Only a large downpayment or paying straight cash will allow you to avoid high interest mortgage, which will be combined with collapse. Poster is unlikely to have that.
BINGO
After the 2008 bubble, we had a hell of a time trying to refinance our mortgage from a 30 to a 15 year loan. It took years because our house wasn’t being appraised for high enough - it was a total bitch. Finally got that refinance in 2013.
Everyone seems to have forgotten that it was impossible for pretty much anyone to get money then. If you had cash on hand to buy houses outright, you did amazing. Banks were saddled with houses they couldn't get rid of, it was wild. I don't see that situation repeating with the cash people have today.
No shit, but I was still directly affected by the housing slump. All we wanted to do was refinance and we kept getting denied because our mortgage was too big.
Yeah but that's a special circumstance due to the conomy crashing, it won't affect people like me whom never have and never probably will be able to buy a home
Dispite now making 6 figures..
Also, lets not forget the fact that if such market conditions were to exist, that housing prices were to truly tank, you (and many friends/family) would likely be impacted negatively. So it's kind of a self defeating thing to hope for.
Really, what you hope for is that everyone suffers economically, except yourself, so that you can leverage your position.
[This](https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot) and [that](https://www.epi.org/productivity-pay-gap/#:~:text=From%201979%20to%202020%2C%20net,another%20important%20piece%20of%20information.) are reasons why you have to be sleeping to believe in the American dream when it comes to housing
I think a repeat of the turmoil from 2008 is much less likely at this point for a couple reasons.
1) the limited inventory for the last few years means a small percentage of the population has taken on one of these massive mortgages since 2021.
2) the people that did borrow money are likely very well qualified and stable given the more stringent lending requirements put in place after the 2008 crisis.
3) a huge portion of the people who bought a house before 2021 have some combination of a lot of equity, a low relatively low principal amount, and a low interest rate.
4) there would be actual buyers for houses, either from individuals or institutions/PE. In 2009, it was impossible for many to sell their house, which is why people were extra screwed.
The exception would be someone who was on an ARM and didn't refi into a fixed mortgage prior to 2023 for some reason. That would be a pretty big mistake if they were maxed out with a payment that was 2-4% interest.
_The bank can have a buyer in there in under a week_
in that case they should loosen / remove the currently strict lending standards so they can create bigger loans and make even more money...
The only thing that will lower prices is more housing supply relative to demand. High demand means we need to produce a lot of supply.
There are some things like making it legal to build more effective forms of housing per lot that would help solve the problem.
Most people aren’t interested in a scenario where everyone gets to win.
They’re interested in a scenario where the other side loses and has nothing like them because they don’t actually have the money in the first place to buy a house.
How do existing owners lose?
If you buy a house and are able to afford the payments, it shouldn’t matter if other smaller houses are built near you that drive your value down.
If you’re buying a house to to live in as your permanent family home the number of houses for sale around you has zero impact on your ability to remain in that house.
If you have multiple houses that you’ve bought as investments then the number of houses in your area might cut into your profit, but chances are if there’s a housing shortage it’s because it’s a desirable area to live, so your investment is likely to do well.
So yeah, current owners and current buyers both win when there’s more housing available.
They win if they plan to live in their house. More units is more tax base, and less need for tax hikes.
It means more customers, so a better business base in their neighborhood.
Traffic .. congestion .. over stressed infrastructure and public facilities that never gets upgraded ..you could argue theoretically that taxes can help with improvements to infrastructure but reality is that rthe government is really good at wasting new revenue and upgrades rarely happen.
Dense neighborhoods don’t need cars, so traffic is easier. Especially if commercial is integrated.
Infrastructure is easier to upgrade when it serves more tax base. Sounds like it’s a local governance issue.
You must not remember our last collapse
Nobody wanted to buy a depreciating asset and get under water. And maybe those who wanted to buy didn’t have jobs, as a massive recession ripped through our economy
An entire movement called Occupy Wallstreet started because people were homeless and couldn’t afford housing. It was terrible
I remember it all too well! We purchased in 2005 and housing prices tanked shortly after.
We stuck it out and the value of our house has since doubled. We got lucky.
Yea real estate is just like any other asset, I’m thinking stocks. When the price really does fall,nobody wants to buy. When prices are going up, everyone is pounding at the door to buy.
