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When supply can't keep up with demand, prices soar.
It's true that supply and demand simoultaneoulsy determine price, but typically the real estate market behaves as most others do - if demand spikes and the market price increases, supply will increase as suppliers expand operations and competitors enter the market in pursuit of profits. Supply then increases and the market price decreases until profits near zero and supply stops expanding. Now, in the Bay Area (and most major metro areas on the west coast really), suburban growth policies, land use laws, and difficult topographies severely hinder supply growth while demand continues to expand. The West Coast would solve a lot of its problems if it just took its suicidal suburban growth policies behind the shed and shot 'em.
It's true that supply and demand simoultaneoulsy determine price, but typically the real estate market behaves as most others do - if demand spikes and the market price increases, supply will increase as suppliers expand operations and competitors enter the market in pursuit of profits. Supply then increases and the market price decreases until profits near zero and supply stops expanding. Now, in the Bay Area (and most major metro areas on the west coast really), suburban growth policies, land use laws, and difficult topographies severely hinder supply growth while demand continues to expand. The West Coast would solve a lot of its problems if it just took its suicidal suburban growth policies behind the shed and shot 'em.
I'm inclined to agree. Most people I know who've worked in the Bay Area have moved to places such as Denver, Atlanta, Texas, Chicago, Boston, Seattle, etc. pursuing higher real (adjusted for cost of living) incomes, better schools, less choking density, etc. And the few people I know who currently live in SF/Silicon Valley are looking to jump ship sooner rather than later. It's generally one of the better areas in the US particularly in regards to job growth and overall quality of life, but California's utterly ludicrous suburban growth & land use/zoning laws, real estate investors, and the area's explosive population growth have made it nearly impossible to eek out a decent living there even making three figures.
Sure, you can blame some of the increase in values due to restricted growth, but bottom line, people are always going to want to live in coastal California. We did the Dallas thing for 4 years. After the first year it was quite miserable. Yeah, those terrible real estate investors, so evil. Look, the reason Texas doesn't appreciate is because of its miserable quality of life. We bought at the bottom in one of the best suburbs of Dallas with the second best school district in that area. The house increased from $318k to $383k in 3 years. Big deal. This was the best the area had ever appreciated. We put in about $25-30k in regular maintenance that we never would have done in CA. So the return is very nominal and not even worth buying into.
Also, I question just how good of schools are in Texas. Sure, our school had the highest test scores, etc, but my kids are having a much more difficult time in CA in the classroom than they did in one of the top school districts in Texas. But hey, great that so many are finding happiness in in Denver, Atlanta, Texas, Chicago, etc. that's awesome.
Sure, you can blame some of the increase in values due to restricted growth, but bottom line, people are always going to want to live in coastal California. We did the Dallas thing for 4 years. After the first year it was quite miserable. Yeah, those terrible real estate investors, so evil. Look, the reason Texas doesn't appreciate is because of its miserable quality of life. We bought at the bottom in one of the best suburbs of Dallas with the second best school district in that area. The house increased from $318k to $383k in 3 years. Big deal. This was the best the area had ever appreciated. We put in about $25-30k in regular maintenance that we never would have done in CA. So the return is very nominal and not even worth buying into.
Also, I question just how good of schools are in Texas. Sure, our school had the highest test scores, etc, but my kids are having a much more difficult time in CA in the classroom than they did in one of the top school districts in Texas. But hey, great that so many are finding happiness in in Denver, Atlanta, Texas, Chicago, etc. that's awesome.
Well, I don't know that they're happier, just that the principle of revealed preference seems to indicate that they'd prefer to live somewhere other than the Bay Area.
Given what I could make in the Bay Area, I would probably prefer to live there as opposed to Dallas just for the climate and scenery alone (although Austin's probably a tie), but the hard reality for everyone is that money only goes so far in certain places (such as the Bay Area) and you can't blame anyone for trying to maximize what they can get for their income especially if they're trying to start a family.
As for why Dallas area home values don't rise very quickly, it isn't really because of quality of life. Despite the area's perceived low quality of life, that doesn't seem to translate into demand for housing, which is constantly on the up and up all over Texas. The reason why home values don't rise quickly in Texas despite high demand is because 1) the topography is almost nonexistent - it's extremely easy to build anywhere; 2) Texas has no government-imposed suburban growth limitations and lax land use laws; and 3) there are no huge bodies of water to restrict outward growth. Land is simply very cheap compared to other major metros and the supply of housing has a lot of room to grow and does so quickly.
And I wouldn't dump on Dallas too much - it has some pretty good dense, urban residential areas, most notably Uptown Dallas.
Well, I don't know that they're happier, just that the principle of revealed preference seems to indicate that they'd prefer to live somewhere other than the Bay Area.
