Market Statistics

San Francisco Values: Recovering, if Ever So Slightly

Of the 11 neighborhoods we are tracking for 2 bedroom condominiums in San Francisco, 6 showed sale prices higher in the first half of 2010 over 2009 numbers.  For the 13 neighborhoods in which we are tracking single family homes, 8 showed improvement in the same period.  Interestingly enough, for TICs, all three of the neighborhoods under consideration showed improvement.

I can almost hear you asking, well, what does this mean?  I think it means that the market is stabilizing and sluggishly trying to improve, but that it depends very much on the inventory being offered.  In Glen Park, for example, there were a couple of very large, brand new homes sold that were very dissimilar to the inventory that closed in 2009.  The extreme sale prices for these homes (over 1.6MM) had a dramatic affect (+19%) on the average sale price out of only 11 sales in the first half of 2010.  I would say this is an anecdotal improvement in values.  I would contrast this with the 3.3% improvement in values in Pacific Heights/Cow Hollow based on 27 sales, which I think is a more valid reflection of marketplace recovery.

As always, if you want to check in on the value of your home, I’m happy to work it up for you!

Now for the details (click on image to see larger):

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Market Update: July 2010, Mid-Year Review

Median prices and average dollar per square foot figures are generalities, which may be affected by other market factors besides changes in value. All information contained herein is derived from sources deemed reliable, but may contain errors and omissions, and is not warranted. Sales not reported to MLS are not included in these analyses.
Median Sales Prices
The Median Sales Price is that price at which half the properties sold for more and half for less. Many agents believe that SF homes values started to climb in the last quarter, and, as shown in the chart, houses and condos did hit their highest median prices since 2008. However, they’re only about 1% above late 2009, and still within 3-4% of prices 15 months ago. The new quarter will show whether an established upward trend in prices has begun, instead of the recent zigzaging up and down. Remember that sales prices are 30-60 days behind the market: closed sales in June generally reflect offers accepted in April and May.
Paragon Real Estate Group

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Homes Accepting Offers
Despite all the news reports about declining home sales, in San Francisco at least, though we have seen a drop from the unusual spike in April (expiring Federal tax credits), activity in June was still the 4th strongest month in the last 2 years, 7% above June 2009, and almost equal to June 2008 (before the market downturn in September 2008). Last year, sales did not significantly slow in the summer.
Paragon Real Estate Group

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What’s Going to Happen Next?

The San Francisco Home Market: Bounce Back or Double Dip?
 

 

Yesterday, an extended piece on The Today Show rated San Francisco as the #1 housing market ripe for recovery. To see the video, go to http://today.msnbc.msn.com/, scroll down the page to the “Tech & Money” section, then click on the video “5 Housing Markets Ripe for Recovery.”
 
The following criteria for evaluating areas that are stabilizing and poised for recovery:
 
-affordability
-low rate of foreclosures
-appreciation (per National Assocation of Realtors)
-strong job market and low unemployment

San Francisco was the # 1 pick, in front of Pittsburgh, Phoenix, Memphis, and Charleston WV.

I hope the Today Show’s expert Barbara Corcoran is right!

Unfortunately, she may not be.  We live in a constant storm of analysis and opinion as to what is happening and will happen in real estate. Due to national statistics in December (and other economic indicators), some have predicted a nasty “double dip” in the home market subsequent to the recovery which began last spring. But the market goes into hibernation in December: there are far fewer transactions, mostly by first-time buyers purchasing at lower price points, while families and upper-end buyers generally withdraw for the holidays. When the data is reduced and skewed, it’s less reliable. January isn’t much better because it takes a while for the market to wake up.
 
Data is from sources deemed reliable but may contain errors, and is not warranted. Sales not reported to MLS, such as many new-development condo sales, are not reflected in these statistics. Median price is that price at which half the sales are above and half are below.
 