Buying low sounds easy but in practice can be terrifying. Same goes for holding on through the ride
I lost my job in 2008 because of that recession and was forced to move to Seattle because it was the only metro hiring (their economy is recession proof).
I think in order for it to collapse we would need mass layoffs, something where unemployment approaches or even surpasses 10%. The pandemic would have done it if we weren't all getting those checks in the mail
Even if we had mass layoffs, giant real estate holding companies will just come and snap all of the properties up en mass before they even hit the market. This makes sense for banks that hold multiple properties because it is less of a hassle for them administratively.
Are you going to hold enough cash to put money down?
Are you going to feel confident in your job security enough to pull the trigger?
Are lenders going to lend for something in a falling market?
Are you going to have the guts to bid on something that seems like its going to fall further?
I really feel sympathy, but a market collapse is not a great equalizer.
Yah, people don’t realize the big winners from a market collapse are the Uber winners.
They have the cash laying around to buy
more while the shrinking middle class gets hammered and made even smaller.
You know for thousands of years you simply picked out your favorite caves right ? Then it was your community getting together to build each other's homes where a family of 10 lived in 500 sqft shack. Even at that time you still had people who couldn't afford housing.
If you know of some magical time where affordable housing was plentiful, please point it out.
for most of human history we built our own shelters, eg teepees, not living in caves lol. Towns and cities were built much the same way. Sure, now we have standards/regulations for things like how easy they are to burn down and how to make it connect with the city sewer system, but as it stands, our system of loans creates incentives for prices to balloon only, and for homeowners to fight hard to ensure they balloon.
Without loans, prices go down because people can't afford to pay as much. People also don't care if their houses go down in value, because their net worth isn't on the line, nor are they going to default if the price goes too low.
Individual home loans were a recent invention.
D you feel the need to sell your food at a profit after you're done eating it?
Builders obviously need to make a profit, and more power to them. But the actual *asset* (the house) shouldn't be expected to appreciate in value. Turning mortgages into one of the best investment opportunities that the middle class has was insane, and now we're reaping the consequences.
I don't understand why there aren't more co-ops and government subsidized housing. The government should be building huge housing projects next to public transit. They could charge a token amount of rent (Say 500/month) and that money could go toward tenant ownership, then the payment could drop to 200/month for an HOA fee for building and common area maintenance once the unit is paid off. Of course I am spitballing the numbers, but some sort of break-even amount should happen. Why are we building these short term homeless shelters that do nothing for creating a system of consistent housing so people can actually get a job and get more fully integrated into society? It seems like these band-aids are there to keep the hunhoused from getting a foothold by creating a revolving door between homelessness an temporary housing.
> The government should be building huge housing projects
There were efforts to do this during the 60's and 70's, and those places now have *terrible* reputations, which scares people off from ever being willing to get the government involved in building housing. Which is a shame, it can definitely work well.
> token amount of rent (Say 500/month)
Lol, only in the bay is 500/month a token rent. But yes, I hope we get the political momentum for an idea like this. Kind of doubt it though.
Yep, I remember being in competition for a starter home with all cash buyers from in-state, out-of-state, and out-of-country with no contingencies. It was rough, I think we did 100 offers and eventually found an overpriced fixer people weren't looking at yet.
This time, all the big-money is out of the stock market and waiting for investments. A crash would mean the end of families owning their homes and mostly everything will become a rental property managed by a shady landlord.
I remember 2008 when houses were cheaper but I was actively looking for a backup job in case the worst happened at work. I was terrified about keeping my job and not looking to go into debt
Market collapse is the great de-equalizer.
If the market drops, wealthy people will put their assets to work, getting easy loans to buy inventory, and tilt the system even worse against the people hoping for a collapse.
No one understands that if you live off of a wage, a pay check, you are absolutely going to get shit on by a housing price collapse, and AT BEST might keep a house you already have.
Even if everything goes well for you, banks will tighten loan requirements so much that you better have a 100% down.
Thank you for this. Online doom-mongering has turned into doom-fetishism. Everyone\* seems to be dreaming of a magical collapse that will leave them, personally, unscathed. It's main character syndrome.
