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Problem is demand is increasing at a far greater rate than the supply. In fact, I think this is -- among several other factors -- one of the primary causes of t

by strlen 13y ago

Problem is demand is increasing at a far greater rate than the supply. In fact, I think this is -- among several other factors -- one of the primary causes of this migration. The money an individual or a family has to spend is limited. For most, the rent is their single biggest expense: the less one makes, the more one has to give up (in terms of money that would go to savings, basic necessities, or food/entertainment) to live in a more desirable place. Given that income distributions even with some amount of redistribution will still follow a power curve, it is quite possible that certain highly desirable areas -- themselves on a power curve of desirability -- might see great population growth, but -- on the whole -- the movement would not be to those areas. That is, unless, the supply of housing in those ares can keep up with the demand.

11thEarlOfMar 13y ago
This makes sense, but it is a moving target and the situation of over-supply/under-supply (or more likely the degree of under-supply) will go through cycles. Under-supply will likely be served at some point by developers, save hostile zoning as Michael points out. In SV, there are several very large projects where 50 acre(?) office parks have been torn down and are being replaced by tract homes on postage stamp-sized lots. So clearly, these developers are banking on sustained or recovering demand. A lot of that demand is foreign: http://www.cnbc.com/id/101168745 http://www.cnbc.com/id/101168745 and more is driven by the wealth creation at Google, Apple, Facebook, LinkedIn, Twitter, et al. : (2011) http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-demand-for-silicon-valley-million-dollar-homes.html http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-dem... Prices are really pretty incredible. Here are charts for Palo Alto, Los Altos, Mountain View and a couple of others. What is astonishing is that these are communities with 50,000 - 100,000 residents. Not small enclaves. Yet the 'median' price exceeds $2,000,000 in Los Altos: http://www.siliconvalleymls.info/blog/ http://www.siliconvalleymls.info/blog/ On a national, inflation adjusted basis, prices are about where they were at a peak in 1990: http://www.jparsons.net/housingbubble/ http://www.jparsons.net/housingbubble/ So at least here in the valley, the homes are currently being purchased at incredible prices by wealthy immigrants and newly-minted millionaire-techies. It has been a fairly common occurrence that people who have owned homes in Silicon Valley for many years reach retirement age and cash out. Then move to Oregon, Arizona, Reno or just further inland, and live well.

by strlen 13y ago

11thEarlOfMar 13y ago

This makes sense, but it is a moving target and the situation of over-supply/under-supply (or more likely the degree of under-supply) will go through cycles. Under-supply will likely be served at some point by developers, save hostile zoning as Michael points out. In SV, there are several very large projects where 50 acre(?) office parks have been torn down and are being replaced by tract homes on postage stamp-sized lots. So clearly, these developers are banking on sustained or recovering demand. A lot of that demand is foreign: http://www.cnbc.com/id/101168745 http://www.cnbc.com/id/101168745 and more is driven by the wealth creation at Google, Apple, Facebook, LinkedIn, Twitter, et al. : (2011) http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-demand-for-silicon-valley-million-dollar-homes.html http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-dem... Prices are really pretty incredible. Here are charts for Palo Alto, Los Altos, Mountain View and a couple of others. What is astonishing is that these are communities with 50,000 - 100,000 residents. Not small enclaves. Yet the 'median' price exceeds $2,000,000 in Los Altos: http://www.siliconvalleymls.info/blog/ http://www.siliconvalleymls.info/blog/ On a national, inflation adjusted basis, prices are about where they were at a peak in 1990: http://www.jparsons.net/housingbubble/ http://www.jparsons.net/housingbubble/ So at least here in the valley, the homes are currently being purchased at incredible prices by wealthy immigrants and newly-minted millionaire-techies. It has been a fairly common occurrence that people who have owned homes in Silicon Valley for many years reach retirement age and cash out. Then move to Oregon, Arizona, Reno or just further inland, and live well.