 

 

Therefore, the market data for February, as seen in the charts below, is of particular interest. While it’s unwise to make too much of one month’s data (a failing of many pundits), it is surprising how sharply February’s statistics indicate a strengthening market. That is not to say a double-dip isn’t possible — the state, national and world economies are still fragile — just that we are not yet seeing indications of one here in San Francisco. Those who have spent the last year waiting eagerly for further price declines have so far waited in vain. (For the record: according to the Case-Shiller index, home values in the 5-county SF Metro Area have increased 4 – 5% in 2009, but the city accounts for only a small percentage of those sales.) It will be interesting to see if the trends seen below continue, as spring gets under way — and what implications that might hold regarding price movements.

Paragon Real Estate Groupclick for larger imageHome Listings Accepting Offers
Considering February is a short month (with 2 national holidays), market demand was comparable to the highest levels we’ve seen in the past 18 months. February’s number was 50% higher than January, 80% higher than one year ago (during the market’s dark days), and 12% above February 2008.
 
Paragon Real Estate Groupclick for larger imageMedian List Price of Homes Accepting Offers
The most recent market data available is of listings accepting offers. (Sales prices are 30-60 days behind the market, as they reflect when the offer was accepted.) And the median list price of homes accepting offers is generally within a few percentage points of the final sales price. Assuming the steep December/ January drop was a seasonal anomaly, this chart shows little indication of either significantly increasing or decreasing prices. Indeed, the definitive trend is how stable the overall SF median price for homes under contract has been since spring 2009: $700,000 plus or minus about 3%.
 
Paragon Real Estate Groupclick for larger imageMarket Activity by Property Type
House and condo sales dominate the SF market, with TICs and 2-4 unit buildings far behind. The low number of closed sales in February reflects the reduced offer activity of the holiday season, and February’s accepted offers will close mostly in March and April. The average time it took for sold houses to accept an offer (59 days) was lower than that for condos (75 days), TICs (109 days) and 2-4 unit buildings (110 days), which reflects the heat of each market segment.
 
Paragon Real Estate Groupclick for larger imageNew Listings Coming on Market
New inventory has been increasing since early January, but as can be seen in the other charts, it is not keeping up with buyer demand. We may see a greater surge of new listings with the beginning of spring – certainly the hope of many buyers. This is a week by week chart of the past 6 months.
 
Paragon Real Estate Groupclick for larger imageHomes for Sale (w/o Accepted Offers)
Despite the increase in new listings, the number of active homes for sale — house, condo, TIC — over the last 3 months has been lower than at any time in the past 2 years. This reflects the anecdotal word from the field: strong buyer demand; lots of buyers touring open houses; very limited supply of appealing, well-priced homes to buy; often leading to multiple offers on those that do appear on market.
 
Paragon Real Estate Groupclick for larger imagePercentage of Listings with Accepted Offers
At over 22%, February had the highest percentage of San Francisco home listings with accepted offers of any month over the past 2 years, indicating a market heating up. When looking at homes between $500,000 and $700,000 — the price range with most sales in SF — the percentage increases to over 24%, the highest percentage for that price range in the past 2 years.
 
Paragon Real Estate Groupclick for larger imageAverage Days-on-Market for Homes Accepting Offers
The lower the days-on-market, the faster listings are accepting offers. February saw a big plunge in average days on market (to 47 days) for homes accepting offers. In fact, the change was so dramatic, it may be anomalous — or it may simply reflect pent-up demand, as buyers returning from the holidays jump upon an insufficient supply of inventory. It is the lowest average days-on-market number in the past 2 years.
 
Paragon Real Estate Groupclick for larger imageMonths-Supply-of-Inventory (MSI)
MSI is defined as that number of months required to sell the existing inventory of available homes at the current rate of sale: the lower the MSI, the stronger the demand as compared to supply. At an MSI of 3.1 months, February had the lowest MSI figure for SF homes of the past 2 years. The MSI for SF homes between $500,000 and $700,000 is an even lower 2.7 months. Usually MSI figures this low would be considered a clear “Sellers’ market,” but with difficult financing conditions and uncertainties regarding the economy, the balance of power between qualified buyer and motivated seller is currently more complicated.
 
