It’s All a Matter of Perspective

“The goal of owning a home seems to be getting beyond the reach of more and more Americans.  The typical new house today costs about $28,000.”

Business Week 1969

“Housing experts predict price rises in the future won’t be that great…”

National Business Review of 1977

“The median price of a home today is approaching $50,000.”

Money Magazine 1985

“The golden age of risk free run-ups in home prices is gone”.

San Francisco Examiner 1996

“A home is where the bad investment is.”

San Francisco Examiner 1996

 

Some of this seems just good for a laugh, but I think that the overall message is that in whatever time you live, housing seems like it can never get more expensive than it is right at that moment.   It always seems like an uphill battle.  I think these quotes point out it’s important to keep things in perspective:  that while things go up and they come down, the overarching picture is a hopeful one.  Whatever doom and gloom you read about, the proof is right there in the unrealized predictions of the past.

As I quote the media to discredit it with one hand, I’d like to point out this very interesting article from the Wall Street Journal with the other:

Why It’s Time To Buy: The Clouds Haven’t Quite Parted, But the Long-Term Case for Home Ownership Is Looking Stronger

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Some thoughts on why the SF Market may be finally turning upward:

 

  • Strong demand/ low supply: It appears that the decline in values has bottomed out: median prices and average dollars per square foot are beginning to climb (though it’s too soon to know if it’s the start of a longer term trend)
  • Interest rates continue to be incredibly low.
  • Rents in San Francisco have been rising for the past year. When rents rise, the financials of home-buying improve.
  • High-paying high-technology employment is soaring in the Bay Area and many of those people want to live in the city, whether their company is in SF or outside of SF. And then there is the beginning of the surge in new high-tech IPO-enriched employees.
  • SF has always had a low foreclosure rate and distressed-home percentage when compared to the rest of the Bay Area, state and country, and now that market appears to be declining in the city. (Again, it’s too soon to be absolutely sure that the decline in distressed home listings and sales in the city is the beginning of a longer term trend.)
  • New-development home inventory – mostly condos, since the city has very limited space for new home construction — has been steadily declining and probably won’t significantly increase anytime soon because of the multi-year time-cycle for large development projects in SF. This will further constrain supply in the face of buyer demand.
  • General improvement in consumer confidence and optimism regarding the direction of the economy.
  • The recent run up in the stock market has improved the financial condition of the affluent more than that of the general population. Because of our prices, our buyers are almost always at the upper end of affluence.