Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The cause of why Bay Area real estate is so overpriced is a little more complex then that. The reasons go back to the 70's when a large majority of Bay Area communties including SF, Marin, San Mateo, San Jose, Alameda, and so on passed anti-development laws. For example, in Alameda, you are not allowed to build any multi-family dwellings. Additionally, no new homes are allowed to be built on lots under 2,000 square feet or so. On top of that, what little land that's available to be developed on is continuously embroiled in local politics. Those that live there already want it turned into parks( obviously to preserve their property values) while others want it turned into mixed income housing.
These anti-development laws naturally cause the supply to be artificially manipulated and undercut, which in turns increases the demand and price. The prices have been high for years and well before the boom. But the boom amplified this effect. Remember- the boom was national. Its just that the Bay Area got a double-dose of it.
I think we are talking about the same thing here. The 'cause' I was referring to was in relation to the 'latest' increases which is what made the prices 'outrageous' not to the normal appreciation that this area would have experienced. Prices in Bay Area would have doubled between 1994 and 2005 under normal circumstances (which is the issues you are listing), but instead they are quadrupled. I am very well aware and have indicated this before that SFBA is a traditionally pricey area, it was already more expensive than more of the US metro areas before the boom.
Quote:
Originally Posted by sliverbox
A more complex reason is from a law passed in the 70's also called Proposition 13, which in effect froze the taxable amount on a home bought. So in other words, dear old Granny might have paid only 30k for her now 1 million dollar house,but she only pays taxes for 30k. This created a whole slew of unintentional problems.People simply stayed in their houses longer, fewer sold, and ultimately added more to the equation of there being less homes available for future buyers.
It's not abnormal for the older land and property owners to not want to overdevelop their place. I don't think it's unfair. It's the universal law that whoever gets to certain resources first will reap the most rewards. Would you want to be pushed out of your house you occupied for 30 years because someone wants to build a highrise or because you can't afford the taxes? Eventually, the numbers of older owners will deteriorate and city will enter different cycles. Until then law will always be on the side of those who had settled there first and those of course that have more money. Poor areas are often the ones that get more new development and poor older owners are more likely to move or be pushed out.
Quote:
Originally Posted by sliverbox
It took me a few years to figure these things out. When I did, it made me feel better. The prices aren't high because I'm not working hard enough nor is it because the Bay Area is paved with gold and any better than any other major metro. The reason is from bad legislation and poor community development planning.
I agree that this is one of the reasons, but not the main reason. The main reason is still demand. These laws limit the supply and this can increase the demand, but there are other reasons for increased demand. One of the latest ones was the easy credit and low interest rates and the fact that some still continue to ignore that this IS a very desirable area to live. I am not stuck on saying that SFBA is absolutely the best place to live, I don't think so necessarily after visiting and living at other places especially outside of the US. I just can't help but acknowledge that there is something about the SFBA that has always attracted people to move here over the ages and now and we can't ignore it. Had we had all the same development laws in any other place in the US not as popular I doubt the prices would go through the roof.
[/quote]
Again, I'm not worried about it. A house is really just a huge liability. I have no kids, and even if I did, buying a house wouldn't increase the quality of their lives either. People need to understand this. I've been renting the house I live in for longer than half the people on my street have owned and sold their houses, of which some I know have actually lost money in the transaction.[/quote]
A house is actually an asset not a liability, a car or some other depreciable is a liability. There is nothing wrong with not needing to buy a house, to each their own. But it helps to own something that at least would keep your savings up with the inflation. People lost money for different reasons. Some were speculating (taking a risk) which is not always rewarding. Others were just at the wrong place at the wrong time.
A house is actually an asset not a liability, a car or some other depreciable is a liability. There is nothing wrong with not needing to buy a house, to each their own. But it helps to own something that at least would keep your savings up with the inflation.
While I think we are on the same page, I couldn't disagree more with a house being an asset. By virtue of a home purchase, the home is none other than the property of the bank until the remaining balance is paid. Secondly, if you want to keep ahead of inflation, buying a home is not a guaranteed hedge against it. Housing cycles are unpredictable and tied almost entirely towards herd mentality. The booms and busts can happen almost immediately. Unlike the stock market which with great reliability has performed 7 out of 10 years for over a century, housing busts and booms aren't as regular and take much longer to return to boom cycles. A down cycle can last 5-10 years or more. The last bust in the 80's and early 90's didn't see a return to a healthy form of appreciation until 1997, and even then the rise was fairly low. If you bought a house 2 years ago, chances are you won't see a return on it's value for another 5 years or more. Bottom line- stocks always outperform housing.
