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Old 06-08-2016, 10:31 PM
 
24,348 posts, read 26,787,175 times
Reputation: 19827

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Quote:
Originally Posted by Perma Bear View Post
Maybe I could start a rebel group and conquer a third world Latin American country. If I save up the tax income for a few years I might have enough to put a downpayment on a house in sf
Like I said, I bought a condo in SF in 2011 for around $250k and it was a regular sale (not a bmr), so even in SF there are opportunities to buy when the economy is down.
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Old 06-08-2016, 10:58 PM
 
4,369 posts, read 3,702,904 times
Reputation: 2479
Quote:
Originally Posted by bmw335xi View Post
Like I said, I bought a condo in SF in 2011 for around $250k and it was a regular sale (not a bmr), so even in SF there are opportunities to buy when the economy is down.
200 square foot studio? Extremely lucky timing? I didn't even work in 2011 because I was wrecked by 2008/2009. I could only buy stocks.
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Old 06-09-2016, 09:12 AM
 
244 posts, read 179,830 times
Reputation: 488
What is often missing from these discussions is whether one can afford a house they will actually like. Given that it is a huge investment not just financially but also time and effort wise, I think it is important that one has positive emotions about the purchase. Otherwise, one's quality of life will suffer seriously.

For instance, we have been and continue to rent. If we really wanted to, we could buy somewhere in Hercules, Concord or Martinez (after spending nearly all savings on the downpayment). But not only are those places an hour and a half commute to the likely employment center in SF, they are just nothing to get excited about.

"Home" is so much more than a property title and a mortgage payment...I just do not see that word meaningfully fitting the relatively affordable far flung suburbs where mortals of the Bay Area can actually buy. I often feel as if the idea of home ownership as an absolute good is something that our system promotes in order to keep people busy, isolated from each other and too tired to ask the right questions.
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Old 06-09-2016, 11:25 AM
 
24,348 posts, read 26,787,175 times
Reputation: 19827
Quote:
Originally Posted by Perma Bear View Post
200 square foot studio? Extremely lucky timing? I didn't even work in 2011 because I was wrecked by 2008/2009. I could only buy stocks.
800 square feet in Candlestick Point now selling for mid $500,000s

At that time I could have bought a 450 square feet condo in South Beach / SOMA and a 450 square feet condo in Alamo Square.

This wasn't the first tim home prices crashed and it won't be the last. People just need to save money for when prices drop in half. It will happen again.
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Old 06-09-2016, 02:05 PM
 
10,920 posts, read 6,874,748 times
Reputation: 4942
Quote:
Originally Posted by bmw335xi View Post
800 square feet in Candlestick Point now selling for mid $500,000s

At that time I could have bought a 450 square feet condo in South Beach / SOMA and a 450 square feet condo in Alamo Square.

This wasn't the first tim home prices crashed and it won't be the last. People just need to save money for when prices drop in half. It will happen again.
I'd be shocked to see prices drop in half - I just don't see 2010-2012 prices coming back anytime soon. We'd need something cataclysmic at a wide-spread systemic level for that kind of crash to happen. You'd need not only tech crashing to get that - you'd need something similar to the 2008 recession on top of that (basically something that brings down people's buying power (lower salaries) AND brings down overall employment in the region (less demand on the system and less people/couple's making ridiculous salaries).

We all know the supply end of things isn't going to change quickly (if much at all) in the Bay Area since there's so much resistance to it (insert your favorite villain here). So any decrease in housing costs will have to come from the demand side (a la 2008-2011/2012).


The problem is that I just don't see any major warning signs that this is happening imminently. I mean, sure, there are a ton of overvalued companies here. But for every unicorn 'useless' startup, there's a mature company with solid financials/earnings. Some of these companies will fail. Some people will lose their jobs (unfortunately). So there will be some sort of downturn, certainly. Markets are cyclical, and tech in the Bay Area (and housing by extension) is not immune to this.

But a downturn where housing costs go down 100%? I just don't see it. 15%-25% seems more realistic - which, ultimately, will really not open up that many more doors to people that can't afford the area ("middle class" people that really can't afford much above 300-500K).


Of course, anything can happen, especially in the more distant future. The Bay Area over time could become a smaller center for tech - but A LOT would have to happen to make that happen (e.g. some other place would have to rise to rival/replace it, and MANY companies would have to pack up and set up shop elsewhere - and unless both of those happen simultaneously, any price reductions would likely occur slowly over time).

I'd love to be wrong, by the way - housing costs are probably the single biggest issue I see facing the region as a whole, so I wouldn't mind seeing some pressure being let off so people that we need in the region (i.e. middle and working class families) can come/stay - but I'm just being realistic here.

Last edited by HockeyMac18; 06-09-2016 at 02:50 PM..
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Old 06-09-2016, 02:38 PM
 
4,369 posts, read 3,702,904 times
Reputation: 2479
Quote:
Originally Posted by bmw335xi View Post
800 square feet in Candlestick Point now selling for mid $500,000s

At that time I could have bought a 450 square feet condo in South Beach / SOMA and a 450 square feet condo in Alamo Square.

This wasn't the first tim home prices crashed and it won't be the last. People just need to save money for when prices drop in half. It will happen again.
Until they lose their job
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Old 06-09-2016, 03:05 PM
 
473 posts, read 517,993 times
Reputation: 1034
Quote:
Originally Posted by HockeyMac18 View Post
I'd be shocked to see prices drop in half - I just don't see 2010-2012 prices coming back anytime soon. We'd need something cataclysmic at a wide-spread systemic level for that kind of crash to happen. You'd need not only tech crashing to get that - you'd need something similar to the 2008 recession on top of that (basically something that brings down people's buying power (lower salaries) AND brings down overall employment in the region (less demand on the system and less people/couple's making ridiculous salaries).

