The large misalignment of prevailing median wages to land pricing around the world has puzzled me for decades. Personally, as someone outside of the real estate industry, any of my real estate-related expenses in my business (I'm all remote) and personal lives are near-total deadweight losses to me. But I don't ever see a kind of "your margin is my opportunity" transformation drop real estate around the world >90% in valuation to free up the stranded capital for other industries, as the real estate industry is enormously powerful and wealthy, and I see no horizon where that is ever disrupted.
San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
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Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#162I would say the city being “closed” is the major driver. Among my group of ~40 coworkers, about 30 (including me) have left the city. As far as I know all but one were renting. Everyone who left gave the following rationale: - we can work remotely so move wherever or nomad now - SF is not very fun during the pandemic - WFH in my tiny apartment is much less enjoyable than when I was working in the office and didn’t sp…
therefore I’m moving for a year or so until things fully reopen Do you see an end to this pandemic in the next year or so? A good percentage of people are still refusing to wear masks, we aren't anywhere closer to a vaccine etc. I am trying to be optimistic, but the situation isn't improving from any direction and we are already 10 months in :(
It's a fair question, and for me the answer is open-ended. I expect this to last at least another year, but I really have no idea when things will feel "normal" and "safe" again.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#163Earlier quoted context omitted.
Is there a big difference between San Francisco and San Diego? They're both Californian mega cities.
Politically it's a lot more centrist. More housing friendly, no good transit options though.
I wouldn't be surprised if the massive, long-standing military presence in/around San Diego is a factor for the region being more conservative than most of coastal California.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#164That title reads super awkwardly. Anyway, on the flip side, the trend seems real from my observations. I live in a mountain town in North Central Washington. The real estate market has seen around a 35% price increase, homes are selling in hours all cash and almost every builder is already booked through 2021. It's almost exclusively people bailing from Seattle.
But Seattle has seen the same thing, the market has gone crazy here and there isn’t much housing supply to meet demand. That is just the forsale market, rentals are much weaker.
In my area (Methow Valley) rentals have gotten way harder to score since so many of the people who rented out second homes have moved here full time. It's a pretty big problem for the local workers.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#165> The figures underscore how the pandemic has roiled property markets and changed renter preferences. With companies allowing employees to work from home, people have fled cramped and costly urban areas in droves, seeking extra room in the suburbs or cheaper cities. I am skeptical. Yes a lot of Bay Area companies are allowing work from home for now, but are people really weighing that so heavily that they’re moving?…
It also seems like renting is the most optimal way to take advantage of a long term, temporary WFH situation.
A major advantage of renting (over owning) is being able to move when your lease is up. If the WFH thing blows over you can always move back at that point but at least you'll have saved yourself X months of expensive rent.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#166Earlier quoted context omitted.
yep - rent is the quintessential example of inelastic supply. A tiny shortage of housing can cause a huge jump in price.
> rent is the quintessential example of inelastic supply. A tiny shortage of housing can cause a huge jump in price. You'd need inelastic demand for this, not inelastic supply.
It seems to me like both are required. Supply is more elastic, but only in the medium term.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#167Not surprised. I have been seeing a lot more SF city parking stickers on cars in San Diego.
I am one of them. Oh boy life has been so much better since the move. Living 6min walk from the beach, everything is open including indoor dining.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#168Earlier quoted context omitted.
Sounds like for things that are inelastic, we should find ways (on both sides) to maintain a buffer if we want to have stable systems.
how would this work? the only way I can think of is for the government to buy above market when prices are going down and then unload them when prices go up. it's hard to see how the public would actually benefit from this. it's a little insane to use government funds to take perfectly good housing stock off the market and prevent people from living in it. seems like the cure would be worse than the disease. imo, it'…
And yet this is exactly what is done for farming: Paying farmers to leave fields fallow in order to maintain supply and thereby pricing.
Dropping property prices shouldn't even be an issue for owners. Property value and thereby property taxes should also go down. As long as they can cover that, then they can continue to own the property. Except in reality everyone is actually leveraged against their property and don't own outright. In which case, sounds like their leveraged risk failed and losing the property is supposed to be the outcome of that. And the new buyer can get it at a cheaper and more maintainable price.
I want to be clear that I'm discussing business owners of commercial property -- including residential rentals. Obviously the above is less desirable when we're talking about real people becoming homeless. But no one is going homeless if a business loses a leveraged property to another buyer.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#169Is there any data on rent changes in Texas? A Bay Area school district employee told me that she has noticed a big increase in requests to transfer student records to Texas districts. But I don't know how widespread that is.
The events of the past 6mo have caused tons of people in places like NYC, SF, etc who were on the fence to cash out an move elsewhere. Housing prices, local politics, just about everything is gonna suck real bad for the people in the destination locales because a bunch of people with more money than them are showing up and trying to tell them what to do.
That’s been a hidden instability of those markets, in my opinion - housing prices being so outlandish makes it trivial to cash out. For an average renter, moving probably maxes out at a few thousand.
Weak topsoil because of too few roots leads to a dust bowl like scenario.
Re: San Francisco Apartment Rents Crater Up to 31%, Most in U.S.
#170Not surprised. I have been seeing a lot more SF city parking stickers on cars in San Diego.
Is there a big difference between San Francisco and San Diego? They're both Californian mega cities.
San diego is much more spread out, has very nice beaches, is warm all year long. It doesn’t have good chinese food though.