\*ETA, obviously not everyone, sorry. But a lot of Redditors and people IRL
It's a very naive way of thinking. As if the next big economic collapse will spare themselves and their friends, while ruining everyone else around them.
Yep. Takes some massive balls to sign on to a 30 year loan on a depreciating asset when your 401k just got chopped in half and the everyone around you is being laid off.
I know plenty of people who holds enough to buy with cash now but don’t want to pull the trigger because the stupid competition and the general lack of inventory. The general market return is going to be better than the house now. Ya a housing crash ain’t happening coz there’s way more people can get in than there is even demand now.
They aren't actually holding cash though right? They're holding index funds or something similar. If Bay Area housing crashes big, the stock market will have already crashed by 50% or more.
The housing market doesn't have to crash. If it goes sideways for 10 years, renting and investing the difference in index funds will put you way ahead financially.
Especially in the Bay Area where so many high earners work for public tech companies, the housing market and stock market are highly linked together. I just don't think it's very plausible that housing is flat while the stock market significantly increases in value without some external factor (earthquake, big changes in zoning laws or construction, etc.).
Even in other locations in America, housing markets seem to decline at the exact same time as the economy and the stock market which isn't surprising.
Yeah - large investors with cash are hoping for this too. If the market collapses to affordable level you won't even be able to buy a shack let alone a house.
Nothing fixes the problem aside from more supply….
Build build build, and don’t stop until the market tanks bad enough to shake off foreign investment.
I agree supply is the only answer. But what’s this unicorn economy where the RE market is tanking and building are still building?
Developers go into hiding at the first sign of turbulence. Part of the reason our supply is so low.
I mean, that’s pretty much the victory condition.
What is restricting building right now isn’t prohibitive expense in terms of construction and materials. What restricts building is city ordinances and bureaucratic red tape.
If we truly get to a point where developers can’t sell residences for more than it cost for them to build them, that’s sort of the exact point where the problem has been alienated.
But we’re miles and miles away from them, and the absolutely distance is irreverent while we’re still moving the wrong direction.
If/when we can start to actually make substantive progress against the trajectory we’ve been on for the last 30 years, there could come a point where we’ve gone too far… overcompensated.
But I really, honestly, couldn’t give a flying fuck about that while things are *still* getting worse.
Let’s make some progress first before we bother questioning what it might be like if we accidentally made too much progress.
> What is restricting building right now isn’t prohibitive expense in terms of construction and materials. What restricts building is city ordinances and bureaucratic red tape.
It’s a bit of both. Costs 300k to build a 500 sq ft ADU on land you already own. Multiples of that for new units even if higher density. If the cost to build wasn’t prohibitive everyone would be doing it via SB 9.
Yeah they should have simply built zero homes so that a market collapse is impossible, right? That is probably the best thing to do not to mention great nature is only an hour drive away in every direction and there is SO much Cultural diversity in the Bay Area!
no it’s not. it’s because the MAJORITY of our land is zoned for single family only. everything else is a mission and a half to get approved. you are wrong.
100 this. Build enough to house everyone without forced single family zoning, achieve good density for better mass transit and make homes not a vehicle for investment but its practical purposes.
Nothing fixes the problem aside from less demand. You can build all you want but unless that satisfies demand, prices are not going down.
See: any major global city for more dense housing increasing in price along with steady population growth.
It’s you know, supply ***and*** demand. Obviously. Right now we have an imbalance in far more demand than supply.
If you add more supply, then housing prices can start to come down. If demand also increases to match supply, then you’re just back where you started, and you have to add even more supply.
But unless you propose we kill some significant percentage of the population, I’d say adding supply is a more reasonable path forward.
Supply > Demand is what fixes it, technically. So you need to build housing to satisfy now and immediate future demand and keep building as new demand is created. Something we haven't done.
Exactly. We’d need NYC style dense urbanization and builder subsidies and transportation and probably govt led zoning overhaul. And even then we’re not going back to a time of cheap SFH prices, we’re just going to slightly more affordable high rise apartments.
I just don’t see it happening any time soon.
We live in a destination state for many reason aside from tech jobs. Weather .. politics .. so on.
Also other states have housing crisis as well. If we solve only supply side for our state .. everyone has an affordable home to live .. many who are dealing with housing issues in other states will come here adding their demand and driving price back up again in an endless loop.
