Tuesday, October 7, 2014

SF housing cycles visualized

If you've shopped for real estate in San Francisco recently, you've likely experienced the crazy world of multiple offers, waived contingencies, and all-cash deals well above asking price. We've been house shopping here for nearly two years, without much to show except a jaded view of the market and an ever-increasing pile of home-for-sale flyers. My husband and I joke that our toddler will grow up thinking that's what you do on the weekends: go look at other people's houses.

If you've been in this situation, or a similar one, you've perhaps also wondered (like us) whether prices will continue to increase at the rate they have been, or if there is an elusive bubble that is about to pop. To that end, we came across the visual below, which depicts a simplified view of San Francisco housing market cycles over the past few decades.

If you've followed this blog for long, you might expect that I will next proceed to rip the above visual apart. But I am not going to. 

I actually really like it. 

Sure, there are some minor things that could be changed. But let's focus instead on the good: it's well-labeled, both in terms of titles and text annotation on the graph itself. There is a clear narrative that calls out some interesting things in the data. For example, over the past 30+ years, the period between a recovery beginning and a bubble popping has been about 6 years.

According to the graph, the last recovery began in 2012, which would put the next bubble pop at approximately 2018.

Which means there's still time to buy before we hit the peak... 


  1. If you were to collapse the time line and just use data points it would look like some kind of exponential curve right? the climbs seem to get steeper. Maybe it would look different (flatter) in constant dollars. I agree, good presentation of info. :-D

  2. This graph succeeds in tracking time between cycles, but without the Y axis, it is difficult to know exactly the impact of recovery or bubble pops. Without these values, the steep recoveries and bubble drops, while dramatic in presentation, may be misleading. The recoveries do appear to get steeper, but how drastic the change is not known except in proportion to the previous one. What is the increments were on .01% and the difference between end of a recession and the bubble pop is only .05%?

    1. Great point, Neil. I actually hadn't even noticed the absence of y-axis until you mentioned it, as I was focusing more on the trend. My guess is that's the intent, and that cycles do represent marked changes in housing price, but you're absolutely right that should be made clear by showing the y-axis values. Thanks for your comment!

  3. I had a long comment about the absence of the y-axis but somehow clicking the "Preview" button deleted it. Looks like Neil beat me to it anyway. But I agree that I have no idea what's being charted. The Case-Schiller Index? MLS Sales? Some combination of the two? Indexed for inflation, maybe, maybe not? Are things really 12x different now than they were in the early 1980s, or is the scale not linear? Without the y-axis I don't feel like I've learned anything other than, "Things have changed in 30 years," which we already knew.

  4. Great blog and equally great observations/comments. Yes, inserting the Y-axis would help a lot.