4 ms·

Does that imply the housing prices will grow even more in 2017? The new riches will buy houses, which will raise the housing prices even more?

bin01 10y ago
Most likely. If you think its unaffordable right now, wait until Uber, Airbnb IPO's.
rconti 10y ago
Hate to say it, but 2016 may have been the time to buy. (Well, other than every year before it..) The Peninsula market has been slow. I know, because I'm hoping our house appreciates in value enough to insulate us from the eventual crash :D http://www.almanacnews.com/news/2016/12/29/atherton-no-longer-is-the-most-expensive-forbes-says http://www.almanacnews.com/news/2016/12/29/atherton-no-longe...
- kspaans 10y ago
  The good ol' market timing strategy. ;)
  - wtvanhest 10y ago
    I wish there was a way to help people understand how bad market timing is. No amount of explaining will help.
    - kspaans 10y ago
      There is! :D http://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/ http://qz.com/487013/this-game-will-show-you-just-how-foolis... It starts at a random point in the stock market over the last 10 years or so, and you get to sell once and buy once. I tried 3 or 4 times when I first found it and only beat the market once.
      - sfifs 10y ago
        I did this as a Monte Carlo simulation on the Indian stock market and concluded actively managed funds and systematic investment plans are basically fleecing investors. I subsequently only do passive index funds or buy options if I want to take a risk
  - deleted 10y ago
    [deleted]
  - tormeh 10y ago
    Markets are very short-term, though, so you can time the market. It's just hard to time it exactly. All investors want to sell 5 minutes before the crash. It's impossible for a normal person. However, investors generally don't want to sell 5 months before the crash. On many occasions it has been widely known that something is a bubble, but people keep investing in that thing because they expect the bubble to grow a little more before it pops. If you're willing to watch the market grow for months after you've sold then I think it's possible to time the market. This is not professional investment advice, btw. It's somewhat outside of orthodoxy. I would do my own research before trusting me.
    - wtvanhest 10y ago
      This is simply not true. It is basically never widely known when there is a bubble, that is why there is a bubble. There are lots of false positives and false negatives. No one has successfully timmed the market over a long period of time.
ChuckMcM 10y ago
Sort of depends but historically "exits" (whether they are by IPO or acquisition) has kept a steady supply of "well qualified buyers" in the market. But the trend lines are pretty linear.
twblalock 10y ago
The number of new rich people created by IPOs is a minority of the aggregate demand for housing. Plenty more people are moving to the area from elsewhere.
- aetherson 10y ago
  In terms of driving housing prices up, I'd expect growth in the stock prices of the bigger companies to be a bigger deal. If Google's stock appreciates 20% (or Apple's, or Microsoft's, or a rising market helps lots of companies out 5%), that affects a much larger number of people with equity than does adding maybe 100 millionaires. Especially if the main thing keeping a lot of people out of the market is raising a down payment, not affording the monthly mortgage. To make a down payment, you "only" need a few 100k, not millions. It's in reach for people receiving significant equity value from their employers along with strong salaries, you don't need to get boosted into the ultra-rich.
  - mathattack 10y ago
    Some of it is geographic too. Apple/Google/LinkedIn impacts Mountain View, Sunnyvale and Cupertino. (Palo Alto is already through the roof) Less of an impact in the city where other dynamics are also in play.
    - IvarTheHomeless 10y ago
      And San francisco
- edblarney 10y ago
  "The number of new rich people created by IPOs is a minority of the aggregate demand for housing. " 1) A lot of new employees who make 1-2 millions (maybe not rich, but 'some money') means more demand on housing prices. 2) It does not take a lot to keep the bubble going. Less than 2% of the buyers, if they are 'price inelastic' (i.e. they'll pay whatever the asking price is) is enough to keep a bubble going. This happened in Vancouver - as soon as foreign buyers paused due to new taxes, prices fluxed quickly. They don't represent a large chunk of the buyers.
edblarney 10y ago
"Does that imply the housing prices will grow even more in 2017?" It depends on Fed rates. If rates start to crawl up, you could see some crazy devaluations in housing. Rates are historically low - so low there's a lot of leverage in homes. A 1 point change at the low end has much more difference than a 1 point change at the high end. Slightly higher rates + a couple of nice IPO's would be good for everyone. Not too high though :) or else VC's will have less money for startups :)
shmerl 10y ago
Most don't get rich on IPOs.

