BAY AREA / Population expected to swell by 2 million / ABAG report says number of jobs and people will increase through 2035, but regions housing stock may not keep pace — This article goes on to talk about the housing problems. I only run this to emphasize the disparity between reality of a genuine housing shortage and those who forever wish for a housing bubble and crash in Northern California. It simply can’t happen with this trendline. Although things have settled down I can assure you that prices will begin to rise again soon. Buy now or get out. And for those looking for a mythical bubble, I’d advise you study the Hong Kong Real estate market in the 1990’s to see how things can get weird.
The Bay Areas population will rise by about 2 million people over the next 30 years, with the largest increases in San Jose, San Francisco and Oakland, the Association of Bay Area Governments projected in a report released Thursday.
Planners and demographers said Thursday it may be time for the Bay Area to bite the bullet and plan for density, because people will continue coming here to work.
Currently we are in a one year housing price increase hiatus in the SF Bay Area as are other zones. A classic example of price movement is shown in the graph below. It’s for Palm Beach county and is fairly typical for hot areas. In Northern California I expect to see prices begin to follow a similar pattern making properties appreciate at a scorching rate right up to 2010. Bubble, maybe, but it ain’t poppin’!
May not keep pace? I doesn’t keep pace right now!
Try and fin a new house in a neighborhood that is less than a 1hr commute into SF that doesn’t look like CSI-San Francisco under a million $. It used o be Location Location Location… now it’s Traffic Traffic Traffic.. Along with that any commuter rail or anything is voted down because it will just allow people to move furthur out… Ceating more traffic…. Unless the population drops the pressure will be on,
There isn’t going to be many houses built here. Where? Redding?
Interesting. Dan Gillmor (among others) preaches the “housing bubble” model incessantly. He’s right about a lot of things, but perhaps not this.
On the other hand, wasn’t there a news piece just this week about California showing net losses in population?
I’m personally ambivalent. Since I own a house in San Jose, I’d certainly love to see it rise in value; it’s my main retirement account. On the other hand, there is no way for my kids to settle down on the Bay Area because of the high cost of housing.
Because of that, I think demographics in the area are going to be interesting in the next few years….
I’ve said this before..If you bought a house when Dan Gillmor first began to preach about a “bubble” you’d be rich by now from appreciation. From my perspective I see all prices doubling by 2010. This pretty much will match the 30-percent annual rise seen elsewhere. By then the area will be unlivable and perhaps it will stop appreciating for a longer term. Genuine commuter rail such as that found outside of New York or Paris would halt this trend, but the dingbats who run the State would never approve it.
It will really turn into a have and have-not region, with people commuting hours daily just for the privilege of owning a home.
What is the payment note on a 1.3 Million dollar house? How many can afford a $7000 / month payment?
I just bought a house in Texas, Fort Worth area, 15 minutes from the airport, 5 blocks from the freeways for easy access. For $86,000 total price I got one full acre (horses in the neighbors yard), remodeled 2 bedroom home (empty nester). Total payment on a 15 year loan is $800 / month including taxes and insurance.
I expect lots of people to sell their $1 million homes, take the profit and buy an inexpensive place (like I did) and enjoy the profits from their home as a real nest egg.
Damn Im starting to like the idea of getting land somewhere else.
Well it’s popped here! I’m in Palm Beach County.
Here’s a link to the Palm Beach Post:
Here’s a quote in part from the article discussing foreclosures:
“… buy a home during the housing boom, when home prices were lofty. This year the housing market is in a deep slump.”
Well then your slant on this is not much different than the liberal crap I usually see.
Please explain to me how anyone can afford to live in these areas? I’m a developer and salaries seem to be only slightly more in the Bay area vs Nashville, TN (where I’m at). $70-90k can only go so far! $5k, 6k, 7k morgage payments plus taxes, insurance… Does everyone have multiple full-time jobs, rich parents, or live off the extra $100 left over after the house is paid for? Or does everyone make $200k+ a year? Someone please explain this, I haven’t been able to figure it out.
With broadband everywhere and companies willing to telecommute, why don’t more people move to other areas where $100 /sqft is still the norm like nashville?
#8 – Sporadic –
By standard formula of income -vs- housing expense, only 12% of the population of San Francisco can actually afford to live there… all the rest are paying higher than formula for their housing.
To answer your question: average person in the bay area has 1-2 months total savings and large non-housing debt.
I read somewhere that when calculating the overall revolving debt, the taxes related to future sales, the true possessions, the car payments, etc, the average full net worth of a family in the bay area is a grand $12,000. They don’t have any equity in their house, they don’t own their car, they owe lots to the credit card companies, and they have miniscule savings.
#10
“They don’t have any equity in their house, they don’t own their car, they owe lots to the credit card companies, and they have minuscule savings.”
Don’t have enough to buy what you want? No Problem! Just borrow it ! Well at least we are following the fiscal example set by the American government.
Welcome to the new American Dream!
Steve
Richard Florida, the author of The Rise of the Creative Class, had a good article in the October issue of the Atlantic about why certain areas will stay and become even more expensive to live.
