Earlier quoted context omitted.
Part of this slowdown in consumer spending also has to do with the tightening of credit as well, making it more difficult for people without means to spend. In my opinion this is a great thing. When people are backed against a wall because they have no other way to pay for their livelihood than their salary, they're not going to be ok with stagnant wages and companies low balling them. Bring on the pain, I say. Real…
I wouldn't say that credit is driving up the costs of Bay Area homes, but the amount of wealthy workers in the area. And also consider that homes built today have to go through tons of regulatory costs (building codes, politics with permits), there are new technologies installed, AC, internet, upgraded roofing, better foundations, upgraded wiring, possibly an HOA, rec center, etc, paved sidewalks in front of every ho…
If this was true across the board (tightened credit), homes simply would not sell at their current prices. Most people, with the expenses of day-to-day living, would have a very difficult time scrounging up $600k for the down payment of a home, if they could do it at all in their lifetime. Meanwhile the stock of unsold homes and anxious homeowners looking to move would grow. Market forces would eventually push these prices down.
This isn't even theory. This literally happened after the crash when banks stopped loaning money. People wanted to buy houses, and why not? Loan rates were insanely low. But a substantial portion of the population found it difficult to extend their credit further, or get first-time credit, and thus house prices tanked around the country.
You're right that the Bay Area is unique. We have a dangerous combination of: The aforementioned credit, many highly paid people, and people who are younger, and perhaps less intelligent with how they evaluate the value of things, using credit as a sledgehammer to get what they want. But even well-payed engineers couldn't afford the houses around here without substantial credit extension.