| Is There A Housing Bubble? | September 28th, 2005 |
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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! |
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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:| Market Update, September 2005 | September 21st, 2005 |
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This past August was the slowest market we’ve seen in the past ten years in terms of number of closed sales. My personal opinion is that this was due to an incredible dearth of good inventory. Since Labor Day, open house traffic has slowed down for certain properties. District 5 (Noe, Glen Park, Haight, Upper Market) single family homes are experiencing less activity if they are priced over $1,000,000. Buyers who were burned by the heated summer market are fearful of multiple offer situations and holding back. The result is far fewer offers on a property. Some are receiving no offers at all on their offer date. If interest rates rise, there could be a spike in demand as buyers decide to get into the market while it’s still affordable. Properties perceived as good values are expecting multiple offers. One of Paragon’s listings—a good-sized single family home in Noe Valley listed just under a million– had exceptionally high open house activity. Relative to the past, there is substantial inventory right now— a lot of new properties hit the market after Labor Day. We expect the buyer demand to absorb the additional properties and anticipate a more balanced market soon (i.e. this is a great time to buy). We predict a strong stable market as we move towards the end of the year. No more wild appreciation, but good, solid growth. |
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Here’s a San Francisco market update, based on some story swapping and shared opinions at our sales meeting today (at Paragon we meet every couple of weeks). Keep in mind that what follows is highly subjective – much of it is based on anecdotal evidence.