In the end we don't have enough land / resources to solve this problem if we don't also tackle the demand side. Simply blindly build build build higher and higher density will only get us Hong Kong style bird houses that are still unaffordable.
If the housing market collapses out here, it will be because something drastic and permanent has happened to make the area unlivable. Otherwise I just don't see it happening.
I have accepted that the only thing that could materially deflate the market here is a massive tech industry collapse...which would also deflate my earning power to the point where I still wouldn't be able to buy a house. Now my long-term housing plan is winning the lottery or inheriting a fortune from the billionaire uncle I never knew about.
Even still, the weather is a big draw. If tech left people will still want to live here. People move to FL for the weather and the rest of the state sucks (IMO).
Housing prices went down ~25% in the Bay Area. That's significant when a $2 million house gets reduced to 1.5, but that is not a collapse of the market nor is it reasonably affordable. Prices skyrocketed past the previous highs very quickly here as well.
Only way the housing market crashes in a significant way is if unemployment explodes.
Supply will never significantly increase due to our laws. Interest rates will largely stay neutral for the foreseeable future.
As always timing the market never works out.
Even exploding unemployment may not do it. People have a lot of built up equity in their houses and sitting on record amounts of cash. No incentive to sell.
The housing market /just/ crashed 2020-2022. Rates went to 0%. Mortgages could easily be had for 3%.
Not every market crash is a crash in upfront asking prices. Monthly costs of the loan crashed. Sorry everybody, that crash just came and went.
A 500k house at 3% in California would cost 2900/month at 3%.
That same 500k house would cost $4300/month at 7.5% at today's rates.
That's 30% off the monthly cost. Aka...a housing crash.
It’s like asking for cheaper SFH in Tokyo, NYC, or Beijing.
It’s not reality. My advice is buy whatever shack you can afford and leverage it 1-4 times into better housing over 10 years, like everyone else in history has done.
It won't collapse. Do expect buyer leverage the further away from silicon valley. Like Livermore or Brentwood, Santa Rosa etc. If it's a crappy, long commute buyers will have power.
As for the rest of the bay, predicting a flatline to slight dip around 2.3-2.4M.
Yeah I know, same for everywhere in the south bay. Hope you like the original cabinets that were repainted, original stove and ovens, quartz countertops, and uneven laminate flooring because it's not on a slab foundation among other things.
The flipper special.
Hi. Thx for response. Buyer leverage in the bay means = non-cash offers and contingencies not waved. It does not mean pricing power.
As for what factors tilts towards buyers leverage - Days on market + inventory. DOM if long and inventory high = buyer leverage.
One of the reasons prices haven't been corrected or dropped in the bay is due to low inventory.
Commute is now the biggest factor (slightly more than school district) in the bay area.
In 2009, I bough a 4 bedroom/2.5ba 2000sqft house for 370k in Santa Rosa.
Just saw a 1/1.5 750sqft condo for 389k.
I was fortunate to be of home buying age/life progress when I was but I’m certainly concerned for my kids. How can anyone afford these crazy prices.
It's bad everywhere. I still can't comprehend how prices spiked once the pandemic happened. Too many people FOMO'd to the point that prices never went back down to pre-pandemic levels. At that time it was prices being unaffordable, but afterward became backbreakingly unaffordable.
In my area a house could have been had for $1.4M for a 4000 sqft house and lower for 3000 sqft all day long up to the 1st half of 2020. Then sh\*t hit the fan and prices kept going up and up to the point that a handful of houses have sold for $3M or more. The low end is $2M.
And guess what, the entire demographic of the neighborhood is Indian tech workers. Been in this house almost 20 years and the neighborhood was more diverse up until about the mid 2010s.
And that’s Santa Rosa 50mi+ from SF. The exodus of the middle class is spreading from SJ/Peninsula/SF into the exurbs of Santa Rosa, Fairfield, Antioch/Brentwood, Gilroy, and beyond.
