Unless you are new around these parts, you’ll probably know that spending money on print advertising isn’t what I consider to be a good investment of marketing budget dollars. But I figure I owe you more than a rant about how supermodel-skinny the local glossy print publication for real estate has become. Instead, I figured I’d take a look at brokerage page share (number of pages paid for by a brokerage divided by total pages in the most recent issue is equal to brokerage page share) in the most recent issue and compare that to brokerage market share. The idea behind this grand comparison is to see if advertising in the primary SF glossy real estate magazine has any correlation with actual market share (as measured in either units sold or dollar volume)…

May 12 - 25 San Francisco Issue

The May 12 – 25 issue has actually put on a little bit of weight when compared to its March edition, having added four pages of advertising (which may or may not be related to the crazy specials they were advertising a few months ago, but I digress). This issue has a total of 56 pages of advertising if you count the front cover, inside front cover, back cover, and inside back cover (which I normally haven’t been counting as pages, but probably should since for a big enough check they too can be yours).

Market Share vs. Page Share

Real Estate brokerages seem to fall into one of three categories – the first category is those brokerages that are “under-represented” in glossy print marketing (red or orange bar much larger than blue bar), meaning they have a greater market share than indicated by their advertising page share in the Real Estate Times. The next category is for those brokerages that are roughly “at parity” between their market share and page share. And finally, there are those that are “over-represented” (blue bar much larger than orange or red bar) in page share when compared to their market share.

The numbers for market share are from Clarus AgentMetrics, which pulls its data from the San Francisco MLS. Market share is for the past year.

Those that are under-represented include Sotheby’s, Hill & Co., Pacific Union, Zephyr and Paragon.

Brokerages that are at roughly at parity between market share and page share would include Herth and Coldwell Banker.

Which leaves the rest as being over-represented in the magazine when comparing page share to actual market share: Brown & Co., Vanguard, Prudential, Climb, Alain Pinel, and McGuire.

So, in conclusion, it would seem to me that you could conclude that smaller brokerages try and make themselves look bigger by having a great presence in print advertising. Or perhaps it could be that spending so much money on print advertising leads to a smaller brokerage…

The language comes from recovery groups, but today I’m applying it to real estate. From a recent CAR presentation about the state of the market, past, present and future comes a slide titled “Hitting Bottom: Sales 2007, Prices 2009″. The slide looks at 40 years of California real estate market data, charting both the number of sales of existing detached homes and the median price at which the homes sold. It’s a fairly high level look at California real estate trends, and while it can’t speak to what has happened in any particular local market, I still think it is interesting for some historical perspective in the California real estate market.

According to the California Association of Realtors data, the number of sales hit bottom in California in 2007, with a 44% decrease from the number of units sold in peak year 2005. The median price hit bottom two years later (insert joke about sellers in denial here) in 2009.

If you look at other contractions, you see the biggest decrease in volume actually occurred between 1978 and 1982, when there was a 61% decrease in sales of existing detached single family homes.  However, even during that time from the median price was actually increasing, unlike the plummet in median price that happened between 2007 and 2009.

The other big slump in the volume of single family homes happened between 1988 and 1992, when volume was down 25% and median prices were essentially flat.

So has the real estate market made amends for its addictive behavior? Has it finally recognized a higher power (interest rates? mortgage underwriting standards? national debt?)

Or are we just in court-ordered rehab for the equivalent of a 30 day dry-out period, with California real estate soon to return to it’s binging ways, like Lindsay Lohan?

Or should I just hang up the metaphor and get back to my day job?

We are into the final month of the first quarter of the year, so how is the real estate market in San Francisco looking so far? There were 273 deals recorded in the San Francisco multiple listing service in the month of February, which is up just ever-so-slightly from February 2010 when 270 were recorded. There are some interesting trends in the mix, though. Single family home sales are down about 8%,  while condominium sales are up by almost 25%.

I would suggest that the increase in condo closings is due most likely to a small bit of easing in the condominium financing market (I’m not saying its easy, I’m just saying that it is easier than it has been). The actual number of condominium transactions is actually higher, since not all new construction sales (One Hawthorne, The Millennium Tower, 1 Ecker, SF Blu, and the Artani to name most of the larger projects) are reported to the MLS.

February 2010 vs. February 2011 Sales Volume, San Francisco Residential Sales

Tenancy-in-Common (TIC) deals are down by roughly 1/3, which doesn’t surprise me in the least. Fewer large TIC projects are coming to market, condos are more affordable for many buyers, and the challenges of financing a TIC have drastically decreased the interest in this market segment. I’ve heard too many recent horror stories about TIC resales, but I’ll spare you all the gory details (or perhaps  just save them for another post).

Stock Co-Ops have always been a very small segment of the market in San Francisco, so I wouldn’t read to much into the data when we have such a small volume. It’s kind of like turning two. You might be twice as old as you were a year ago, but at the end of the day you are still only two!

Finally, loft sales are down just as well, they’ve had a tough time retaining value since most of the new construction in town is in their neighborhood (SOMA/South Beach) and shiny and new can be hard to compete against, particularly when developers are making concessions.

I didn’t see much that surprised me in these numbers, what about you?