5 ms·

> When that's gone, the Valley will decline. When the Valley declines, the local real estate bubble will pop. I wouldn't be so sure of that. The appeal of a pa

by UVB-76 13y ago

> When that's gone, the Valley will decline. When the Valley declines, the local real estate bubble will pop. I wouldn't be so sure of that. The appeal of a particular location as a place to live will usually long outlast the activities or culture that put that location on the map in the first instance. San Francisco is a strong brand, and demand for housing in the city is going to remain strong for a long time to come.

afterburner 13y ago
Yes; San Francisco was probably an interesting and desireable place to live even before anything tech related happened there.
- Zimahl 13y ago
  Agreed, but the OP's point was that while obviously desirable it wasn't at the price that it currently stands.
  - dragonwriter 13y ago
    > Agreed, but the OP's point was that while obviously desirable it wasn't at the price that it currently stands. Median home prices (which are actually median prices of homes sold, which is important to keep track of) in California are deceptive right now because there is very little inventory for sale. What is being sold is mostly being sold at high prices, because very little is being sold at all, what is being sold tends to be sold by people who are fairly well off (and thus, to be high end) because the collapse hollowed out much of the rest of the market, and banks are a lot more reluctant to loan than they were before the crash, so the people that are able to buy tend to have lots of money. Its not a rapid rise in market value of existing real estate, or even a rapid rise in the price for like real estate.
tomkarlo 13y ago
It's worth noting that SF is already on it's 3rd or 4th major evolution; between the Gold Rush, the big shipbuilding days, the 1906 earthquake, the WWII period and 90's tech bubble, it's survived a series of major changes and collapses and rebuilt successfully. I don't know Detroit's history that well, but it seems like it's basically had one major act (the auto industry) and that's still playing out.
- jared314 13y ago
  The timeline you described has events separated by 40 or more years. I cannot practically plan my life around events separated by almost half a generation.
  - tomkarlo 13y ago
    I chose a few events from a 300 year history. There are lots of micro cycles - if you note from the article, current prices are only returning to previous highs from 2007. So in just 6 years we've gone through a cycle.
    - jared314 13y ago
      The previous highs from 2007 were real estate bubble prices. I don't consider a return to over-inflated prices a rebound. Is your point that everything is a cycle, or that SF will rebound after this new bubble?
      - tomkarlo 13y ago
        Whenever you return to a previous high, it was a bubble / peak. Because otherwise it wouldn't now be a "previous high". That doesn't mean the new price is a bubble or not - it's just inherent in the definition of the term. The 2000 peak was a big "previous high" too, and yet even in the depth of the last 2007-2012 cycle, prices didn't drop below that level. SF prices 1996-Mar 2013 http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-Shiller_HT_1996-2011.jpg http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-...
Androsynth 13y ago
SF is only like 10% of the population of the SF/Oak/SJ bay area triangle. It may have the best brand in the area, but what happens when the housing prices drop in fremont/milpitas and then in santa clara/san jose and then starts working its way up the peninsula? I think housing in SF is very dependent on 1) the tech boom and 2) the baby boomers who own property in the south/east bay (but wont sell because they missed out on the 2008 sales price). Both of which are temporal in nature. SF may always be a enclave of the wealthy, but if the rest of the bay area goes to shit, prices will drop. It may not get massacred like SJ eventually will (after the baby boomers houses start hitting the market en masse), but even those wealthy enough to live there will feel it.
- hkmurakami 13y ago
  I'm part of one of those boomer families that have owned their house in the SF peninsula for many years (we're coming up on 25 years now), and many of us have no intention of ever selling because prop 13 has kept property taxes very low and selling would mean that we'd only be able to afford a much smaller/inconvenient place for the same upkeep cost. What will change this is when the wave of deaths hit the boomer generation in the next 10-20 years. Once that hits, houses will be reassessed at current property values, and the house will often go on sale to settle estate taxes and to liquify the value in the house so that it can be split between the siblings. However, the side effect will be that Peninsula housing rents will rise to adjust to the new higher property tax costs. That's right - we haven't soon the worst of rents with respect to single family homes yet... shudder

by UVB-76 13y ago

afterburner 13y ago

Yes; San Francisco was probably an interesting and desireable place to live even before anything tech related happened there.