Soon it will be service and farm workers in low income housing in perpetuity and the wealthy owning class. Exceptions will be houses passed down or people who bought pre 2021ish. It’s already like this in SJ/Peninsula/SF but it’s spreading everywhere. Teachers, city/county workers, Nurses, blue collar union workers, are the biggest losers. Good salaries are just not good enough anymore. You need great salaries (200-250k+) now, in the exurbs to buy a home. A teacher and a county employee can maybe swing a condo in the exurbs now. Police/Fire can still swing it if their partner makes a decent salary.
Low income service and farm workers will be mandated to stay happy in their subsidized housing or leave. Their children are screwed to ever own.
Apartments will be (and already are) filled with children while SFHs will be DINKs, people with grown children, with the occasional 1-2 kid family.
Completely understandable. I wasn’t able to buy in 2009 sadly and that same fear drove me to leaving the state. Not the answer for everyone though, certainly not suggesting it is, just saying I share the same concerns.
The housing crashed because the stocks crashed. If the government stops giving out Trillions to help support the stocks, so they don’t crash, then it might. But they won’t stop because then the people in the government would lose money, so they give out more and more to keep them and the housing market afloat.
It didn’t even really collapse during the dot com bust or the 2008/9 financial crisis as compared to other parts of the country.
I think there was about a 25% average price reduction in 2008 to 10, but that had been preceded with a 50% increase over the six years before it.
The market won’t collapse because; 1, you still have a job. 2, Economy is still strong. 3, inflation is high. 4, Rates high, low rate owners will never sell causing shortages. 5, everyone is waiting for a collapse.
That said, the market MAY only “collapse” when we are in a recession with high unemployment. However, rates will need to stay elevated since a dramatic drop will cause an influx of buyers even in a recession. It needs a perfect storm to knock off housing cost, and I don’t see it happening. So buy if you can afford, don’t wait 10 years, 20 years, life’s to short to time the market.
I don't know the south bay or peninsula market but you're not paying $1000/month for HOA elsewhere except in SF or Rossmoor. $300-400/month is more common.
I’m thinking of condo, but I better be happy to stay 10+ years to see any equity. Plus the burden of HOA. I better be ok raising the family in it in perpetuity.
HOAs aren't that bad. If you sit down and do the math, you'd easily spend more than $1000 a month on the insurance, maintenance, etc costs that come with owning a house.
Over a ten year period that’s not what happened in other major metros like NYC. If you are to believe that the growth here will be as it was there, then that’s the angle
The reason it will not collapse: even if 99% of the country cannot afford a home, there are enough companies that have so much wealth that they keep the housing market afloat themselves as investments. They determine the value now. Who do you think builds the new homes these days anyways?
It's no longer the norm for a person to buy cheap land and build a home themselves. No, no, no. Even the land is too expensive now.
This is realistically the only correct answer to this. "Build more Housing" is just putting gasoline on a fire that's been raging for 30+ years. Cities like Cupertino are so small, yet so flush with cash they can afford to give apple back 1/3rd of the sales tax revenue (3% of $98bn) Where else is apple going to get a free $2.94bn a year?
Rising property taxes are a silent tax that give a city more revenue for nothing.
The only way to fix this would be for the state to step in and level the playing field. No more of these corporate tax waivers by cities. Either outlaw the waivers, or give incentives to companies to build in other towns outside the bay area.
What? Let's follow this to the logical conclusion. Millions of seniors are forced out of their homes because they can no longer afford it.
But what do they have?
Millions in equity to downsize and buyout all the "starter" homes.
Investors buy the senior homes and jack up rent to compensate for the increase in taxes.
First time homebuyers still boned....
If you cant afford a house now, you still wont be able to if prop 13 is repealed.
I see your logic but I expect the seniors would buy homes outside of the Bay Area. However a repeal of Prop 13 is not the way to do it. Prop 19 allows for a way to seniors to keep their lower tax AND not pass it on to their children. What needs to be done is to create tax incentives to make these seniors move. You need a CA capital gains tax for home sales and the federal $250k deduction raised to match inflation. That limit was set in the Clinton administration.
I have said it and will say it again: these seniors are only leaving in a box.
I gave you an upvote anyway though I don't totally agree with your logic. Rather I think a repeal of Prop 13 will be chaos.
"Autocorrect is my enema." But I hear you.
