single Family Home or Condo, you're looking to make your purchase. There are a few areas, such as Noe Valley, The Inner Mission and Pacific Heights/Marina , that are currently seeing multiple offers and sales well over the asking price while other areas have seen a 40%+ decline in pricing.
I wish I could tell you with certainty when the economy would level off or when the Real Estate market would get back to normal but I think that, unless you're coming off the sidelines with new investment money, buying a home to live in is a great idea at any time.
The mortgage crisis is a bit different. We're starting to see an increase in liquidity in the financial markets and the new Jumbo Mortgage pricing is beginning to figure itself out, so we may be looking at a bottoming out of that side of things. Banks are still tight on their approvals and the better the down payment, the nicer they treat you but it's still appears that we'll be in this for at least a few more months if not middle of next year. That's just my humble Real Estate Professional opinion. You may want to ask that question of someone in a different industry.