Real Estate Reporter

Our Heinz ketchup moment

Has the long-anticipated price correction finally begun?
Not everything you anticipate will make you feel good. Photo:

Living in a real estate world can be made a lot easier if one examines other industries. As we look at news about the current market and try to guess where it’s heading, it feels a little like a television commercial that those of us old enough to remember the late 1970s might recall.

In it, two boys are sitting at a kitchen table preparing to eat hamburgers.

First boy: “Boy, your ketchup’s slow.”

Second boy: “You mean your mom doesn’t buy Heinz?”

The second boy then gives the first one his bottle of Heinz ketchup to pour on his hamburger. The first boy watches in amazement as the “thick, rich” ketchup slowly pours onto his burger while singers croon “Anticipation.”

You had to wait for your ketchup, but boy it was — the ad suggests — worth it.

Ever since 2012, when the San Francisco real estate market started to boomerang back from the depths of the Great Recession, people have predicted that prices would stop rising. They anticipated it every year. A few of those years, I was one of them. But home prices and valuations did not stop their ascent.

So don’t expect me to make a prediction here. But I do want to look at some of the indicators and opinions and try to judge if they could give us hints about an end to this record-setting runup in home prices in San Francisco.


First, we have to note that the overall American economy is performing well. By “well,” I’m not ignoring the fact that for many people that means they’re working multiple jobs just to get by. But in terms of very low unemployment rates, corporate profits, and the stock market, things remain strong despite expectations (again, at times from me) of a slowdown.

The National Association of Realtors reports that 2019 was a good year for sellers, with prices increasing in all regions of the country. “Price appreciation has rapidly accelerated, and areas that are relatively unaffordable or declining in affordability are starting to experience slower job growth,” NAR Chief Economist Lawrence Yun said. “The hope is for price appreciation to slow in line with wage growth, which is about 3 percent.”

In many cities, prices have indeed been up, though you can spot some caution signs.

In 2018, a Bloomberg News headline reported that “Investors Are Piling in to NYC Condos at a Record Pace.” As usually happens, when the “irrational exuberance” stage hits, things look set for a correction. Throughout 2019, the headlines — we’ll stick with Bloomberg, for consistency’s sake — reported troubling news. “Manhattan Home Sales Drop to Decade Low for a First Quarter,” “NYC Apartment Building Sales Plummet . . .” and finally, “Manhattan Luxury Condo Sales Moving Slowly, Even With Freebies.”

And in October, The New York Times reported that “It’s Now a Buyers’ Market in Manhattan Real Estate.”

So is any of that applicable to San Francisco, where prices have vied with New York for the highest big-city housing costs in the nation?


Zillow teams up with Pulsenomics to produce the Zillow Home Price Expectations Survey, based on responses from more than 100 economists and real estate experts. In the fourth quarter 2019 survey, most of those respondents chose San Francisco to underperform in 2020; 64 percent expect San Francisco’s real estate market to underperform compared to the national average rate of home value appreciation; in second place was nearby San Jose at 61 percent.

The experts went further, telling Zillow’s number crunchers that 57 percent of them expect home values in our city to actually decline in 2020.

Closer to home, the San Francisco Chronicle’s Amy Graff asked some local real estate pros to predict what will happen in the market, and the overall response was in line with Sotheby agent Herman Chan’s statement that “It is not a crash, nor is it a boom.” Compass Bay Area chief market analyst Patrick Carlisle told her “. . . the market will stay relatively even.”

So I am making no predictions. The factors cited here and that I have read elsewhere do suggest no disaster is right around the corner, but they do make me read market reports with just a little bit more interest, looking for telltale details that might portend more.

Of course, in the Heinz “Anticipation” commercial, it was a good thing that the long-anticipated arrival of the ketchup occurred. In the real estate world, the long-anticipated market correction will please some people who are able to afford a lower-priced home, but it will displease sellers and everyone who relies on ever-rising real estate tax revenues. A big drop in revenue — especially if the real estate downturn is part of an overall economic slowdown — will cause a lot of city and state programs to go on an unwanted diet.

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