Home Values Are Rising by $800 a Day in San Jose
bloomberg.com
bloomberg.com
In the 2000's was when we met, those who had grown up there and those who were moving were in the same age group. Only about 40% were college educated or in tech/programming oriented roles. Of those, a small amount has ridden the wave to prosperity. Most moved to Seattle (if looking for a career/home/etc), or Portland (if they pass the weird-test). There's been a steady trickle out of the Bay for anyone not in tech for the past decade, and now I think only 10% of them still remain. Now they're going to Colorado rather than Seattle, and a few more to Portland. Those that are currently missing the wave in Seattle are looking at moving to Colorado.
I have no idea which area is gonna be next - Colorado is now seen as the last "cool" place thats "affordable" and liberal (sorry screaming Coloradan's, you're next).
Personally, I just can't believe its gone on this long - the pressure release valve that I thought would be released from the bay every year for the last decade hasn't fully let go. Career or being able to afford a house seem to be mutually exclusive ideas if you're not in programming. This is creating a rather nomadic culture within my friend groups... welp, this area is too expensive, might as well move onto the next. Very few are putting down roots.
I wonder what this all will look like when we look back 20 years hence - was it really a bubble, or the creation of a permanent Elysium style class divide between those that had the capital (or took the risks) early, and those who didn't start out as well (or were conservative in leveraging themselves)? Every day it feels like I'm leading more towards the latter.
That town has stagnated and now it is dying. It is an oversimplification but I would rather deal with the problems of growth than stagnation and decay.
Better to be marginally less wealthy and free to live how I want than run the race by the rules of some coastal city for little benefit.
Be careful about romanticizing the idea of rural life if you haven’t already done it. It’s nothing special in my experience.
I'm trying to find it but there was this old video recording from either 1995 or 2005 (I don't remember which) of a Bob Dylan-ish parody song being performed on acoustic guitar and the lyrics were complaining about the exact same things back then that you hear complained about here today. As a matter of fact, don't move here if you can't handle complaining.
I think if you moved to the city post 2010, you probably don't realize what "old Seattle" was like.
Who are these other "culturally important folk" and why are they so important? Not denying they exist, I just don't know who you are talking about.
I still see a lot of opportunity for middle (or possibly upper-middle) class families to live in Seattle although it is not easy. It seems a lot easier than SFO and entirely within reach to me. Something should be done to make sure this stays within reach but we have to be realistic about how that looks. A single family home on a 1/4 acre isn't gonna fly. You're probably going to be sharing at least one wall with someone.
You are echoing the concern I hear often and I have no doubt that you feel what you are describing but I'm just not convinced that it reflects reality.
I lived in Seattle for the summer of 2009 and while I didn't explore a lot of it back then I don't think it has changed much culturally. I hear the "it's an old Seattle thing you wouldn't understand" cliche a lot too. I'm just surprised nobody can articulate what was different then.
Also,
> There's an art gallery across the street from me. Many coffee shops and restaurants have locally created art for sale.
There's a ton of those in SF, too. Gentrifiers enjoy the old culture and all its signifiers; that's why they moved there in the first place. (IDK what you mean by street performers but there sure aren't those in SF.)
I’m not sure how to reconcile “all the artists are leaving” with “gentrifiers like art” and the presence of many forms of art all over the place. Which is it? Are artists not supposed to sell art? I really don’t get it.
Grunge didn’t really start here, it just blew up here. It’s more of a Pacific Northwest thing than a Seattle thing. If you ever come visit check out the Nirvana exhibit at MoPop (previously EMP), it does a great job explaining the evolution of grunge.
There are several local bands who are doing well on the national stage. The biggest is Macklemore although he’s not really my style.
The music scene in Seattle seems healthy to me, you can get a variety of shows any night of the week. The metal scene is supposed to be big but not my deal so I don’t know a lot about it.
I was at a backyard/underground wrestling show (hosted by a local band) last summer where the heel taunted the audience by telling them they’re a bunch of people who moved here 8 years ago and are mad at the people who moved here 5 years ago.
From where I sit Seattle has a multitude of healthy subcultures. It’s just fashionable to complain.
Change is just constant I guess.
Of course, that's true of a lot of US cities that are growing these days. Certainly NYC or Boston were much grittier in the 80s/90s than they are today with a net outflow of population.