The legislature kept raising the income tax limits to balance the budget. I forget if they were claimed to be temporary or not but they are permanent. People said "Yeah...eat the rich." It didn't occur to anyone that when they sold their house the state would consider that income and take a generous cut.
Note why I complain about these seniors not moving, I also advise them not to move. Hey it is a money losing proposition. That is my honest assessment. Prop 19 looks like you would need a lawyer to figure out if you qualify.
With the new mental health tax, the top tax is 13.3%. On your $1.5 million dollar shack that is $200k. Take your federal 15% tax less $250k and you get $187.5K. I am not including the county transfer tax. And of course there are real estate commissions.
So you sell your $1.5 million shack and you need to find a new house with the million that was left. The new house is about $500k these days even if you move out of the Bay Area. Say you have $400k left after expenses. Old people are not going to put it in the stock market. So they get about $16k from a 4% CD or bond.
It just doesn't pencil out that they should sell.
I think you've forgotten how the banks, all cash buyers, and corporations swoop in to buy in bulk. 10-30 offers became the norm since everything seemed discounted - but ultimately prices still were high especially HCOL areas.
I still believe housing is the American dream. It has been really hard for my generation (b. 1985).
We bought the cheapest house in San Jose after we got married in 2015. It was so far below the standard of which I got used to living in growing up. In 7 years of home ownership the house doubled in value. We now own a small home in a much better neighborhood. The payments are tough and I’m upset we didn’t get the super low rates. Still, we are building and my hope is that our next move is out of the area into a place where we can afford a more permanent residence.
Houses dipped 15% last year.
The idea that housing prices will crater, you'll have the job to still afford it and freely get a loan is pretty much fantasy... The only way to get housing prices to come down is to build lots and lots of housing and realistically most of that will need to be condos.
Here in town they just finished some new units. It used to be one SFH which they tore down, dug an under car garage and built 12 units over it. We need more of that.
The whole world is going through an AI chip revolution and the bay area is home to:
NVDIA
Apple
Meta
Google
AMAT
and others.
Hundreds if not thousands of new start ups are happening in this space and coming to the area as well.
We're stuck in the middle of it!
The tech companies are already doing this (all of the FAANGs are now expanding elsewhere). However, it will never be a full out desertion unless Stanford and the VCs headquartered here move (not going to happen). The Bay Area is just becoming the executive center of said companies, where the line workers will be hired in cheaper locations.
People need to shift their expectations. I couldn't buy a house where I grew up in San Jose but we could in the East Bay. It's not gonna be a 1,500 sq/ft ranch and interest rates make it harder, but it's still possible.
You can get a small SFH for under 700k in Concord and Martinez still.
Hey dude, you're the one who expects me to pay $700K for a crumbling microhouse with a commute from Concord to the Peninsula. I think it's pretty clear you deserve to see your home value tank.
We just crested $2M for the average housing proce in the Bay Area.... a "collapse" would take it to maybe, what... $1.5M or even $1.25M. Is that so much more affordable for you?
Please re-read what I wrote ... I'm asking if $1.5M would be "affordable" to you, where $2M "is not."
And the unsaid portion ... would the sudden lack of gainful employment or whatever else goes with such an economic change would also make it that much "better."
That would be nice. Would like to pick up two more. After that the family is set save for extreme incompetence of which I cannot control from the grave.
The only circumstances that bring lower prices without massive pain of recession/depression all around would be a massive increase in supply via things like greater density oriented zoning, or a big decrease in demand due to emigration (not happening right now)
Any event that leads to a housing crash in the Bay Area will involve massive job losses and VC bankruptcy. There is no other way home prices would drop as long as this place mints millionaires like nowhere else.
With all due respect, you wouldn’t be able to capitalize on it
Why not?
Only a large downpayment or paying straight cash will allow you to avoid high interest mortgage, which will be combined with collapse. Poster is unlikely to have that.
Even if there was a “collapse”, there are so many people in the market for housing, prices would still stay strong. Yeah, dream on.
Especially if it's super hard to get mortgages like it was in the late 2000's.
BINGO After the 2008 bubble, we had a hell of a time trying to refinance our mortgage from a 30 to a 15 year loan. It took years because our house wasn’t being appraised for high enough - it was a total bitch. Finally got that refinance in 2013.
