This is my second weekly market missive. Our next sales meeting is a week from today. I’ll be sure to convey all the information-swapping we share then. In the meantime, here’s a refreshing perspective on the housing bubble:

Buried in last Tuesday’s business section of the Chronicle is an article about why the San Francisco housing bubble may be a myth. A link to the full article is at the end of this email, but here’s the gist of it–

A study from Columbia University and the Wharton School of Business concludes that: 1. The ratio of housing costs to income is more favorable now than at any other time in the past 24 years.

2. The annual cost of owning a home relative to renting in San Francisco is lower than it was in the late 1980s– just before the last major downturn in housing prices.

3. San Francisco has a ‘superstar’ status. People who make a lot of cash and are able to live anywhere in the country can choose where they want to live. San Francisco is one of those choices.

4. San Francisco’s housing market has outperformed the nation’s for the past 60 years.

The conclusion: price growth is not based on wild speculation and a housing bubble. Instead, rising prices can be attributed to economic fundamentals. This includes low interest rates, strong income growth and abnormally low prices in the mid-1990s. (*Sigh* Don’t we all wish we’d bought lots and lots of real estate then???)

I’ll be sending out more market missives from time-to-time. If they bug you, just email me and I’ll get you off my list. If you love ‘em, then forward them. I’m also happy to add anyone to my list. Just have them email me or send me their contact info. Thanks!

This entry was posted on Wednesday, September 28th, 2005 at 12:00 pm and is filed under Market Conditions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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