I visited with my girlfriend in 2015 and stayed in the suburbs where her girlfriend's guy was working for MS. The burbs seemed pretty peaceful and green (older suburb—but I don't know the city). Maybe they were in Redmond proper.
It was a beautiful area, and I could definitely live with that. It's too bad it's pricing people out like that.
We were there only too briefly so we just hit some touristy options like the market and some hipster arcade bar, the Army/Navy, etc.
We live in Toronto and it felt pretty similar overall (though I'd give major points to Seattle for scenery). The same thing is ultimately happening here, too, though. Rents are skyrocketing but wages aren't.
With a lot of the political commotion and the desire for more outdoors activity, I haven't seen much of Canada mentioned in this thread and I'm curious if its landed on the map for anybody. And where?
If other countries are up for comparison, I would really love to move to Brisbane someday.
If I left Seattle (and the US) it would be for something completely different like Taipei.
I’m also a bit too patriotic to move out of the US while I can still build a life here.
Most folks working at local medium-large businesses seem to get price-reduced orca cards for their daily commute.
https://github.com/lukeschlather/load-king-county-assessor-d...
1. Rip up all city streets with jackhammers and sod the streets at once.... All public movement would be by foot and a fleet of bicycles, maintained by the city police force.
2. Change the name 'Aspen', by public referendum, to 'Fat City'. This would prevent greedheads, land-rapers and other human jackals from capitalizing on the name 'Aspen'.... These swine should be fucked, broken, and driven across the land.
3. Drug Sales must be controlled. My first act as Sheriff will be to install, on the courthouse lawn, a bastinado platform and a set of stocks in order to punish dishonest dope dealers in a proper public fashion. Each year these dealers cheat millions of people out of millions of dollars.... it will be the general philosophy of the Sheriff’s office that no drug worth taking should be sold for money.
4. Hunting and fishing should be forbidden to all non-residents, with the exception of those who can obtain the signed endorsement of a resident- who will then be legally responsible for any violation or abuse committed by the non-resident he has ‘signed for’…. By this approach-making hundreds or even thousands of individuals personally responsible for protecting the animals, fish and birds who live here-we would create a sort of de facto game preserve, without the harsh restrictions that will necessarily be forced on us if these blood-thirsty geeks keep swarming in here each autumn to shoot everything they see.
5. The Sheriff and his Deputies should never be armed in public. Every urban riot, shoot-out and blood-bath (involving guns) in recent memory has been set off by some trigger-happy cop in a fear frenzy.
6. It will be the policy of the Sheriff’s office savagely to harass all those engaged in any form of land-rape.
I'm sure there's 1000 economic and social reasons they can't be done, but damn if it doesn't sound good.
Boston's inner suburbs are full of this sort of stuff - walkable stores, small business and light industry, 2-5 story buildings for housing. And it all feels a lot like the old quarters of many European cities.
Part of the change is building materials and cars, I suppose - what was obvious in 1850 now has to be planned to outcompete highrises and cars-first layouts. But an awful lot of it is just not outlawing what people already do if you let them; Boston's livable old suburbs are basically all illegal today.
Points 1, 2, and 4 remind me of nothing so much as Abbey's stance on protecting the national parks: avoiding regulation via personal responsibility and barriers on idle, disinteresting consumption.
As I remember, his plan for the Grand Canyon was to put the last parking lot 5+ miles from the Canyon, with a bus line and a fleet of bicycles. You bike in (or take the bus, iff you've got a health reason not to bike), see the Canyon, then take a bus back out. No Canyon-side parking, less litter, no tourists seeking 5 minutes of photos, and no hucksters selling tickets for glass bridges or anything else. And yes, I seem to remember he wanted to keep names like "Hell's Half Mile" on everything possible, the better to limit demand.
A bit exclusionary, maybe, but sort of a nice vision given what we've got instead. (As far as I know, the park that came closest is Zion, and it's definitely better for having done so.)
This would put a stop to hordes of new residents from trashing places because it would give the existing residents time to react before the newcomers dominate local politics.
Experience/time considered in all sorts of contexts. The opinion of someone who's been doing something for years is more meaningful than that of someone who hasn't. Why don't we apply that to political representation. People who have been living somewhere for awhile probably have a better opinion on the future direction of that place than people who haven't.
Asheville, NC is coming up after Colorado - I've got one friends-couple that's actively moving there this summer, and a couple others that are thinking seriously about it.