Paragon Real Estate Groupclick for larger imageInventory Absorption: SF Home Market
The longer gray lines delineate “residual inventory”, i.e. that number of listings actively for sale on the last day of the month which were listed prior to the first day of the month: simply put, listings which have not accepted offers within 1 month of going on market. January and February saw the lowest amount of residual inventory in the last 2 years. Also the ratio of properties which have accepted offers to residual inventory is at the highest level in 2 years. Two more statistics indicating a strengthening market.
 
Paragon Real Estate Groupclick for larger imageSold Listings vs. Expired Listings
The green bars indicate sold listings and the purple bars the expired/ withdrawn listings in any given month. (Again, the low number of sales in January and February reflect the low number of accepted offers during the holidays.) Even with the relatively strong demand in SF since last spring, for every 3 homes that sold, another 2 listings expired without selling. The current market is unlike our (very hot, perhaps irrational) market of 2 – 3 years ago, when it seemed that virtually everything sold quickly. Most Buyers now ignore listings they consider overpriced, and homes not priced within 5% – 8% of perceived fair market value usually don’t even receive offers.
 
Paragon Real Estate Groupclick for larger imageLuxury Homes Accepting Offers
This 2-year chart delineates the number of San Francisco homes priced $1,500,000 and above which accepted offers in any given month. Luxury home sales rebounded in February 2010 from the doldrums of the holiday season, back up to the highest levels seen in the past year — but still substantially below the activity seen before the market meltdown in September 2008.
 
Paragon Real Estate Groupclick for larger imageLuxury Homes: % of Listings with Accepted Offers
At 19%, February saw the highest percentage of high-end listings ($1.5m and above) with accepted offers since July 2008, an obvious indication of increasing demand amid relatively low supply. A year ago, the percentage was a very low 7% (following the crash in the luxury home market after September 2008), and 2 years ago, during the hot luxury market, the percentage reached a high 28%.
 
Paragon Real Estate Groupclick for larger imageMortgage Rates
As March began, the average rate for 30-year fixed-rate loans once again fell below 5%, which is very low. Many analysts believe rates will increase after the Fed ends its bond buying program at the end of March, and though opinions vary, the consensus forecasts an approximate 1% increase by the end of 2010. 6% is still a low rate historically, but the increase would add significantly to the carrying cost of home ownership.

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Cocktail Chatter: How’s Real Estate Doing?

 

This is what I was asked at every party this past holiday season.  I’m sure you heard folks discussing this as well.  I’m happy to report that the news is not as bad as you might think!

Despite all the hype, the median home price (house and condo) in the city was remarkably stable in 2009, running between $685,000 and $710,000 from April through October 2009, then ticking up to $731,000 in November.  It is too soon to tell if November’s increase in median price is the beginning of a trend or just an anomalous blip. This is after the general 15% to 25% decline in values from their times of peak value in most neighborhoods.*  In comparison, in 2007, the median home price in the city hit $829,000.

While prices are down from each neighborhood’s “peak,” the city-wide median home sale price has been disproportionately affected because the low end has been disproportionately active.  This activity is being driven by the low interest rates available on government backed mortgages below $729,000.  Loan interest rates are a vital part of the home-purchase affordability equation because of their impact on both qualifying for a loan and the ongoing monthly cost of home ownership. Interest rates hit at all time low in late November. While it’s harder to qualify than in past years, the rates are fantastic.  If your home (or the home you want to buy) is well-priced and that price is below about $910,000, activity/competition will be high.  The further the value/price is away from $910,000, the fewer buyers there will be who can get a great interest rate, and there will be commensurately less activity.  ($729,000 is just about 80% of $910,000 and most loan products offering great rates require a minimum 20% down payment.)

More listings accepted offers in October than in any month in the past 2 years.  You can see that this is the case in the chart of recent sales.  All of these closings took place since December 1, 2009.  When I pulled the same sample data for my piece in August 2009, I had to include almost 2 months to get enough data! New ratifications began to taper off in November, which is common for the holidays, but the number of accepted offers was still higher than in November 2008 or 2007. The holiday season was a good time for buyers to make offers because there wasn’t as much competition from other buyers and sellers are eager to move on with their lives.  Now that it’s January, it can be a good strategy to have your agent review recently expired or withdrawn listings.  These homes may still be for sale – just taking an official break from marketing while waiting for spring.