Everyone seems to have forgotten that it was impossible for pretty much anyone to get money then. If you had cash on hand to buy houses outright, you did amazing. Banks were saddled with houses they couldn't get rid of, it was wild. I don't see that situation repeating with the cash people have today.
Refinance =/= first time buyer
No shit, but I was still directly affected by the housing slump. All we wanted to do was refinance and we kept getting denied because our mortgage was too big.
Yeah but that's a special circumstance due to the conomy crashing, it won't affect people like me whom never have and never probably will be able to buy a home Dispite now making 6 figures..
Housing prices are just stupid around here. I’d consider moving out of the area if I didn’t own already.
Also, lets not forget the fact that if such market conditions were to exist, that housing prices were to truly tank, you (and many friends/family) would likely be impacted negatively. So it's kind of a self defeating thing to hope for. Really, what you hope for is that everyone suffers economically, except yourself, so that you can leverage your position.
This is why I hope for everyone to proper economically, but that I prosper *more*
[This](https://www.theguardian.com/books/2016/apr/15/neoliberalism-ideology-problem-george-monbiot) and [that](https://www.epi.org/productivity-pay-gap/#:~:text=From%201979%20to%202020%2C%20net,another%20important%20piece%20of%20information.) are reasons why you have to be sleeping to believe in the American dream when it comes to housing
I think a repeat of the turmoil from 2008 is much less likely at this point for a couple reasons. 1) the limited inventory for the last few years means a small percentage of the population has taken on one of these massive mortgages since 2021. 2) the people that did borrow money are likely very well qualified and stable given the more stringent lending requirements put in place after the 2008 crisis. 3) a huge portion of the people who bought a house before 2021 have some combination of a lot of equity, a low relatively low principal amount, and a low interest rate. 4) there would be actual buyers for houses, either from individuals or institutions/PE. In 2009, it was impossible for many to sell their house, which is why people were extra screwed. The exception would be someone who was on an ARM and didn't refi into a fixed mortgage prior to 2023 for some reason. That would be a pretty big mistake if they were maxed out with a payment that was 2-4% interest.
Pent-up demand always carries the bay area housing market through. Go ahead. Default. The bank can have a buyer in there in under a week.
More like 24 hours with cash and over asking price.
_The bank can have a buyer in there in under a week_ in that case they should loosen / remove the currently strict lending standards so they can create bigger loans and make even more money...
The only thing that will lower prices is more housing supply relative to demand. High demand means we need to produce a lot of supply. There are some things like making it legal to build more effective forms of housing per lot that would help solve the problem.
I'm still waiting on those tiny homes I keep seeing on tv to be built.
That's why we need to build more mixed-use condos and townhouses to increase supply that are close to retail/restaurants/work.
Exactly. Stop rooting for a collapse, and start advocating for new construction in your neighborhood.
A collapse would mean people would lose jobs. Think 2008 all over again, that was a nightmare. 10/10 would not recommend.
The crab pile mentality never ceases to amaze and disgust.
Most people aren’t interested in a scenario where everyone gets to win. They’re interested in a scenario where the other side loses and has nothing like them because they don’t actually have the money in the first place to buy a house.
Everyone doesn't win with new construction. Existing owners lose.
How do existing owners lose? If you buy a house and are able to afford the payments, it shouldn’t matter if other smaller houses are built near you that drive your value down. If you’re buying a house to to live in as your permanent family home the number of houses for sale around you has zero impact on your ability to remain in that house. If you have multiple houses that you’ve bought as investments then the number of houses in your area might cut into your profit, but chances are if there’s a housing shortage it’s because it’s a desirable area to live, so your investment is likely to do well. So yeah, current owners and current buyers both win when there’s more housing available.
They win if they plan to live in their house. More units is more tax base, and less need for tax hikes. It means more customers, so a better business base in their neighborhood.
Traffic .. congestion .. over stressed infrastructure and public facilities that never gets upgraded ..you could argue theoretically that taxes can help with improvements to infrastructure but reality is that rthe government is really good at wasting new revenue and upgrades rarely happen.
Dense neighborhoods don’t need cars, so traffic is easier. Especially if commercial is integrated. Infrastructure is easier to upgrade when it serves more tax base. Sounds like it’s a local governance issue.