> I wonder what this all will look like when we look back 20 years hence
There was an interesting throwaway comment in Carlota Perez's Technical Revolutions and Financial Capital (written in 2002). She's famous for her observation that each technological revolution tends to lead to a financial crisis that separates the "Installation" phase (governed by financial capital, and marked by successive asset bubbles & widening wealth inequality) from the "Deployment" phase (governed by production capital, and marked by a widespread dissemination of best practices and corresponding productivity gains throughout the economy).
Less famously, the book also mentions that towards the end of the "frenzy" period (the latter half of the Installation phase), you get a phenomena of "two monies". Any prices connected to the new means of production - stock values, salaries, real estate in key cities, etc. - grow exponentially, while the old economy remains stagnant. Eventually, the divide leads to war, with regions that have adopted the new production techniques battling rump states of the old declining empires. That's as far as the book goes, but the historical implication - based on the early 20th century examples of the Ottoman Turks, Czarist Russia, Imperial China & feudal Japan - is that societies that cling to the old ways collapse, and their leadership is exterminated. Those who aren't killed and who are adaptable enough to adopt new techniques find places within the victorious societies, which then start focusing their efforts on spreading the new production techniques widely within the society to equalize social divisions and cement the new order. Think of the GI Bill after WW2, the widespread suburbanization, mass production of the automobile, consumer goods, department stores, the Civil Rights Act, and so on.
But California also has a unique factor, proposition 13. [3] This drastically disincentives people from moving. Palo Alto has the lowest property tax rates in the state.[4] Why move when you will pay significantly more monthly. This is especially pertinent to retirees. So no one moves which destroys market liquidity. Combine this with NIMBYism, an over abundance of protected lands, rent control, affordable housing measures and piss poor public transportation, and you get the shit storm that is the Bay Area housing market. Tech is simply a convenient excuse. There’s a reason California is building a bullet train between SF and LA, but no public transportation from the east bay to the peninsula which would help an enormous number of workers and the environment. Despite lofty rhetoric, people vote their self interests.
[1] https://www.wsj.com/articles/bank-of-japans-50-billion-quest... [2] https://www.zerohedge.com/news/2017-09-11/wtf-chart-day-boj-... [3] https://medium.com/@michaellevinson_64108/landlords-and-heir... [4] https://www.mercurynews.com/2016/12/01/high-priced-californi...
Absolutely though Prop 13 hurts liquidity in California though. There's a lot of factors, nobody can agree on them, so we're stuck with this massively overheated market.
Seattle is catching up with the other big cities, but it's still lower cost. Especially given how new the buildings are.
However, these windfall gains can be recycled into public coffers via the tax system and lighten tax burdens on productive activity.
As a nice bonus, it would make it much harder to be an idle landlord in a prime area... the physical equivalent of a patent troll.
How do you define "fairness" in this context?
* Edited to less confrontational question.
In fact, by effectively being a tollbooth operator upon the prerequisites for economic development they are an active hindrance. Land titles are necessary, but it is not necessary that they keep the land rent, only the improvement values that they are responsible for.
One of the reasons we got the dot-com bubble, even though the Fed was aware of it, was that they were more afraid of instability from the emerging markets than a domestic bubble. That fear was certainly justified, but nonetheless the dot-com bubble was still enormous.
But tech is where the demand comes from. The median home price in Santa Clara county is almost $1.3M, and ~20% of residents can afford that price. Those are tech workers.
Supply has been steadily decreasing for years and years, so I don't see that problem getting solved. Therefore I think we'd need to see a significant drop in the tech industry for prices to slow down.
Yet I still moved to the crowded and insane Bay Area because jobs. In FL I was always running that risk that if my current job didn’t work out I’d have few remaining options. And in today’s tough hiring market, where you have to apply to 100 jobs to get 10 interviews to get 1 offer, having few employers around is a massive risk. It’s why I’m forced to stay out in the SF area.
I know folks like to point at the big techcos in the area being flush with cash as evidence this can continue a long time. And in a vacuum, wage growth in tech could continue to keep pace, perhaps. But that is 300k in appreciation a year.
How far out will school teachers, janitors, chefs, mechanics, city employees, and similar need to live before their not-quite-as-quickly-increasing salaries fail to keep up, and they leave the area en masse?
Cut the NIMBYism and you might see some improvement, but only as fast as the city can approve permits.