These have been stressful times for all of us.  Before you worry about the value of your home, I encourage you to ask an expert.  Realtors spend all our time discussing, researching and thinking about property values.  So if you need to know about your home – just ask one of us!

*The southern neighborhoods hit hard by foreclosures have seen 25% – 40% declines. As has been the case since the foreclosure crisis began, the majority of bank-owned (REO) house sales occur in the city’s less affluent, southern border neighborhoods running from Oceanview to Bayview-indeed, a little more than half of all house sales in those neighborhoods are either REO or short sales. For REO condos, the main neighborhoods are SOMA, South Beach and Mission Bay, where most recent condo development has taken place. read more →

Update on “Decline from the Peak”

We have a lot to be thankful for in San Francisco. We have largely survived this real estate downturn without the enormous declines we are seeing on the news. However, they have been significant. Anyone in the market today on the seller side certainly can tell you that.

I thought it was a good time to check in and update the article from earlier this year “How Much Have San Francisco Home Values Declined Since their Peak?” Thankfully, many neighborhoods have not had a change since April, when values were even lower than in February, and some have even climbed a percent or two.

Below is an analysis of San Francisco neighborhoods comparing Average Dollar per Square Foot ($/sqft) at what is estimated to be peak value, to the average for sales occurring 10/15/08 – 4/1/09 (the market period right after the 9/15/08 financial markets meltdown), and then to the average for more recent sales occurring 5/1/09 – 10/30/09 (as home sales volume – and financial markets – surged again).

Different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales included were chosen to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high end and the ultra low end, which often distort averages.

Dollar per square foot is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, or exterior spaces. These figures are usually derived from appraisals, tax records or condo maps, but are sometimes unreliable (especially for older homes) or unreported altogether. There are often surprisingly wide variations of value within neighborhoods, and averages may be distorted by one or two sales substantially higher or lower than the norm. They may also be distorted by confidential sales, which are not uncommon at the upper end of the market. (For confidential sales, the list price, and not the sales price, is used for the calculation.)

Key to Estimated Peak-Value Period for the Chart Below:
*             Peak values estimated to have been reached 1/1/06 – 6/30/06
**           Peak values estimated to have been reached 1/1/07 – 6/30/07
***        Peak values estimated to have been reached 1/1/08 – 6/30/08

Changes in Average Dollar per Square Foot Values
for Selected San Francisco Neighborhoods & Property Types

Neighborhood
or District
Property Type
Price Range
Avg $/sq.ft. at Peak Value10/15/08 – 4/01/095/1/09 –
10/30/09
Change from 4/1/09Total Change from
Est. Peak Value
Bayview*House
$300k – 800k
$507/sq.ft.$294/sq.ft.$280/sq.ft.– 5%– 45%
Ingleside/ Hghts / Oceanview*House
$400k – 800k
$580$449$444– 1%– 23%
Excelsior/Portola*House
$400k – 800k
$600$457$450– 1.5%– 25%
Central/Outer Richmond **House
$700k – 1.4m
$569$488– 14%
Inner Mission**Condo
$500k – $800k
$621$496– 20%
Central/ Outer   Sunset**House
$500k –  900k
$626$533$501– 6%– 20%
Miraloma/ Sunnyside**House
$500k – 1m
$677$598$550– 8%– 19%
Hayes Valley/ Alamo/ NOPA***Condo
$500k – 900k
$684$602$559– 7%– 18%
SOMA**Condo
$500k – 900k
$689$553$562