Given what I could make in the Bay Area, I would probably prefer to live there as opposed to Dallas just for the climate and scenery alone (although Austin's probably a tie), but the hard reality for everyone is that money only goes so far in certain places (such as the Bay Area) and you can't blame anyone for trying to maximize what they can get for their income especially if they're trying to start a family.
As for why Dallas area home values don't rise very quickly, it isn't really because of quality of life. Despite the area's perceived low quality of life, that doesn't seem to translate into demand for housing, which is constantly on the up and up all over Texas. The reason why home values don't rise quickly in Texas despite high demand is because 1) the topography is almost nonexistent - it's extremely easy to build anywhere; 2) Texas has no government-imposed suburban growth limitations and lax land use laws; and 3) there are no huge bodies of water to restrict outward growth. Land is simply very cheap compared to other major metros and the supply of housing has a lot of room to grow and does so quickly.
And I wouldn't dump on Dallas too much - it has some pretty good dense, urban residential areas, most notably Uptown Dallas.
Yes all the reasons you mentioned is quality of life. You can live far out in Dallas and I will be more affordable. You can live in Hghland Park and it will be more expensive than the Bay Area. Sure, people live there for jobs, family and execs that have access to the airport and can get anywhere easily.
I can dump on Dallas all I want. Unlike those that dump that have never lived in an area I earned my right by spending four miserable years there. You couldn't pay me enough to live there again. That's my opinion. I can see why people that don't care about outdoor activities, beaches, and just being able to enjoy outside would love living in Texas. That is their choice and I won't judge someone for that. It's just funny how judgmental people are in Texas about California though when all they have done is maybe spent a vacation here and form an opinion about an entire state.
Yes all the reasons you mentioned is quality of life. You can live far out in Dallas and I will be more affordable. You can live in Hghland Park and it will be more expensive than the Bay Area. Sure, people live there for jobs, family and execs that have access to the airport and can get anywhere easily.
I can dump on Dallas all I want. Unlike those that dump that have never lived in an area I earned my right by spending four miserable years there. You couldn't pay me enough to live there again. That's my opinion. I can see why people that don't care about outdoor activities, beaches, and just being able to enjoy outside would love living in Texas. That is their choice and I won't judge someone for that. It's just funny how judgmental people are in Texas about California though when all they have done is maybe spent a vacation here and form an opinion about an entire state.
Yeah all those things I mentioned could be considered quality of life but it's pretty obvious on the whole that the overall low quality of life in the Dallas area doesn't have much of an effect on real estate prices because population growth and demand for housing are higher in the Dallas area than in the Bay Area and among the highest in the nation. Quality of life does have an effect on real estate prices in some areas like Detroit, Cleveland, Trenton, etc. where demand for housing is extremely low, but not in Texas because demand for housing is growing despite the supposedly low quality of life.
I lived in San Jose for 2 years so I at least have some right to talk about Northern California. For me, I enjoyed my stint there and it was a very interesting place but I can safely say that on the whole I prefer northern Virginia, the northern suburbs of Atlanta, and now the Seattle area. I've never lived in Dallas so I'm not sure how it compares to the Bay Area, but I'm just citing some of the fundamental economic reasons why so many people and companies are leaving California (and the northeast) for places like Texas.
Yeah all those things I mentioned could be considered quality of life but it's pretty obvious on the whole that the overall low quality of life in the Dallas area doesn't have much of an effect on real estate prices because population growth and demand for housing are higher in the Dallas area than in the Bay Area and among the highest in the nation. Quality of life does have an effect on real estate prices in some areas like Detroit, Cleveland, Trenton, etc. where demand for housing is extremely low, but not in Texas because demand for housing is growing despite the supposedly low quality of life.
I lived in San Jose for 2 years so I at least have some right to talk about Northern California. For me, I enjoyed my stint there and it was a very interesting place but I can safely say that on the whole I prefer northern Virginia, the northern suburbs of Atlanta, and now the Seattle area. I've never lived in Dallas so I'm not sure how it compares to the Bay Area, but I'm just citing some of the fundamental economic reasons why so many people and companies are leaving California (and the northeast) for places like Texas.
Based on what metric? There is more startup activity in San Jose/SF compared to Dallas. Sure Dallas is home of Fortune 500 companies, like I said perfect for this exec to travel around the world living in Dallas. There is so much more demand for housing in the Bay Area than Dallas. I'm not saying Dallas is a slouch, sure the demand is there, but maybe just compare appreciation rates for each area over the last 4-5 years. Even the highest appreciation area in Dallas is not going to be as high as a mid level appreciation area in the Bay Area.
I too like NoVa, Seattle, but just say no to Texas is my opinion. I'm glad so many want to move there, i would to for a better quality of life than say the Northeast or Midwest which so many are actually doing.