As Buffett likes to point out: be "fearful when others are greedy and greedy when others are fearful".
Prop 13 only has effect when houses do NOT sell. Whenever a property changes hands, which is the only event that matters wrt demand, it is assessed at current market value.
Prop 13 does have an effect but only in the manner in which it supresses sales.
Last we checked, per-student spending in public schools was negatively correlated with student achievement, so the hypothesis that funding levels are unrelated to performance would appear to be on pretty strong ground.
If a house is appraised at $10,000.00 in 2000 and doesn’t sell for 10 years it pays $2000.00 in taxes. Since teachers are paid out of this tax their salaries increases are capped at $2,000.00. If wages (and housing prices) in general went up at even 3% per year then teachers have to compete against other buyers with double the cash.
The only way teachers aren’t getting screwed here is if every house sells every year.
Again, I’m not an economist and these numbers are obviously a gross oversimplification.
Prop 13 limited prop tax to 1% of the assessed value (actual property tax also includes many parcel taxes). About 100 school districts out of about a thousand in California have such high property values and/or low number of students that the 1% tax is enough to fund the schools at a higher per student rate than the standard for California. These rich areas are called "basic aid" districts and don't give their prop tax to the state, keeping it local and funding schools at a higher level.
Prices in the area I live in use to be $100k-ish for a 3 bdrm home 10 years ago. Now they're $760k and I live >30 miles from the CBD.
Teachers salaries have continued to get "cost of living" increases and we have news stories like this popping up all the time: https://www.stuff.co.nz/national/education/102707618
It terrifies me to see how poorly we treat educators and education in general. As a highly developed nation our only chance for the future is to maintain our edge. We are borrowing against the intellectual (and in the case of public university tuition, also the financial) capital of the future and I'm not even sure what we are doing with the money.
So...since you’re fearful, I should invest in San Jose real estate ASAP? ;)
It's not even about people on tech salaries at this point. Those people are being priced out of the market, too. It's an issue of foreign investment mainly from China either speculating on the market, or investing their money in the only way they can given that personal property does not exist in their country.
Usually you will find the data you might want is "not collected".
It is not in anyone's interest to figure out how much bubbles are propped up by foreign money.
I live in San Francisco. No one I know has any belief about any units being unoccupied. All the Chinese people I meet here are working.
It is unlike the anecdotes I hear from friends living in Vancouver.
To be fair, you wouldn't see Chinese individuals "unoccupying" units.
In Vancouver, for instance, it's very clear. ~280,000 housing units, of which ~25,000 were recently found to be owned-but-unoccupied. Which doesn't mean international owners, but does mean housing is being used not to live in, or even to rent, but as a pure investment - with obvious consequences for the people actually living there.
A very quick look doesn't turn up this number for San Jose, but it's the most obvious way to distinguish price hikes driven by capped housing and rising salaries from those driven by outside investment.
https://www.sfgate.com/expensive-san-francisco/article/peter...
VC -> Startup -> Employee -> Landlord.
Everyone blames tech workers, but they're not the ones raising the prices. Most of their money disappears into rent.
The argument for not blaming high-salary tech workers is that when they demand anything other than housing (nootropics or standing desks or whatever other stereotype we might choose), prices don't react anywhere near as strongly.
The Bay area should look a lot more like Manhattan, not that Manhattan is the gold standard in affordable housing...
See for instance: https://seekingalpha.com/amp/article/4161999-mother-deflatio...
The real beneficiaries are the people who gain from the increased tax revenue.
I’m kicking myself for not buying earlier, but not a chance you’d get me to buy in now. We’re in a bubble that’s ready to burst IMO.
If property values goes up faster than salary per home, you'll end up with a precarious housing market subject to the whims of investor sentiment. Workers won't be able to move in and back up the house valuation if they are priced too high.
A few places along the peninsula had stagnant or slowly rising property values, like Palo Alto. Values in SF either held or declined very little. Places like Oakland lost a little value and Hayward, maybe one of the least desirable areas around the bay regained all of its lost value in just a few years.
From Jan 1987 to Jan 2018, prices in San Francisco MSA have gone up 5.0% a year, ((258.81-46.95)/46.95)^(1/(2018-1987)). The equivalent amount invested in the stocks over that time period would have yielded 10.3% a year[1], with dividends reinvested.