Lastly, everyone talks about how much their home is worth and how much equity they have. That doesn't mean anything unless you actually sell it, at which point I fail to see why you'd buy in the first place if all you're going to do is sell it in a few years. The same and more would've been accomplished by investing in stocks.
Frankly, the bigger issue in people's minds shouldn't be houses anyway. It should be retirement, and if you buy a home in the Bay Area, you'll never retire unless you sell and move away... which defeats the reasoning for living here entirely doesn't it?
I love hearing blunt statements like this. I too have lived in numerous large metropolitan areas. Each had their own form of culture, identity, and character. I've also been to a number of smaller, second tier cities that also had a wonderful atmosphere-like Nashville for example. It is perfectly fine to say that you like a certain area/city better than another. But to say that one has more of "X" over another is kind of arrogant in my opinion.
It's not arrogant. It's the truth. Once again, I spent 7 years in Minneapolis, 5 in Seattle, and now 3 here. The culture, identity and character of Minneapolis are gravely less than those of San Francisco (and to some extent Seattle). Minneapolis' strengths are it's art and theater (truly fantastic, I'll give Minne that), but San Francisco still holds the edge and has a ****-ton over Minneapolis.
While I think we are on the same page, I couldn't disagree more with a house being an asset. By virtue of a home purchase, the home is none other than the property of the bank until the remaining balance is paid. Secondly, if you want to keep ahead of inflation, buying a home is not a guaranteed hedge against it. Housing cycles are unpredictable and tied almost entirely towards herd mentality. The booms and busts can happen almost immediately. Unlike the stock market which with great reliability has performed 7 out of 10 years for over a century, housing busts and booms aren't as regular and take much longer to return to boom cycles. A down cycle can last 5-10 years or more. The last bust in the 80's and early 90's didn't see a return to a healthy form of appreciation until 1997, and even then the rise was fairly low. If you bought a house 2 years ago, chances are you won't see a return on it's value for another 5 years or more. Bottom line- stocks always outperform housing.
Lastly, everyone talks about how much their home is worth and how much equity they have. That doesn't mean anything unless you actually sell it, at which point I fail to see why you'd buy in the first place if all you're going to do is sell it in a few years. The same and more would've been accomplished by investing in stocks.
Frankly, the bigger issue in people's minds shouldn't be houses anyway. It should be retirement, and if you buy a home in the Bay Area, you'll never retire unless you sell and move away... which defeats the reasoning for living here entirely doesn't it?
I work in financial planning. A home is DEFINITELY considered an asset. You build equity and as time passes the debt to equity ratio decreases. Furthermore (although not right now every where), you can definitely make money in real estate, especially in San Francisco. Home prices have not fallen here, and have a long historical track-record of increases in value to discredit your statement. I know a lot of people who start out small, build equity, sell for profit, and buy something bigger.
Regarding your last paragraph - no. While I definitely think planning for retirement is very important, you cannot live your life today solely focused on tomorrow - tomorrow may never come. I doubt I'll retire here, and I don't know if I'll ever own here, but I am young and there's no better place for me.
I seriously do not know how many times I need to repeat this: I AM NOT TALKING ABOUT JUST HOUSING! Go reread my original post and many subsequent posts. I'm talking about COST OF LIVING, which consists of more than just housing! Yes I know demand is high as it should be, but there are other factors that drive up the COST OF LIVING that are not directly related to housing.
DEMAND DRIVES UP EVERYTHING - GET A CLUE!!!!! It's a basic economic principle that affects every single price out there. Demand is high - prices go up, demand is low - prices go down. SIMPLE!!!!! People want to live in San Francisco and they're willing to pay a premium to do so - for all goods and services (including housing)!
You need to repeat it many times because you're wrong and you make no sense. Everyone else gets it but you!
Do you realize how many programs SF ALREADY have in place for the homeless that do almost nothing? And it's not b/c a lack of funds either, it's b/c of incompetence and no accountability for the people that run those programs. If higher taxes are the solution then why do cities with LOWER taxes and less homeless programs have less of a problem with the homeless than SF? You can throw as much money as you want at a problem but it doesn't mean it will solve it. Why throw money at something if it doesn't help?
You obviously are clueless on more than just economics. Most other American cities do not have the same homeless problem because:
1). Climate - San Francisco has mild winters and mild summers - both are welcoming to the homeless - no harsh winters or brutually hot summers to survive.