+ 2%

– 18%
Neighborhood
or District
Property Type
Price Range
Avg $/sq.ft. at Peak Value10/15/08 – 4/01/095/1/09 –
10/30/09
Change from 4/1/09Total Change from
Est. Peak Value
Bernal Hghts***House
$500k – 1m
$651/sq.ft.$556/sq.ft.$567/sq.ft.+ 2%– 13%
St Francis Wd/W.
Portal/Forest H **
House
$800k – 2.5m
$687$585– 15%
Noe & Eureka Valleys***Condo
$500k – 1m
$751$675$613– 9%– 18%
South Beach***Condo
$500k – 1m
$785$681$640– 6%– 18%
Potrero Hill**House
$700k – 1.4m
$753$648– 14%
Russian/Nob/
Telegraph Hills***
Condo
$600k – 1.2m
$798$692– 13%
Noe & Eureka Valleys***House
$800k – 1.5m
$891$755$707– 6%– 21%
Pacific Hghts/  Marina (Dist 7)***Condo
$600k – 1.2m
$809$763$733– 4%– 9%
Most Expensive North SF Areas***House
$1.5m – $4m
$975$797– 18%


Averages are generalities and cannot account for the varieties in location, condition and amenities found in SF homes. Averages may be affected by unusual events or short-term trends, and do not necessarily reflect values for specific properties.  Average dollar per square foot values fluctuate even in a stable price market as they are impacted by individual sales, and changes of less than 3-4% should probably be ignored. All data from sources deemed reliable, but not guaranteed and may contain errors and omissions. Sales not reported to MLS – such as many new condo-development sales – are not included in this analysis.
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Recent Sales (Over, Under or At ask)

As I mention in my article on volume, more activity puts pressure on prices. As you can see in the table below, the number of transactions where the property is selling for more than the asking price, is sharply up from earlier this year, where even for single family homes, under 20% of transactions were yeilding a sales price over asking. We’re at a whopping 54% of single family home transactions closed in the last two weeks coming in over asking price.  To see more about earlier in the year, click see “Have we found the Floor?” from July 31, 2009

Last 2 weeks’ home sales in SF:   
 Over AskUnder AskAt AskTotal 
SFD39201372
% of sales54%28%18% 
Condos/TICs17411371
% of sales24%58%18% 
2-4 Unit Buildings29112
% of sales17%75%8% 
Total587027155
% of sales37%45%17% 

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At Last! Sales Volume Trending Up

In every category, even luxury, the number of homes sold is trending upwards. The charts below are not reflective of the price they are trading at, but generally higher market activity starts to put upward pressure on prices. The charts below show a two year period ending August 30, 2009.  Overall, my reading of these charts is that if you were waiting for the market to bottom out, it has already done so.  Also, it’s still a very good time to buy between 500k and $2MM as those curves have only just started to gently edge up.

Home Sales $500,000 & Under (It must be noted here that one of the reasons the growth in sales is so high is because there were fewer homes as a proportion of the market under $500,000 back in 2007.)

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Home Sales $501,000 – $999,000

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 Home Sales $1,000,000 – $1,999,999

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Home Sales $2,000,000 and Above

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Have We Found the Floor?

Yesterday, the Case-Shiller Index — considered the most objective index of US home prices — reported, as pertaining to April to May prices: “10-city and 20-city composites reported positive returns for the first time since the summer of 2006…the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.”

For the SF Metro Area (i.e. greater Bay Area, NOT just SF), C-S reported gains of .6% March to April, and 1.4% April to May. Year over year, C-S reported an overall metro area decline of 26.1%. Read the full article here.

From my own experience, I can happily say that things are picking up. Home of the Week 1617 Fulton went into escrow after just 5 days or so on the market with a pre-emptive offer. My listing at 640 Judah got three offers after just a short time on the market, and buyers who I am working with now are regularly competing in a field of 3 or more offers. To be clear, these deals are all well under the $1MM mark, and activity is definitely being driven by the availability of financing available at very low rates. Homes that are not eligible for these low rates – most TICs and homes requiring a loan over $729k are not moving nearly as briskly (if at all -oh so gorgeous Home of the Week 116 Sugarloaf has been on the market over a year and has been reduced from $7.5MM to a mere $4.5MM).

The below charts show that there has been a substantial increase in sales volume, and about a 20% decrease in homes selling under asking price.  Volume for the two weeks ended July 15 was 172% of what it was for the period ended March 18 of this year.  It is too soon to tell if the decrease in homes selling under asking price (and the commensurate increase in those selling over) means that prices are climbing.  However, my recent market experiences tell me that there has been a shift toward underpricing homes to attract attention (and multiple offers) in the “affordable” sectors of the market.