Unless you are planning to use it as an investment property and reinvest rents (net of property tax, maintenance) in other properties, it still doesn't appear clear that buying a home vs renting and investing heavily in the market is a better bet, not to mention other intangibles like upkeep and longer commutes.
Why do you think that, though? Is it solely because prices are rising very quickly? There's no indication whatsoever that people will stop buying any time soon. Homes are selling >110% of asking price for all cash within days, and supply is essentially fixed.
Not saying a crash is imminent, but prices are even higher than before last crash, even taking inflation into account.
People were buying overvalued homes they couldn't afford in the middle of nowhere on subprime adjustable mortgages, which caused the crash of '07 when the ARM rates kicked in and they couldn't afford payments. This is a fundamentally different situation.
Now, a very small number of elite highly wealthy people from around the world are treating American housing stock as their investment vehicles since there is literally no other better option in 2018. Where we go from here in terms of affordable housing, nobody knows. But I really really doubt we're going to see a housing crash any time soon. It's just simple supply and demand.
I recall this specifically, as I was in the market for a house at the time. Fortunately, I didn't face much cash competition as I was shopping slightly upmarket. The line seemed to be $300-400k. Those folks would be seeing pretty good returns at this point as those houses are now typically worth $500-600k and might be renting for $2-3k.
That was the complaint in Vancouver until they actually started tracking foreigner purchases and it turned out it was 10-15% of purchases (higher in certain neighborhoods). That means the other 85-90% of demand was from Canadians.
I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst.
I can’t tell you exactly why I feel it, it’s more an emotional thing, but I don’t see a better strategy than that when trying to predict long-term housing prices.
Why do you say that? Haven’t all the tech companies been performing well across a variety of metrics these last few years?
Why?
HUGE influx of people into the field, fueled by government programs, people in tech pushing for more people to join (why they would ever do this is beyond me, say goodbye to your salary), education in high school and younger, wide availability to learn online, outsourcing, etc... The influx of workers will simply outstrip demand once worker influx hits it's powerband in 5-10 years.
Programming is on the same path that many craft careers have been on in years past. Mark my words - it's a blue collar job in the making.
If you aren't specializing in some niche field of programming right now, you will be kicking yourself in 10 years.
The problem with a bad hire in tech is that they can be worse than useless. Mentoring a junior software engineer can be very expensive and not many companies want to do that in an environment like the Bay Area where people hop between jobs frequently. Personally I think this is very short sighted and sad as I love mentoring junior engineers.
Thinking logically and being able to clearly articulate your thought process is a rarer skill than you would think.
I do a lot of teaching/consulting in the Bay Area. I see a lot of people coming out of bootcamps trying to get entry level positions.
Some of the candidates graduating from these bootcamps are awesome and have lots of potential but those are few and far between. Also, their is a shortage of entry level positions.
The best bootcamps filter heavily and generally only take people with a vaguely related college degree (Economics, law, physics, biology) or who have shown an aptitude (portfolio).
I’m summary, I wouldn’t be surprised if the growth in tech jobs outstrips the supply of quality candidates. If anything having years of relevant experience is going to become even more valuable as time progresses. It’s the entry level candidates that are going to have a harder time landing a job and paying rent in the Bay.
The difference between law and software engineering is that you can't really BS your way in software for too long without being caught. I knew a few friends who would never have been able to pass the math and engineering courses a decent CS program requires, but they were admitted and essentially paid a huge bribe (with loans) to get a law degree from a low-tier school, cram for months for the bar, and get certified.
But they never made much money in law, and probably would have been better off choosing another path.
My girlfriend is a lawyer who is transitioning to become a UX researcher via a bootcamp. The general standard of people in her bootcamp clas is quite high. On the young end you got recent grads from top tier schools (UC Berkeley English) on the older end of the spectrum you got a VP of marketing who’s worked at reasonably high profile consumer brands and who has a pretty good undergrad degree. Some of these bootcamps can be quite selective and aren’t easy to get into. They want highly motivated people who are smart. Those kinds of people are in short supply.
Not necessarily. Bubbles are based on speculation. The last bubble was powered by sub-prime mortgages, which is what burst.
The Bay Area has the problem of ongoing immigration, a very highly paid demographic, and housing market that isn't keeping up. Simply, Offer < Demand.
Offer isn't looking to catch up any time soon [1], and demand crashing would mean the tech economy will have crashed as well (or, you know, The Big One).