We all know the supply end of things isn't going to change quickly (if much at all) in the Bay Area since there's so much resistance to it (insert your favorite villain here). So any decrease in housing costs will have to come from the demand side (a la 2008-2011/2012).


The problem is that I just don't see any major warning signs that this is happening imminently. I mean, sure, there are a ton of overvalued companies here. But for every unicorn 'useless' startup, there's a mature company with solid financials/earnings. Some of these companies will fail. Some people will lose their jobs (unfortunately). So there will be some sort of downturn, certainly. Markets are cyclical, and tech in the Bay Area (and housing by extension) is not immune to this.

But a downturn where housing costs go down 100%? I just don't see it. 15%-25% seems more realistic - which, ultimately, will really not open up that many more doors to people that can't afford the area ("middle class" people that really can't afford much above 300-500K).


Of course, anything can happen, especially in the more distant future. The Bay Area over time could become a smaller center for tech - but A LOT would have to happen to make that happen (e.g. some other place would have to rise to rival/replace it, and MANY companies would have to pack up and set up shop elsewhere - and unless both of those happen simultaneously, any price reductions would likely occur slowly over time).

I'd love to be wrong, by the way - housing costs are probably the single biggest issue I see facing the region as a whole, so I wouldn't mind seeing some pressure being let off so people that we need in the region (i.e. middle and working class families) can come/stay - but I'm just being realistic here.
I think this is a pretty good assessment. It's amusing to me that there's a contingent on this board that thinks they're going to be the last people standing during the next big recession. Maybe that's true (and good for them) but it's likely that whatever catalyst topples the real estate market will also take the stock market down with it. So all those ETFs they've been buying instead of real estate? Guess what, they've also lost half their value.

I'm happy to see prices beginning to moderate as more inventory is being built. That's the better solution to the housing crisis rather than wishing for thousands of people to lose their jobs.
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Old 06-09-2016, 03:15 PM
 
4,369 posts, read 3,702,904 times
Reputation: 2479
Quote:
Originally Posted by WanderingFar View Post
I think this is a pretty good assessment. It's amusing to me that there's a contingent on this board that thinks they're going to be the last people standing during the next big recession. Maybe that's true (and good for them) but it's likely that whatever catalyst topples the real estate market will also take the stock market down with it. So all those ETFs they've been buying instead of real estate? Guess what, they've also lost half their value.

I'm happy to see prices beginning to moderate as more inventory is being built. That's the better solution to the housing crisis rather than wishing for thousands of people to lose their jobs.
I hope the Bay Area cities stand up for themselves and tax the fuzz out of tech companies. If they leave we'll return to a rational market.
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Old 06-09-2016, 03:46 PM
 
24,348 posts, read 26,787,175 times
Reputation: 19827
Quote:
Originally Posted by HockeyMac18 View Post
I'd be shocked to see prices drop in half - I just don't see 2010-2012 prices coming back anytime soon. We'd need something cataclysmic at a wide-spread systemic level for that kind of crash to happen. You'd need not only tech crashing to get that - you'd need something similar to the 2008 recession on top of that (basically something that brings down people's buying power (lower salaries) AND brings down overall employment in the region (less demand on the system and less people/couple's making ridiculous salaries).

We all know the supply end of things isn't going to change quickly (if much at all) in the Bay Area since there's so much resistance to it (insert your favorite villain here). So any decrease in housing costs will have to come from the demand side (a la 2008-2011/2012).


The problem is that I just don't see any major warning signs that this is happening imminently. I mean, sure, there are a ton of overvalued companies here. But for every unicorn 'useless' startup, there's a mature company with solid financials/earnings. Some of these companies will fail. Some people will lose their jobs (unfortunately). So there will be some sort of downturn, certainly. Markets are cyclical, and tech in the Bay Area (and housing by extension) is not immune to this.

But a downturn where housing costs go down 100%? I just don't see it. 15%-25% seems more realistic - which, ultimately, will really not open up that many more doors to people that can't afford the area ("middle class" people that really can't afford much above 300-500K).


Of course, anything can happen, especially in the more distant future. The Bay Area over time could become a smaller center for tech - but A LOT would have to happen to make that happen (e.g. some other place would have to rise to rival/replace it, and MANY companies would have to pack up and set up shop elsewhere - and unless both of those happen simultaneously, any price reductions would likely occur slowly over time).

I'd love to be wrong, by the way - housing costs are probably the single biggest issue I see facing the region as a whole, so I wouldn't mind seeing some pressure being let off so people that we need in the region (i.e. middle and working class families) can come/stay - but I'm just being realistic here.
I am 100% certain we will see another major drop in the future, probably around 50% in both the stock market and housing market. With that being said, I am not saying it will go to the same level as 2010-2011. Over the long-run home prices tend to trend higher even with crashes. If the median house is $1,000 and then a crash happens and then the median price is $500 and then we see a recovery where the median house is $1,500 and then we see another crash where the median price might be $750 at the low, which is still higher than the previous $500 median, but still around a 50% drop. Does that make sense? Nothing goes straight up forever, the line zigs and zags and when it comes to real estate, I believe it will continue trending higher over the long-term, but with zigs and zags in between. Also, I'm not saying we will see a crash this year or next year. Nobody knows when the next crash will happen, but I'm guessing we are closer to the top than the bottom and that the average home in San Francisco will at some point be less than the current $1.2 million or whatever it is now.
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Old 06-09-2016, 03:50 PM
 
Location: Missouri
1,874 posts, read 1,317,758 times
Reputation: 3115
"....its' different this time..."
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