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Monday, February 29, 2016

More Warnings of Real Estate Bubble Apocalypse — Should You Care?

Posted By on Mon, Feb 29, 2016 at 1:21 PM

  • LinkedIn/Stacey Smith
It doesn’t matter if it’s Feb. 29 or March 1, it’s the same old story for San Francisco’s housing market. Or is it?

Depending on which electronic news source you read, it’s either impossible for most everyone in the city to afford the current median home price, or super impossible. We’re talking 11 percent  and 8 percent of people living here can afford to buy a home here, folks. As for the discrepancy, it appears SFGate just flat read the report wrong (it’s those extra-February-day blues apparently), but the figures are scary nevertheless.

Unless you have $240,000 under your mattress and a solo or combined household income of $250,000, you might as well start checking the listings in Portland (wait, they don’t want you either).

While those figures are more sobering than your 40-year-old roommates’ toenail clippings all over the bathroom, the real meat of the story is the fact that this kind of data was floating around right before the world economy — and especially our mortgage-backed own — imploded like a supernova 8 years ago.

If you want to get depressed and angry at yourself for moving here, scroll through this Paragon Real Estate report and look at all the charts. They clearly spell out: Run for your lives! Unless, of course, you’re one of those one-percenters creeping around the streets in your silent Tesla.

Business Insider points out that it’s the end of days for SF’s housing market thanks to a few factors.

There’s a crap ton of housing “in the pipeline,” which means permits are filed or shovels are already deep in the ground. We’re talking more than 60,000 units, with a bunch anticipated to be market-ready this year.

But houses only command big prices if there is big money vying for them. Locally, this big money comes from venture-backed companies. And, maybe the scariest of all, the startup world is (gasp) struggling. We saw this coming too back in January.

The city’s long-running economic driving force, that was supposed to make us the envy of all other cities, is running on fumes. And when the venture capital dries up, so too do all those perk-heavy jobs that might pay enough to afford a home here.

So what’s next? Hard to say. With all the homes in the pipeline, it’s enough to accommodate some 137,000 potential new residents. Yes, we know the city is currently about 850,000 strong and feels as dense as a fruitcake. That means there will be a lot of empty units, and expensive ones.

But not for long! Prices will certainly dip and things will get ugly for the people who invested so much money here. Oh well, they’re rich already.

There is one trend that at least some folks will be happy to see. If indeed we see a housing glut and the tech sector stops hiring, all those transplants who despise homeless people will probably move back to where they came from.

These folks will be thrilled.
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Max DeNike

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