[1] I'll have to sleuth up the link from 6mo-1y ago about how maximizing consctruction at this point would only keep up with demand, effectively only preventing a further increase.
Not saying it is gonna burst, and i see the factors, but theyw ere there in 2008 too.
But then it depends on which timescale we're talking about.
https://en.wikipedia.org/wiki/Subprime_crisis_impact_timelin...
The movie The Big Short explained this pretty well.
Funny somewhat related story; just as the downslide started in that market we made an offer on a house 50k below asking. The owner, an investor, laughed at us. After the bust, we had already moved away at that point, we saw the house finally sold for something like 100k to 150k less than our low-ball offer.
Another somewhat related funny story; went to an open house and told the realtor I was worried over falling house values before deciding to buy. We were told house values don't fall. Didn't bother to point out to her that the for sale sign out front had a "reduced" sticker on it.
I have more, but I don't won't to be a bore.
I hear "low inventory, high demand" all the time, and while it is true, the part that most people ignore is, it is still possible that older buyers still have a ton of profit, while recent buyers can be under water
SF home prices went from an indexed 219 in Mar 2006, down to 120 in May 2009. That's a 45% decrease over two years.
Right now the index is at 259 and that's inflation adjusted.
[1] https://www.advisorperspectives.com/dshort/updates/2018/03/2...
I don't think people really fathom how big of a deal this is. When was the last time a group of heavily concentrated companies were so flushed with cash sitting in banks? And also who's most coveted asset was highly paid white collar workers? Wall Street in the 80's maybe?
SB 827? That's what's kept me from buying. The fact that housing in the Bay is political scares me off. I'll bet on economics every day, but not on politics.
Out of curiosity - is there anywhere in the US in history where housing that had the highest value in the country was affected massively (negatively) by regulation?
(I wouldn't wish the anxiety around this decision on anyone, least of all future generations, which is why I've resolved to buck the trend of homeowner NIMBYism.)
[1]: https://www.mercurynews.com/2017/10/19/housing-economist-pos...
[2]: https://www.mercurynews.com/2018/01/11/unpacking-the-bay-are...
The bay area, specifically San Francisco, is one of the best real estate purchases anyone can make. It's geographically constrained and has historically shown to gain value over the past 100 years CONSISTENTLY.
There will be some small bumps in the road here or there, but when you look back in 20, or 30 years, I can almost guarantee you're going to see pretty solid returns. At least you can rest easy knowing it was perhaps the safest real estate investment anyone (who can afford it) could make.
Want to get REALLY depressed? Consider this FACT:
Foreign investors (rich people) can purchase homes in the US (San Francisco), and have no requirement to live in them, or use them. They can be purchased as purely speculative investments and it happens ALL THE TIME.
I spoke with a real estate agent at a major SF firm, and asked them point blank - WHO can afford these insane home prices? He generated a nice little chart for me of the buyers by career. Software Engineers was number 4.
#1 - Foreign Investors (mainly Chinese) #2 - Trust funds #3 - I forget (this was 4 years ago) #4 - Software Engineer
How / why it's legal for foreign investors to hold onto homes that people could be living in is beyond me. It destroys communities, and seriously hurts everyone.
People have been saying this every single day since I moved to San Francisco in 2009. I guess if you keep predicting it eventually, you might end up being right, but its not exactly insightful.
If you have a house on the penninsula, I'd say it's time to cash out and move to the midwest and retire. ;)
Logically, interest and property taxes are business expenses for landlords, just as steel and electricity are business expenses for Ford.
Then, there's a question of whether you want to have a level purchasing environment for prospective owner-occupants when they are bidding against a prospective landlord. (I believe that we do want to encourage owner-occupancy, at least to the extent that they are on equal footing with landlords.) Repealing the OO-MID (owner-occupied mortgage interest deduction) would mean that a landlord could literally pay more for a property than an owner-occupant and achieve the same long-run financial outcome, or pay the same and achieve a better outcome. This would amount to a subsidy to renters over owners. Providing a similar (now lessened) subsidy to owners serves to level, not tilt the playing field.
If one believes that a nation of entirely renters is preferable or indifferent as compared to a mix of landlords and end users, then there is no valid purpose for the OO-MID.
I believe there are community and public benefits to owner-occupancy and support the level playing field.
I get government incentives overall. I am just pointing to some reasons bubbles form.