Zimahl 13y ago
Agreed, but the OP's point was that while obviously desirable it wasn't at the price that it currently stands.
- dragonwriter 13y ago
  > Agreed, but the OP's point was that while obviously desirable it wasn't at the price that it currently stands. Median home prices (which are actually median prices of homes sold, which is important to keep track of) in California are deceptive right now because there is very little inventory for sale. What is being sold is mostly being sold at high prices, because very little is being sold at all, what is being sold tends to be sold by people who are fairly well off (and thus, to be high end) because the collapse hollowed out much of the rest of the market, and banks are a lot more reluctant to loan than they were before the crash, so the people that are able to buy tend to have lots of money. Its not a rapid rise in market value of existing real estate, or even a rapid rise in the price for like real estate.

tomkarlo 13y ago

It's worth noting that SF is already on it's 3rd or 4th major evolution; between the Gold Rush, the big shipbuilding days, the 1906 earthquake, the WWII period and 90's tech bubble, it's survived a series of major changes and collapses and rebuilt successfully. I don't know Detroit's history that well, but it seems like it's basically had one major act (the auto industry) and that's still playing out.

jared314 13y ago
The timeline you described has events separated by 40 or more years. I cannot practically plan my life around events separated by almost half a generation.
- tomkarlo 13y ago
  I chose a few events from a 300 year history. There are lots of micro cycles - if you note from the article, current prices are only returning to previous highs from 2007. So in just 6 years we've gone through a cycle.
  - jared314 13y ago
    The previous highs from 2007 were real estate bubble prices. I don't consider a return to over-inflated prices a rebound. Is your point that everything is a cycle, or that SF will rebound after this new bubble?
    - tomkarlo 13y ago
      Whenever you return to a previous high, it was a bubble / peak. Because otherwise it wouldn't now be a "previous high". That doesn't mean the new price is a bubble or not - it's just inherent in the definition of the term. The 2000 peak was a big "previous high" too, and yet even in the depth of the last 2007-2012 cycle, prices didn't drop below that level. SF prices 1996-Mar 2013 http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-Shiller_HT_1996-2011.jpg http://my.paragon-re.com/Docs/General/SixtyFortyImages/Case-...

Androsynth 13y ago

SF is only like 10% of the population of the SF/Oak/SJ bay area triangle. It may have the best brand in the area, but what happens when the housing prices drop in fremont/milpitas and then in santa clara/san jose and then starts working its way up the peninsula? I think housing in SF is very dependent on 1) the tech boom and 2) the baby boomers who own property in the south/east bay (but wont sell because they missed out on the 2008 sales price). Both of which are temporal in nature. SF may always be a enclave of the wealthy, but if the rest of the bay area goes to shit, prices will drop. It may not get massacred like SJ eventually will (after the baby boomers houses start hitting the market en masse), but even those wealthy enough to live there will feel it.

hkmurakami 13y ago
I'm part of one of those boomer families that have owned their house in the SF peninsula for many years (we're coming up on 25 years now), and many of us have no intention of ever selling because prop 13 has kept property taxes very low and selling would mean that we'd only be able to afford a much smaller/inconvenient place for the same upkeep cost. What will change this is when the wave of deaths hit the boomer generation in the next 10-20 years. Once that hits, houses will be reassessed at current property values, and the house will often go on sale to settle estate taxes and to liquify the value in the house so that it can be split between the siblings. However, the side effect will be that Peninsula housing rents will rise to adjust to the new higher property tax costs. That's right - we haven't soon the worst of rents with respect to single family homes yet... shudder