Based on what metric? There is more startup activity in San Jose/SF compared to Dallas. Sure Dallas is home of Fortune 500 companies, like I said perfect for this exec to travel around the world living in Dallas. There is so much more demand for housing in the Bay Area than Dallas. I'm not saying Dallas is a slouch, sure the demand is there, but maybe just compare appreciation rates for each area over the last 4-5 years. Even the highest appreciation area in Dallas is not going to be as high as a mid level appreciation area in the Bay Area.
I too like NoVa, Seattle, but just say no to Texas is my opinion. I'm glad so many want to move there, i would to for a better quality of life than say the Northeast or Midwest which so many are actually doing.
There have been quite a few studies showing that companies and jobs on net are leaving California at a pretty decent tick while the southeast is leading in net job and company inflow. Here's one of them: spectrumlocationsolutions(.)com/pdf/Businesses-Leave-California-(.)pdf.
For sure there is a lot more tech start-up activity in the Bay Area than in Dallas, but start-up jobs aren't the only tech jobs out there and tech jobs aren't the only jobs out there.
The appreciation rate isn't a good proxy for "demand" by itself since price is simultaneously determined by supply and demand. The rate of Bay Area real estate appreciation wouldn't be nearly as high if supply were less restricted, i.e. if the Bay Area had more lenient suburban sprawl laws, didn't have an ocean to the west and a bay in the center, and had a less varied topography to build on. And the demand for housing in the Dallas area is higher since the population growth rate of the Dallas combined statistical area from 2010-2015 (that's the latest easily available data) has been almost 8% while the Bay Area/San Francisco combined statistical area has only been just over 5.5% from '10-15. But Dallas real estate doesn't appreciate as much because of its supply growth which is much higher than the Bay Area's.
I've only visited Texas but I think I would probably choose the northern or western suburbs of Austin if I had to live there.
What's so good about the place again? It's absolutely filthy, the homelessness, the potheads, the crazies, the crime. I can't stand the weather either. I want a proper summer like any normal place. I would be OK with the dysfunction if it was some giant world city, but there is no excuse in this small city of 800k. It's like people here try so hard to convince themselves that they live in a "world class" place. The rampant and collective delusion of this place is evident on this very forum. Only in San Francisco and the area do people feel the need to constantly spout to others and remind themselves of how "important" and "great" this place is. It's really not..people say that to convince themselves that the money they pay to live in this dump of a city or the boring Bay Area is so worth it. In the *real* cities I've been to, everyone knows where they live is "great" but no one ever talks about it. Confidence laced with self-depreciating humor. Say one negative thing about this place there is a huge uproar. Pathetic.
And it has nothing to do with money. I can more than afford to stay but I want out. I'm not weird enough or an H-1B visa tech nerd immigrant so I don't fit in. I'm not the only one as everyone seems to be fleeing in droves.
I'm out on business and when I left my home in an "upscale" neighborhood this morning, there was a man peeing on my doorstep. It was just sickening and I needed to vent. I just want to never return.
You are the man! Im a San Francisco native born and raised and you sir are spot on! When we look at San Francisco honestly, its Literally filled with Hipsters, Techies, homeless, Homo priders, gang bangers, crack heads, killer cops, and desush bag lefties of the worst kind.
I finally escaped the bubble we call San Francisco. Im a millenial and now I live in Madrid Spain and I will never go back to crappy, dirty, foggy, expensive, chaotic, boring, sleepy San Francisco now that I got a taste of a real City like Madrid. I also visited Rome, Paris, Barcelona, Veniezia, Brussels, Amsterdam. Point of the story is that There are so many great cities in the world, why anyone would pick to live in SF is beyond me. The only reason I used to live there was because I was born there. I even got a few SF tattoos on me that I wished I could get removed. I never thought id say this but Fucckkk San Francisco!
Location: "Silicon Valley" (part of San Francisco Bay Area, California, USA)
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Why do you guys want a sfh so much? I grew up in one, but I have to tell you, I enjoyed the year that I lived in a rented room in downtown San Jose. I had everything that someone in a sfh does, except it was shared. In the suburb where I grew up, I felt the awesome energy of Silicon Valley and the Bay Area, but it was stronger in downtown. Like the song says, "the lights are so much brighter there, you can forget all your troubles, forget all your cares, so go downtown!"
We don't need to ease restrictions on suburban growth. We need denser housing. I would build 100 story buildings full of four bedroom condos, each room holding 100 square feet. I would put them close to light rail (or BART depending on which city). In the case of San Jose, they would have to be in the south to avoid the height restriction on downtown due to the airport, but it is only a short light rail ride away.
I would build 195 foot tall buildings in downtown San Jose, full of those same four bedroom housing units with 100 square foot rooms.
I would ban new SFHs from ever being built in SF or SJ again. Density rules!
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