Firstly, older people own homes and they vote. Secondly, homes are a significant part of people's retirement assets. As companies do away with pensions and as the Social Security age gets increased, home values gain in importance. So the government has an incentive to keep home prices high.
This hurts the younger generation looking to buy homes and raise a family. But the older generation votes in greater numbers than the younger people.
If you are politician running for office, you aren't going to say "lets raise property taxes" or "lets get housing prices down so that young people can afford it".
Prop 13 is one big reasons, too.
The housing situation is not sustainable. Many people end up living on the streets because affordable housing isn't available. There is too much demand and we aren't building dense enough to utilize the land available.
I'm guessing, if offered the same salaries, Google could find plenty of willing takers to move.
There ought to be companies with data on this - some places allow fully-remote work without adjusting salaries for CoL. So I wonder: how many of their employees still end up living in high-cost cities?
Does anyone know of public data that could sort this out?
Homes for sale in March 2016: 1,254
Homes for sale in March 2017: 934
Homes for sale in March 2018: 516
1. low interest rates have been pushing people to buy houses for a decade.
2. and cheap borrowing costs pushed investors into riskier businesses like startups increasing the flow of capital in that region.
Add the NIMBY mentality, and you get skyrocketing prices.
My guess is that raising interest rates are going to change all this drastically before year end.
- stock market is less bullish on tech: https://finviz.com/futures_charts.ashx?p=d1&t=NQ
- less startup funding: https://techcrunch.com/2017/11/30/theres-an-implosion-of-ear...
- mortgage costs going up: https://www.zillow.com/mortgage-rates/ca/bay-area/
- The job market is unbelievably hot.
- I don’t see why any of the big tech companies will turn in outrageously bad numbers this quarter.
- Everyone I talk to is hiring.
- A bunch of people at startups that went public or are about to go public will unlock a lot of stock really soon.
Yet I still feel a bit nervous. I’ve been in the Bay Area since 2008 and I remember how fast the place cleared out after the last big crash. I could see some stocks taking a hit in the short term however I just don’t see what’s on the horizon that’s going to do in tech in particular.
All that funding is being burnt by companies to grow and compete with each other, which is why you see an overheated job market. They also inflate the value of GAFA, because these companies spend a lot in software, hardware, cloud services and ads.
When interest rates go up and bond yields get better though, it's likely that investors will no longer fund companies as much as they used to (which is why I think we're starting to see a slowdown in stock prices). This slowdown in funding will cause companies to have some painful debt crunch, and start the bursting of the bubble...
Anyway, just my opinion
Really? You don’t see why FB may post a decline in users, after all the pushback they’re getting? Why Twitter might enter a spiral soon? These just seem impossible to you?
The rest of your comment seems like what people could easily have said in September of 1929. Not saying a crash like that is coming, but it literally means nothing that things are doing well today, it’s about whether the trajectory we’re on is sustainable in the long-term.
Not really sadly. I’ve been monitoring the App Store rankings through out all of the recent scandals. The only time the top 10 changed recently was due to March madness and that golf tournament thing. The main apps in the top 5 have remained social right through out.
Even in the social category, I didn’t see signal or any privacy related apps make it into the top 50.
I also bet that large portions of the public don’t even know Facebook own Instagram and it’s growing like crazy. Same with WhatsApp.
I can also see a scenario where any regulation that does occur, short of breaking up Facebook or google, benefits the incumbents. I don’t think they are gonna be broken up in the USA anyway due to the way anti trust law is written.
I wonder, in san jose, How long will it take until families start living in garages like in Palo alto?
I'd take the train up to SF on weekends for things to do. Otherwise I was more entertained back home around Minneapolis than most places outside SF.
I had this thought the other day, actually, when tallying my net worth for the quarter. My home went up by ~$100k in value since December (hot neighborhood near Apple) and my family earned about the same amount in income. Long term, we plan on cashing out and moving to the East Coast so it's not just idle numbers tabulating.
You'll see a new generation of people who have never had a static home, but always been at home wherever they are, and they'll never be more than a few steps from their own bed.
That's insane.
However the difference is crazy even accounting for that
Suddenly people started listing - so there’s a LOT of pent up demand.
But only in the Bay would a 20% jump happen and be normal
It would seem me that a policy that encourages illegal immigrants to live in your city is neccisarily going to increase the supply of home dwellers, putting more demand on housing.