bin01 10y ago

Most likely. If you think its unaffordable right now, wait until Uber, Airbnb IPO's.

rconti 10y ago

Hate to say it, but 2016 may have been the time to buy. (Well, other than every year before it..) The Peninsula market has been slow. I know, because I'm hoping our house appreciates in value enough to insulate us from the eventual crash :D http://www.almanacnews.com/news/2016/12/29/atherton-no-longer-is-the-most-expensive-forbes-says http://www.almanacnews.com/news/2016/12/29/atherton-no-longe...

kspaans 10y ago
The good ol' market timing strategy. ;)
- wtvanhest 10y ago
  I wish there was a way to help people understand how bad market timing is. No amount of explaining will help.
  - kspaans 10y ago
    There is! :D http://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/ http://qz.com/487013/this-game-will-show-you-just-how-foolis... It starts at a random point in the stock market over the last 10 years or so, and you get to sell once and buy once. I tried 3 or 4 times when I first found it and only beat the market once.
    - sfifs 10y ago
      I did this as a Monte Carlo simulation on the Indian stock market and concluded actively managed funds and systematic investment plans are basically fleecing investors. I subsequently only do passive index funds or buy options if I want to take a risk
- deleted 10y ago
  [deleted]
- tormeh 10y ago
  Markets are very short-term, though, so you can time the market. It's just hard to time it exactly. All investors want to sell 5 minutes before the crash. It's impossible for a normal person. However, investors generally don't want to sell 5 months before the crash. On many occasions it has been widely known that something is a bubble, but people keep investing in that thing because they expect the bubble to grow a little more before it pops. If you're willing to watch the market grow for months after you've sold then I think it's possible to time the market. This is not professional investment advice, btw. It's somewhat outside of orthodoxy. I would do my own research before trusting me.
  - wtvanhest 10y ago
    This is simply not true. It is basically never widely known when there is a bubble, that is why there is a bubble. There are lots of false positives and false negatives. No one has successfully timmed the market over a long period of time.

ChuckMcM 10y ago

Sort of depends but historically "exits" (whether they are by IPO or acquisition) has kept a steady supply of "well qualified buyers" in the market. But the trend lines are pretty linear.

twblalock 10y ago

The number of new rich people created by IPOs is a minority of the aggregate demand for housing. Plenty more people are moving to the area from elsewhere.

aetherson 10y ago
In terms of driving housing prices up, I'd expect growth in the stock prices of the bigger companies to be a bigger deal. If Google's stock appreciates 20% (or Apple's, or Microsoft's, or a rising market helps lots of companies out 5%), that affects a much larger number of people with equity than does adding maybe 100 millionaires. Especially if the main thing keeping a lot of people out of the market is raising a down payment, not affording the monthly mortgage. To make a down payment, you "only" need a few 100k, not millions. It's in reach for people receiving significant equity value from their employers along with strong salaries, you don't need to get boosted into the ultra-rich.
- mathattack 10y ago
  Some of it is geographic too. Apple/Google/LinkedIn impacts Mountain View, Sunnyvale and Cupertino. (Palo Alto is already through the roof) Less of an impact in the city where other dynamics are also in play.
  - IvarTheHomeless 10y ago
    And San francisco
edblarney 10y ago
"The number of new rich people created by IPOs is a minority of the aggregate demand for housing. " 1) A lot of new employees who make 1-2 millions (maybe not rich, but 'some money') means more demand on housing prices. 2) It does not take a lot to keep the bubble going. Less than 2% of the buyers, if they are 'price inelastic' (i.e. they'll pay whatever the asking price is) is enough to keep a bubble going. This happened in Vancouver - as soon as foreign buyers paused due to new taxes, prices fluxed quickly. They don't represent a large chunk of the buyers.

edblarney 10y ago

"Does that imply the housing prices will grow even more in 2017?" It depends on Fed rates. If rates start to crawl up, you could see some crazy devaluations in housing. Rates are historically low - so low there's a lot of leverage in homes. A 1 point change at the low end has much more difference than a 1 point change at the high end. Slightly higher rates + a couple of nice IPO's would be good for everyone. Not too high though :) or else VC's will have less money for startups :)

shmerl 10y ago

Most don't get rich on IPOs.