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"Because the housing bubble was not driven by supply and demand." .... except in San Francisco. Everyone wants to live here, and Facebook, Twitter, etc. are tur

by ajays 13y ago

"Because the housing bubble was not driven by supply and demand." .... except in San Francisco. Everyone wants to live here, and Facebook, Twitter, etc. are turning out paper millionaires by the bushel. Expect the house prices to tick up again once Twitter IPOs. There is some construction now[1] (just walk down Market street from the Castro), but I think the number of techie millionaires being minted seems to exceed the number of dwellings under construction. Plus: there is the externality of outside money. I've heard of buyers from PRC paying cash down, sight unseen, for properties in desirable neighborhoods [2] [3]. A lot of the analysis such as the one in this article assumes a somewhat closed market; but outside money flowing in can change the dynamics significantly. [1] http://sf.curbed.com/archives/2013/07/25/the_40_most_notable_new_developments_currently_under_construction.php http://sf.curbed.com/archives/2013/07/25/the_40_most_notable... [2] http://www.forbes.com/sites/kenrapoza/2013/07/10/chinese-to-spend-billions-on-american-real-estate/ http://www.forbes.com/sites/kenrapoza/2013/07/10/chinese-to-... [3] http://www.sfexaminer.com/sanfrancisco/chinese-real-estate-buyers-flocking-to-peninsula/Content?oid=2184205 http://www.sfexaminer.com/sanfrancisco/chinese-real-estate-b...

talmand 13y ago
I would say the housing bubble was driven by supply and demand, just not traditional home-buying supply and demand. Houses were being treated as day-to-day commodities, which is bad for people who wish to actually live in houses and not make money off of them. I was in Vegas during the start of the housing bubble and all I saw were investors buying houses to flip immediately for big profit selling to other investors who thought the same. Anyone who actually wanted to buy a house to live in was required to get caught up in a risky mortgage option that left many of them in serious problems when their house was suddenly worth less than half of what they owed on it. We looked at a house at the start of the decline and offered $50,000 less than asking. They laughed at us and we stopped bothering to look. Less than a year later the same house was for sale for more than $100,000 less than our offer. The realtor who showed us houses later moved out-of-state so she could earn a living. Someone I knew told me about his friend that bought a house, did bare updates to it, and sold it within a month for nearly a $100,000 profit. He was gleeful at the idea you could do such a thing. I told him that was good for his friend but incredibly bad for everyone else in the city. About a year or so later I was shown to be correct beyond my worst doomsday predictions. I'm seeing the same things I saw in Vegas starting again.

by ajays 13y ago

talmand 13y ago

I would say the housing bubble was driven by supply and demand, just not traditional home-buying supply and demand. Houses were being treated as day-to-day commodities, which is bad for people who wish to actually live in houses and not make money off of them. I was in Vegas during the start of the housing bubble and all I saw were investors buying houses to flip immediately for big profit selling to other investors who thought the same. Anyone who actually wanted to buy a house to live in was required to get caught up in a risky mortgage option that left many of them in serious problems when their house was suddenly worth less than half of what they owed on it. We looked at a house at the start of the decline and offered $50,000 less than asking. They laughed at us and we stopped bothering to look. Less than a year later the same house was for sale for more than $100,000 less than our offer. The realtor who showed us houses later moved out-of-state so she could earn a living. Someone I knew told me about his friend that bought a house, did bare updates to it, and sold it within a month for nearly a $100,000 profit. He was gleeful at the idea you could do such a thing. I told him that was good for his friend but incredibly bad for everyone else in the city. About a year or so later I was shown to be correct beyond my worst doomsday predictions. I'm seeing the same things I saw in Vegas starting again.