January 29, 2015

The house prices. They won’t stop going up.

They just keep going, and going, and going, and going!

To infinity and beyond!

Comments (28) -- Posted by: burbed @ 12:47 pm

28 Responses to “The house prices. They won’t stop going up.”

  1. SFbay area Says:

    I dont see prices going up in South San francisco(Westborough). Any reason?It still has not reached the 2005 prices.

  2. deertick Says:

    Its been years since I posted here. But I was thinking about the housing market and overall bubble that has returned yet again to the Bay Area. I’ve lived here for 15 years and been through several boom-bust cycles. I got here when the last tech boom busted and missed out on that one. Living here sucked for a long time because I made jack for money. I worked my way up the chain in jobs making better incomes along the way. Meanwhile home prices went nuts and priced us out despite the good incomes.

    Then 3 years ago we bought a house. Ever since then the prices have gone all nutty again and its very bubblicious out there. My feelings now are the same as then. Its ridiculous. I’ve seen the Bay area bubble up and pop before and it’ll probably deflate again someday. So in the meantime I save and save for that inevitability.

    For all those whom are looking for a house, I TOTALLY feel ya. We were priced out the last cycle and that was totally irritating. My advice? Hold tight. If you can’t afford now, save up your money. Monitor the stock market and look for signs of a direction as to whether the bubble will pop. Be patient. At some point it’ll end like the last several did and when it does, wait for the dust to settle and then see what the prospects are.

  3. burbed Says:

    Where did you buy?

  4. Astro Wallaby Says:

    It is astounding just how nuts it is all over again and I suppose I should be cheering for it; according to Redfin in our neighborhood tract houses exactly like mine that bottomed out as low as the low $600k’s a few years ago (when we bought) haven’t sold for a penny less than a million bucks for the last year. But… as awesome as that level of appreciation might be if we were decide to get the heck out of Dodge before Armageddon it’s completely ridiculous and unhealthy from a macroeconomic/demographic standpoint. I’m stuck on the idea that this *should* feel like a “middle class” neighborhood, maybe even verging on blue collar, but judging from what many of the latest buyers immediately do to the houses they buy here after the sales close they must be being bought by people with serious bling to throw around. (Be it real or imaginary-via-crazy loans, I’d love to know what percentage of each it is.) Little 1300sf tract cottages are mushrooming into two story monstrosities; the house around the block from us at least doubled in size and looms over our backyard, which has me thinking of installing a hatefully tall shed in that corner to block some line of sight from its newly sprouted second-story windows.

    Feh. As counterproductive as it might be I sort of wish it would crash again and get it over with.

  5. Sf Bay Area Says:

    I purchased in south San francisco

  6. michael Says:

    The only entities that benefit from high home prices are the banks, homeowners that sell, and of course the local government. Everyone else wants low home prices.

  7. Alex Says:

    I’m waiting for the bubble to pop any day now.

    I’m tempted to sell my house but then the rent would be just as ludicrous. If I had a second house, that would be a different story.

  8. deertick Says:

    Bought in an East Bay environ and that’s as far as I reveal. Anyway just “Astro Wallaby” above we too bought what was at one time a mass-manufactured tract home 50+ years ago in a neighborhood full of the same model. Most of the neighbors have lived in the homes since new and most are strictly middle class, having spent decades working as teachers, salesmen, civil engineers and so on.
    Also like Astro above any of these that pops on the market sells right away for 40-50% more than what we paid for ours. These were going for 500k 3 years ago. Now they’re more like 800-900k. Again- these are plain-jane boring houses. The people buying them are a lot richer than us, drive much nicer cars, and as also mentioned by Astro tend to try and disguise the small tract home they just paid a cool mil for into something that looks like “rich people”. Its sort of ridiculous.

    As mentioned before I’ve been here 14-15 years. I saw full well how ridiculous it was when I first got here with a huge tech boom, lots of people with lots of money, and then followed swiftly by an equally crazy housing boom. These days it very much feels EXACTLY and uncannily like it did when I first arrived in 2000. Unlike 15 years ago when I was poor and destitute I now do pretty well and am firmly benefiting from both booms.

    That said I am wary. I saw what it was like when the entire Bay Area was on cloud nine, the sky was the limit, San Francisco was like a playground, the sky cranes were busy and the freeways were turned into parking lots. Then it all came crashing down. There isn’t a day that goes by that in the back of my mind the thought comes up of when this one will end. Will it be next year? The year after? Who knows? I take advantage of the situation now but always with a respect for the past and with an eye towards fiscal conservatism for the possible future stormy weather.

    Just like Astro I too feel that the environment now in the housing market is unhealthy. The more crazy and out of touch the market becomes the more possibilities of a more painful crash which evaporates money, the economy and jobs along with it. Those whom feel all smug and snug in their homes they bought a few years ago for less like me shouldn’t automatically sit back and relax. Come another housing bust it will be a repeat of 2008-09.

  9. burbed Says:

    > There isn’t a day that goes by that in the back of my mind the thought comes up of when this one will end.< This time it's different.

  10. deertick Says:

    “This time it’s different.”
    Ah yes! that harkens back to the “old” housing bubble.

    So something I’ve also been thinking about: Where is the outcry over this housing bubble? The current bubble is actually worse than the last one. There are people I know my age, same income and all who can no longer afford to buy and are considering crazy faraway exurbs as their future homes, clearly willing to commute 2-3 hours each way… for a house.

    Remember the “good ole’ days?” Sites like this one had HUNDREDS of responses for every post. There were dozens of sites that all carried along the same general theme: ” The housing bubble is outrageous! Let’s voice our frustration!” I was one of those folks. I remember how absolutely frustrating it was to be making a good income, having done all the homework and saved for years only to find the prices just kept growing higher and higher with every dollar more I made. It made no sense. It was clear that thing could not continue in that manner.