Well, it’s changes like these that keep things exciting and I am really happy to be participating in these busy times due to the support I get from all of you. Thanks, as always for your referrals and for letting me be your go-to person for your real estate needs.

(All data is from San Francisco MLS)Market Stats 73109 read more →

Market Update – Signs of Life (at last)!

In recent weeks, the number of listings accepting offers has increased substantially, while the number of price reductions and expired and withdrawn listings – though still high by historical standards – has decreased significantly. Months-supply-of-inventory (MSI), an indicator of seller supply and buyer demand, has also declined. (The higher the MSI, the greater the buyer advantage.) Whether this will prove to be the beginning of a durable resurgence for SF real estate or simply a springtime bounce, it is too soon to tell.

The area where most house sales are now occurring is Realtor District 10 (Bayview-Portola-Excelsior). Then comes District 2 (Sunset-Parkside), District 5 (Noe-Castro-Haight) and Bernal Heights. District 10, with the greatest number of foreclosure sales, has been hardest hit by price declines, and has roughly as many sales as Districts 2 and 5 combined – so it has had a massive impact on overall median price in SF. (Which is one reason why the overall city median home price is virtually worthless as an indicator of changes in market values.)

Most condo sales are occurring in South Beach-SOMA, then District 5 (Noe-Castro-Haight), and then District 7 (Pacific Heights-Cow Hollow-Marina). These numbers don’t include new development sales unreported to MLS – which would greatly increase the South Beach-SOMA sales numbers. The new developments are doing everything they can to move inventory right now.

Foreclosure Sales Update

Since mid-October 2008, 17% of house sales and 6% of condo sales in San Francisco have been REO (bank-owned) homes. The median sales price of an REO house during this period has been relatively stable at about $500,000; the median sales price for an REO condo has been $432,000. 78% of REO house sales have occurred in the less affluent south/southeast part of the city, stretching from Bayview to Oceanview. 85% of REO condo sales have been in the neighborhoods stretching south from SOMA along the east side of the city down to Bayview and across to Oceanview. The greater part of the city – northern, central and western neighborhoods – continues to be relatively unaffected by foreclosure sales. read more →

Appreciation & Depreciation of San Francisco Homes Since 1995

Below, median sales prices are calculated for 2-bedroom condos, 3-bedroom houses and 2-bedroom TICs in a number of SF neighborhoods over a variety of periods beginning with 1995 — when the last, great Sellers’ market began — and ending with the six months following the financial market meltdown in September 2008. (Its effect began to show up in mid-October sales.) Median price is a relatively crude statistical generality – especially in SF with its huge variety in property type, size, condition, curb appeal and architectural style – but it can be useful in assessing macro trends in the market. However, remember: for a specific home, only a specific market analysis is truly pertinent.

Since October 15th, year over year, the number of sales has dropped 20% for houses, 35% for condos, 53% for TICs and 46% for 2-4 unit buildings. But that masks significant changes in buying trends: the number of houses sold below $1,000,000 actually increased 4%, while sales of more expensive houses plunged over 50%. People are generally buying smaller, less expensive homes, and then, only those that stand out as excellent values. Less appealing homes – which still sold in earlier years (virtually everything sold during the boom years) – are not getting reflected in the current figures.

Some of the more affluent neighborhoods had too few sales to be statistically meaningful. For example, in the last 6 months, all of Pacific & Presidio Heights, Cow Hollow and the Marina had only 19 house sales, of all sizes and prices. St. Francis Wood had only 6 and Sea Cliff only 4. Roughly 50 – 70% of buyers of upper-end homes – who would typically be considered “willing and able” – can no longer get better financing rates without very large down payments. When that changes, we’ll be better able to assess values in that market segment. In the meantime, it is dominated by buyers with lots of cash.

Depending on your email system, you may have to give permission to download the following charts.




Further analyses of percentage changes in median and average prices, and dollars per square foot can be found here:
Percentage Declines Analysis read more →