2). San Francisco is very liberal and tolerant of the homeless. As a friend from NYC said while she was here, "The difference between NYC and SF is that we give pennies, you give dollars."
3). The police do nothing.
Three huge factors that contribute to the problem. There are more, of course, but climate and tolerance go a long way.
Stop talking about things you know nothing about. I am saying that it needs to be illegal to panhandle or sleep on the streets - to do so, you need to have enough programs in place to take care of the homeless as well as police them. It would make for a more pleasant and safe city. Something has to be done, and unfortunately, the homeless problem is just not going to go away on its own.
If only it was so easy. I cannot stand this mentality you TRANSPLANTS have brought here. "if its too expensive then just leave and go somewhere else"; how about people like you that come here and jacked up the cost of living, especially with your tax and spend mentality, go back to where you came from! So us natives must leave b/c of a bunch of pretentious, self absorbed transplants can have some overrated "culture". REAL Bay Area natives don't just expect those who are from here and have roots here to just up and leave for somewhere cheaper b/c transplants are ruining this state.
Funny. I have several friends who are natives and don't have these issues. You need to figure out where your anger is really coming from.
It's funny - you mock my post, but reread yours! You've said some pretty ridiculous things yourself.
I liked living in Minneapolis and I will always have a place in my heart for Minneapolis. But, let me tell you, I was exposed to so many new things when I moved to Seattle, and even moreso when I moved to San Francisco. Minneapolis is a regional midwestern city. It just don't not offer what Seattle or San Francisco (to name a few) do.
LA is not much less crowded than San Francisco. I go there frequently - and it sucks that you have to drive every where. It is the same in Minneapolis. There's just not much of a vibrancy in Minneapolis, in terms of being able to spend hours in a number of neighborhoods and find plenty to do. I lived in Uptown, and it's nothing like many many of the neighborhoods here that are full of life.
You also cannot even compare the food in Minneapolis with San Francisco. San Francisco is always in the top 3 of the great culinary cities of the U.S. - Minneapolis isn't even on the list. Put it this way - two friends were visiting me (from MPLS) in Seattle. We spent two hours walking around Capitol Hill looking for a place to eat. Capitol Hill is full of great, non-chain restuarants. Nothing looked good and one said, "Is there an Applebees around here?" I mean come on. And Capotle? What crap and it's so popular there. Try a burrito in the Mission and you'll never want Capotle again.
Sorry, but I have experienced living in both Minneapolis and San Francisco (you have not) - San Francisco offers the world, Minneapolis?
Yeah, how many years ago was it that you lived here in Minneapolis? I have been here for 25 years. In the past 10 years it has changed dramatically. Ethnic restaurants galore!! I have been to Seattle and had thought of moving there. Seattle is nice and very livable, but to me the rain and damp is just as bad as the snow and cold of Minneapolis.
Yeah, how many years ago was it that you lived here in Minneapolis? I have been here for 25 years. In the past 10 years it has changed dramatically. Ethnic restaurants galore!! I have been to Seattle and had thought of moving there. Seattle is nice and very livable, but to me the rain and damp is just as bad as the snow and cold of Minneapolis.
1992-1999. I go back once a year to visit friends. I'm aware of the changes Minneapolis has made, but it's still a regional city with little importance on the national or international stage. Minneapolis is so cold in the winter it borders on torture. I can remember days of temperatures so cold that when it got to 5 below it felt so warm. Seattle is very mild and the rain is more of a drizzle. Sure it sucked at times (a lot of the time), but I'd take Seattle weather (year round) over Minneapolis weather any day. At least, in Seattle it isn't painful to be outside 5 months of the year (Nov, Dec, Jan, Feb, March) like Minne.
DEMAND DRIVES UP EVERYTHING - GET A CLUE!!!!! It's a basic economic principle that affects every single price out there. Demand is high - prices go up, demand is low - prices go down. SIMPLE!!!!! People want to live in San Francisco and they're willing to pay a premium to do so - for all goods and services (including housing)!
You need to repeat it many times because you're wrong and you make no sense. Everyone else gets it but you!
How does demand lead to unnecessary taxes and fee's? How does demand lead to higher bridge tolls? What does demand have to do with CA's worst public policy ever, prop 13? It's not just that simple at all. Other places have high job growth and high demand but aren't as expensive b/c they don't have as many regulations, ordinances, fees, taxes, ect.... And that is on top of the national problem of lax lending that more than doubled the price of homes here. Did demand double too during that time? I guess you just can't understand things beyond the simple supply and demand equation and realize that there is more than just demand for housing that drive up costs for everything.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