    That was 10 years ago. Now a brand-new generation of young people, some with new families are in the same boat as we were. Yet where are they? Did people simply get tired of the bubble talk? Perhaps maybe when the last one popped and the rewards many counted on in the form of 70% price reductions to take advantage of never really happened it dissolved the hope that a pop would solve it all?

  11. DreamT Says:

    Well desirable areas hardly decreased in price in 2008, and inventory has been decreasing eversince. It was even harder to buy at the depth of the recession when 50 people compete for a $500k “bargain”
    Also the newer generation mostly gave up I think, they prefer to cram SoMa… Also we probably have another 2 year in this cycle, so talks of bubble still seem premature. Kinda like talking bubble in 1999.

  12. Real Estater Says:

    Alex says:
    >>I’m waiting for the bubble to pop any day now.


    >>This time it’s different.
    Actually this time it’s the same. Bay Area home prices will go up forever.

  13. Real Estater Says:

    >>Where is the outcry over this housing bubble?

    Why should there be an outcry? High home prices is a good thing. It’s a reflection of a great economy and the desirability of our area. When prices came down last time that’s when we heard a big outcry.

  14. deertick Says:

    Sky-high home prices are not good for the area. Many of the people I either work with now or in the recent past make the same amount as I do and now can’t afford to buy anywhere near their jobs. So they’re all moving to the East Bay where they’re driving up prices there. Eventually those places will also become unaffordable and so the most talented employees will sort of be out of luck.
    Secondly- It sounds like there are some extreme short-term memories here. The housing bust not only threw the economy into a near-depression but it also destroyed jobs, sucked local and state funds for public services dry- of which most have not recovered- and it dropped prices dramatically throughout the area. The house I bought was bought at 50% less of what it has sold for just 4 years before. Now its back up again but for how long?

    Housing bubbles create extreme levels of instability and volatility.

  15. Real Estater Says:

    Affordable homes are still out there in the Bay Area if you look for it, mostly in the East Bay. East Bay is not exactly “nowhere near jobs”. Sure, it’d be nice to live on the peninsula, but if you don’t have a million dollar budget, it doesn’t mean there is nowhere to live.

  16. deertick Says:

    So you must agree with me then. There aren’t really any affordable homes. You mentioned the East Bay. The East Bay is very rapidly catching up. Daily I hear of some other person moving from SF to Oakland. Even some of the crummy areas are getting pricey.

  17. nomadic Says:

    Seems that finding anything under $1.5M with good schools on the southern part of the peninsula is a real challenge these days. Pretty crazy.

  18. DreamT Says:

    Townhomes in Santa Clara with CUSD schools go for $800k these days…. If you are ok with having 280 in your backyard,

  19. Alberto Says:

    I agree with Burbed: it’s not a bubble.
    At least, not the usual one.

    It’s real money. Whoever is buying now, is buying because has money to do it. Someone that was not “killed” by the last financial crysis and now is catching up with all the money pouring in from acquisitions, IPO’s, gain in the stock market. And this from everywhere, not only in US.

    Have you seen De-Leon Realtor last commercial on Facebook? Take a look at it.

    Whatever it is, even if it’s “dirty” money laundering, I do not see it ending or being stopped. Why should it be stopped?
    Sooner or later the Bay Area will become like Manhattan, with the difference you have engineers instead of brokers. Traffic is already at NY level. From my office to Palo Alto (almost 12Km), where I coach, it takes me almost 1 hour if I leave around 5:30pm.

    Well..whatever…I should have bought 3 years ago. Now it’s too late…

  20. Michael Says:

    Nope, it is not going to last

  21. mtv-renter Says:

    We have both a tech and banking bubble and population growth driving up prices in the bay area. The bubble will pop, the population growth will probably not change for a while, and housing isn’t being built quickly enough for the rising population. I think when this “pop” happens, it will be localized. Peninsula cities like Palo Alto (mega rich), Mountain View (the new Palo Alto), and Sunnyvale (Palo-alto to be) probably won’t see much declines, but everything around the wealth pockets should ease up a bit, with more price drop the farther you go from the wealth islands.

  22. nomadic Says:

    Then there are the rich people leaving Palo Alto for SoCal where it’s cheaper, warmer and more vacuous.

    Forget crying Austin man, now we have smug West LA man.

  23. Real Estater Says:

    Why not move to Texas then? Even cheaper, warmer, and more vacuous.

  24. Real Estater Says:

    mtv-renter, What basis do you have to say there is a bubble? or that the bubble will pop? or what will happen after it pops? It seems that you make up a series of claims with nothing to stand behind it.

    Like others have said, we have real money moving into real estate, a real tech economy making more money, and more people wanting to move in. What evidence is there that any of your claims is going to happen?

  25. nomadic Says:

    Let’s not get carried away, RE. Those people (in Texas) are f*ckin’ nuts.

  26. nomadic Says:

    Ok, that was unfair. I was judging based on their “popular” elected officials.

  27. mtv-renter Says:

    I see a tech bubber, Real Estater. VC money is chasing ludicrous things again, just like in 1999, and it can’t last. The VC money is already drying up for the dumbest of ideas, and since we’re so dependent on tech here, when the startup bubble bursts, we’ll see a whole lot of effective income burst and reduce the number of stock option funded house buyers, which will play out just like 2000 did.

  28. deertick Says:

    Its called cycles. There have always been and will continue to BE cycles of booms and busts. That’s been the case in California since 1849 and this time will be no different. As someone who has been through several boom and bust cycles I would advise anyone who is currently doing well in whatever profession they’re in to simply save up and always be prepared for whenever the next dip will be… because it will dip. Its just a matter of time.

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