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The best cure for high prices is high prices. Very few trust that supply vs demand doesn't work, but it absolutely does. Sure there will be temporary spikes i

The best cure for high prices is high prices. Very few trust that supply vs demand doesn't work, but it absolutely does. Sure there will be temporary spikes in price, but as rents go to ridiculous heights (I think $5000 for a 2 br condo is utterly ridiculous, and that prices is about 5 years old in SOMA), it will abate at some point. As long as there isn't a monopoly, or people aren't manipulating the markets, fair and properly functioning markets will self-correct. Always.

ericd 10y ago
It's very debatable whether the SF property market could be considered a fair and properly functioning market, given the massive impediments to new construction, legislative rent controls, and crazy tax breaks for longtime residents.
- pfarnsworth 10y ago
  Of course it's properly functioning. There is a ton of demand and a lack of supply. Of course prices are going to rise and that's perfectly okay. But they can't rise ad infinitum. I think we're seeing the limits of how high prices people are willing to spend, and rising interest rates are going to limit that even further. I'm expecting a precipitous plunge in >$2M houses and the sweet spot will be houses in the $750k range after interest rates limited the crazy market.
  - ericd 10y ago
    It's functioning, but I wouldn't say it's functioning properly. Prices have had to rise much farther than they would in a less encumbered regulatory environment, and as a result, it's been very disruptive for a far larger number of people than it had to be. If there was less encumbrance, we would have seen a housing construction boom well before the prices got to the current, rather ridiculous levels. Compare the number of yearly housing starts and pricing in Seattle to see a more functional market, which happens to be absorbing a lot of SF's excess demand. If your bar for a properly functioning market is that prices rising have caused normalizing factors to kick in, then yes, of course that's the case, as always happens in markets that aren't completely messed up.
zeroed 10y ago
They are manipulating markets. Apartment communities (I first saw this in Bay area) are doing whatever they can to make sure you end up in a particular month of a year. This is summer, at least now. Most of them are doing this. Some use lower prices for 6-7-14 months (the number depends on what month right now). I personally signed up for 14 months without realizing what would happen to me. Some try to just cheat. One of apartment communities sent me a contract for 13 months without mentioning a word. Fortunately I knew about this scam at that time and didn't sign it. So as long as many people need to renew their contracts at the same time - boom! Artificially heated market. I hate them so much for doing it. I wish more people were aware of it.
- digler999 10y ago
  What if it's a more benign reason, like they just want to prevent leases from ending in fall or winter when the demand is lower ?

ericd 10y ago

It's very debatable whether the SF property market could be considered a fair and properly functioning market, given the massive impediments to new construction, legislative rent controls, and crazy tax breaks for longtime residents.

pfarnsworth 10y ago
Of course it's properly functioning. There is a ton of demand and a lack of supply. Of course prices are going to rise and that's perfectly okay. But they can't rise ad infinitum. I think we're seeing the limits of how high prices people are willing to spend, and rising interest rates are going to limit that even further. I'm expecting a precipitous plunge in >$2M houses and the sweet spot will be houses in the $750k range after interest rates limited the crazy market.
- ericd 10y ago
  It's functioning, but I wouldn't say it's functioning properly. Prices have had to rise much farther than they would in a less encumbered regulatory environment, and as a result, it's been very disruptive for a far larger number of people than it had to be. If there was less encumbrance, we would have seen a housing construction boom well before the prices got to the current, rather ridiculous levels. Compare the number of yearly housing starts and pricing in Seattle to see a more functional market, which happens to be absorbing a lot of SF's excess demand. If your bar for a properly functioning market is that prices rising have caused normalizing factors to kick in, then yes, of course that's the case, as always happens in markets that aren't completely messed up.

zeroed 10y ago

They are manipulating markets. Apartment communities (I first saw this in Bay area) are doing whatever they can to make sure you end up in a particular month of a year. This is summer, at least now. Most of them are doing this. Some use lower prices for 6-7-14 months (the number depends on what month right now). I personally signed up for 14 months without realizing what would happen to me. Some try to just cheat. One of apartment communities sent me a contract for 13 months without mentioning a word. Fortunately I knew about this scam at that time and didn't sign it. So as long as many people need to renew their contracts at the same time - boom! Artificially heated market. I hate them so much for doing it. I wish more people were aware of it.

digler999 10y ago
What if it's a more benign reason, like they just want to prevent leases from ending in fall or winter when the demand is lower ?