Median Home Price In San Francisco Hits $1.42 million: A Standard Condo In San Francisco Is Now Selling For $1.15 Million.

San Francisco housing has entered into a new reality.  Tech money and foreign cash continues to flood the market and pushing prices to astronomical levels.  The typical San Francisco crap shack now will cost you $1.42 million, a new record high with condos going for $1.15 million.  The city is entering into escape velocity of gentrification.  You have older Taco Tuesday baby boomers with rudimentary tech knowledge that bought decades ago living next to a new generation of wealth and tech savvy professionals.  You see this as well in Los Angeles.  Some real estate “experts” barely have a working understanding of tech but definitely know how to navigate to Zillow to view their inflated prices. San Francisco is such an odd case study.  A city that outwardly states it supports the poor but when you look at prices even making $100,000 a year makes you part of a new high income poor – at that income level a sizable amount of your net income is going to go to simply paying for housing unless you want to be part of the mega commuting culture that is now emerging in California.  What is going on in San Francisco?

The new ultra rich in San Francisco

It is hard for people to wrap their minds around the cost of housing in a place like California.  Not so much that it is expensive, but once you look at the property and price you realize people are paying high prices for crap shacks.

Take a look at prices in San Francisco:

https://i2.wp.com/www.doctorhousingbubble.com/wp-content/uploads/2018/03/1968-2010_US-CA-SF_Median_Price.jpg

And people are still active and buying. You’ll notice that prices for the U.S. and California overall are merely back to their previous peak price points. Adjusting for inflation, things are moving along more carefully. In San Francisco, we are in a different dimension.

You have foreign money flooding the market and you also have dual income high tech households trying to buy up what little inventory exists. This new class of wealth would rather live in a million dollar dump than spend horrendous hours in a commute. The new sign of status is living near your work, not a McMansion out in the middle of nowhere.

And properties are moving along nicely in San Francisco even at a median price of $1.42 million:

https://i1.wp.com/www.doctorhousingbubble.com/wp-content/uploads/2018/03/property-sold.png

What is telling is that the media is now in unison championing why real estate is a great buy, even at these prices.  Forget about the multitude of factors that now face our economy including jobs that don’t last for a lifetime or the necessity for mobility with the new workforce.  You have the Taco Tuesday baby boomer mentality where people want to stay put forever and assume everyone is going to follow in their same footsteps.  Apple wasn’t built following the old.  Facebook wasn’t built by following the old.  Tesla wasn’t built by following the old.  This generation is different and their need in housing are reflecting a changing tone.

Beyond the obvious, even at $1.42 million most are not going to have the money to buy these properties.  So what does this do to the current market? What does it do to neighborhoods?  Or how about the local school systems?

I think people just assume that high prices are always going to be part of the equation in California.  But recent history shows that we go in booms and busts.  For those that seem to think the market can only go up they should be out in the market buying real estate.  That is their position.  For those renting, you are already taking a position.  And many parts of the state are becoming renting majority counties.

San Francisco real estate continues to go up.  Who is buying right now?  Funny how those buying real estate at these levels don’t see it as speculation but think stocks or crypto are “crazy” – everyone picks their “investment” product and the market seems frothy across all areas.

Source: Dr.HousingBubble

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