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Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is

Thats not the case here. The financial industry is not driving up rents and costs in San Francisco. The pure amount of private wealth pouring into the area is. Thats the dramatic shift this time around -- this isn't a bubble propped up by lending -- this is a bubble due to the fact that we are living in a time where the rich _have so much money they dont know what to do with it._

klenwell 10y ago
Well, true, I suppose. Demand directly is driving up rents. And San Francisco is a special case because of its geographic constraints. It is almost like a literal geographic bubble that formed on the bay there. My conclusions reflect more generally I'm seeing and experience in Southern California, which isn't quite so geographically constrained. I agree it's not the same kind of bubble we saw when strippers (to borrow the example from The Big Short) were carrying 5 mortgages in Florida. And it explains why housing prices never fell there or really here in Southern California to the extent I was expecting (and really hoping) back after the crash. Still, I imagine most of that private wealth that is pouring in there and here is either connected with the financial industry directly or indirectly. At one end, you've got the financial industry financing everything, from mattresses to cars to college education, which spurs demand and price inflation. On the other end, you've got a global wealthy elite for whom all real estate is local. They are small proportionally but still large enough in aggregate to quickly exhaust limited edition luxury items like residential property offerings in San Francisco, Vancouver, London, etc. Anyway, that's the simplified model I've been operating on for the last few years. A weird combination of the super rich shopping where they please and local middle class Americans, hopped up on credit, trying to compete with them in select desirable areas.

klenwell 10y ago

Well, true, I suppose. Demand directly is driving up rents. And San Francisco is a special case because of its geographic constraints. It is almost like a literal geographic bubble that formed on the bay there. My conclusions reflect more generally I'm seeing and experience in Southern California, which isn't quite so geographically constrained. I agree it's not the same kind of bubble we saw when strippers (to borrow the example from The Big Short) were carrying 5 mortgages in Florida. And it explains why housing prices never fell there or really here in Southern California to the extent I was expecting (and really hoping) back after the crash. Still, I imagine most of that private wealth that is pouring in there and here is either connected with the financial industry directly or indirectly. At one end, you've got the financial industry financing everything, from mattresses to cars to college education, which spurs demand and price inflation. On the other end, you've got a global wealthy elite for whom all real estate is local. They are small proportionally but still large enough in aggregate to quickly exhaust limited edition luxury items like residential property offerings in San Francisco, Vancouver, London, etc. Anyway, that's the simplified model I've been operating on for the last few years. A weird combination of the super rich shopping where they please and local middle class Americans, hopped up on credit, trying to compete with them in select desirable areas.