Here’s a link to the article:
http://www.theatlantic.com/doc/200610/american-brains
“With broadband everywhere and companies willing to telecommute, why don’t more people move to other areas where $100 /sqft is still the norm like nashville? ”
Shhh! Stop telling our secret. I really like the SF Bay area. But is it really worth the cost? We have had a huge influx of Southern Californians to the SW Colorado area. They sold tiny houses for big money and buy trophy ranches out here. Trade the ocean for the mountains and little to no traffic. Seems like a decent trade. Here you can get a 40 acres and nice house for around 500K. Or 3 acres and a beautiful house for same. Nightlife is different, Telluride ski resort an hour away. Nice trade off.
Here’s something to think about.
2 years ago *at the peak of the real estate frenzy’ we sold our place in San Fran (as my relatives in Chicago call it) and moved back to Chi town (where I grew up) . What happened was very interesing, We moved into Naperville, IL rated like #2 great place to live etc.. Beautiful town. We really liked it. And we bought a HUGE HOUSE on a gated golf course. for 450K!!! like totally amazing… BUT! and there is always a BUT… the taxes were 19K per year!!!! 3 times the rate as California!
After 1 year, well lets just say we moved back to SF. Our little crappy house north of the Golden Gate Bridge had doubled in price.. And there was absolutely nothing for sale that I wouldn’t consider tearing down. We ended up paying 1.2 mil for a house that would cost 200K elsewhere. Bit you know what? It’s worth it… go figure.
Maybe someday we’ll go look elsewhere. Naperville was really nice, but toooooo damn cold! ha!
BTW, in the Marin Independent Journal paper tonight.. the median price is $925K as of Dec 15th… for a ‘house’, and believe me, 925K will buy you crap. Marin is the county just north of the Golden Gate Bridge.
Amazing isn’t it?
Again, people should examine the Hong Kong market in the 1990’s when small one bedroom condos were selling for millions!
This isn’t rocket science. It’s supply and demand. I do not understand why this isn’t brain-dead obvious. If the SF Bay Area once again heats up with hi-tech BS, a new boom is on and prices will skyrocket.
What amuses me to no end (see West Pam Beach post above) is that the housing prices will stop accelerating and even recede by perhaps 1-2-percent. This is somehow the “bubble” popping. I’m laughing out loud. This is actually happening now in N. Cal. And it happened back in 2001-2002 after the dotcom true bubble. It’s so short-lived it’s ridiculous.
When we(my parents and I ) came to the bay area last year, my Dad thought it might be a nice idea to buy a small house instead of paying the outlandish rents here. We looked near Stanford Medical Center, since I was going to be spending a lot of time there. Well, forget that. The cheapest place we looked at in Palo Alto was an 1100 sq. ft. house, built in 1953….with NOTHING to offer, except a roof and walls, no pool, a small patio, a yard smaller than my mom’s flower garden at home, for 875,000.00. We went south to San Jose, and after 3 weeks of looking at what surely had been former crack houses for 750,000.00 and up, my Dad said screw it….we rented. We pay 3200.00 a month for a 2 bedroom, 50 y/o house, in a nice area, not fancy, a patio, no pool, a decent yard. Only because the owner didn’t have it mortgaged to the hilt, but owned it outright.
What has amazed me is that San Jose is at least 40% Hispanic, and 80% of the people here make less than 50,000.00 a year. How in the hell can they do it. I talk to all kinds of folks when I run in the mornings, and most barely speak english, have no high tech skills, yet, they somehow manage to rent homes and apts. here, and buy grocery’s and stuff, which are twice the cost of Phoenix.
500 sq. ft, studio apts start at 750.00 a month, plus utilities.
Yet, you see people with normal jobs, that own 3/4 million dollar, 50 y/o homes, drive 1 y/o or less SUV’s and cars, eat out constantly, have all the bells and whistles(pic cell phones, blackberry’s, blue tooth, super putors)….I just sit totally in thrall and watch people here.
My Dad has a friend, who is a millionaire many times over, who just bought a 2.5 million dollar, fixer-upper, in the hills above Los Gato’s, when I saw it, I thought, this is nice, he gutted it and spent a million to redo it. It was on the market for 4 million for 2 years, he waited for it to come down before he bought it. In Phoenix, you could buy a 4000 sq. ft. brand new mansion in Paradise Valley for 2 million and save a half a million.
This place is crazy….and it’s growing by leaps and bounds, but mostly poor people coming in…..how can it get anymore high end than it is?
I volunteer at the food bank a day or two each week. There are 175,000 people getting free food in Santa Clara county each month. They have a HUGE donation program from all the markets, and the farms around here, yet, they can only supply people with 3 days worth of food, 2 times a month. The patrons parking lot looks like a fancy mall, full of Lexus, Mercedes, SUV’s, all there to get their 3 days worth of beans and rice and tortilla’s, and tuna fish.
If your lucky enough to get on a housing list for section 8, you can earn 32,000.00 a year as a single person and get section 8, or 43,000.00 for 2 people…..my God, in Phoenix, you can’t earn over 18,000.00 a year for a single person and get housing.
Sorry…..I just get all hyped about what this state has become.
Everything eventually resets. Just not tomorrow.