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Real estate has very very sticky prices when it comes to down markets, because those who hold real estate have every reason to believe that their speculation on
by epistasis 4y ago
Real estate has very very sticky prices when it comes to down markets, because those who hold real estate have every reason to believe that their speculation on ever-increasing prices will be well rewarded.
San Francisco in particular has done everything it can to reward speculation and higher prices by opposing development, thereby greatly enriching those in real estate.
Weathering one to two years of missed rent might be very well worth what they can get on the other side. In anti-development areas like San Francisco, the profits from real estate appreciation are one of the most important aspects of the financial side of the property, and rents often take a back seat.
- JumpCrisscross 4y ago> those who hold real estate have every reason to believe that their speculation on ever-increasing prices will be well rewarded They’re also leveraged. Renting at a lower rate threatens insolvency.
- epistasis 4y agoYes, though that's mostly with newer builds that are just starting to rent out. After a few years, rent appreciation in SF makes the initial mortgage requirements for renting moot, for the most part.
- JumpCrisscross 4y ago> rent appreciation in SF makes the initial mortgage requirements for renting moot Assuming they don’t refinance. Which a lot of them did when rates were low.
- epistasis 4y agoOh good point!!