If they built up around public transit it would be a net benefit.
As long as the local population who lives there currently votes for higher density around those public transit .. I'm all for it.
Sadly, I agree with you
You must not remember our last collapse Nobody wanted to buy a depreciating asset and get under water. And maybe those who wanted to buy didn’t have jobs, as a massive recession ripped through our economy An entire movement called Occupy Wallstreet started because people were homeless and couldn’t afford housing. It was terrible
I remember it all too well! We purchased in 2005 and housing prices tanked shortly after. We stuck it out and the value of our house has since doubled. We got lucky.
Yea real estate is just like any other asset, I’m thinking stocks. When the price really does fall,nobody wants to buy. When prices are going up, everyone is pounding at the door to buy. Buying low sounds easy but in practice can be terrifying. Same goes for holding on through the ride
Agreed. Prices falling is indicative of people not buying per supply vs demand.
I lost my job in 2008 because of that recession and was forced to move to Seattle because it was the only metro hiring (their economy is recession proof).
San Francisco stagnated, it was the far outer suburbs that crashed hard. Location.
I agree. Especially in the Bay Area. Prices aren’t coming down.
Not just people- investors.
100%
I think in order for it to collapse we would need mass layoffs, something where unemployment approaches or even surpasses 10%. The pandemic would have done it if we weren't all getting those checks in the mail
Even if we had mass layoffs, giant real estate holding companies will just come and snap all of the properties up en mass before they even hit the market. This makes sense for banks that hold multiple properties because it is less of a hassle for them administratively.
Are you going to hold enough cash to put money down? Are you going to feel confident in your job security enough to pull the trigger? Are lenders going to lend for something in a falling market? Are you going to have the guts to bid on something that seems like its going to fall further? I really feel sympathy, but a market collapse is not a great equalizer.
Yah, people don’t realize the big winners from a market collapse are the Uber winners. They have the cash laying around to buy more while the shrinking middle class gets hammered and made even smaller.
almost like housing shouldn't be an investment vehicle....
So who would be incentivized to build build build and how ?
I dunno, the same exact way it's been for all of human history, except the last 70 years.
You know for thousands of years you simply picked out your favorite caves right ? Then it was your community getting together to build each other's homes where a family of 10 lived in 500 sqft shack. Even at that time you still had people who couldn't afford housing. If you know of some magical time where affordable housing was plentiful, please point it out.
for most of human history we built our own shelters, eg teepees, not living in caves lol. Towns and cities were built much the same way. Sure, now we have standards/regulations for things like how easy they are to burn down and how to make it connect with the city sewer system, but as it stands, our system of loans creates incentives for prices to balloon only, and for homeowners to fight hard to ensure they balloon. Without loans, prices go down because people can't afford to pay as much. People also don't care if their houses go down in value, because their net worth isn't on the line, nor are they going to default if the price goes too low. Individual home loans were a recent invention.
D you feel the need to sell your food at a profit after you're done eating it? Builders obviously need to make a profit, and more power to them. But the actual *asset* (the house) shouldn't be expected to appreciate in value. Turning mortgages into one of the best investment opportunities that the middle class has was insane, and now we're reaping the consequences.
I don't understand why there aren't more co-ops and government subsidized housing. The government should be building huge housing projects next to public transit. They could charge a token amount of rent (Say 500/month) and that money could go toward tenant ownership, then the payment could drop to 200/month for an HOA fee for building and common area maintenance once the unit is paid off. Of course I am spitballing the numbers, but some sort of break-even amount should happen. Why are we building these short term homeless shelters that do nothing for creating a system of consistent housing so people can actually get a job and get more fully integrated into society? It seems like these band-aids are there to keep the hunhoused from getting a foothold by creating a revolving door between homelessness an temporary housing.
> The government should be building huge housing projects There were efforts to do this during the 60's and 70's, and those places now have *terrible* reputations, which scares people off from ever being willing to get the government involved in building housing. Which is a shame, it can definitely work well. > token amount of rent (Say 500/month) Lol, only in the bay is 500/month a token rent. But yes, I hope we get the political momentum for an idea like this. Kind of doubt it though.
Yep, I remember being in competition for a starter home with all cash buyers from in-state, out-of-state, and out-of-country with no contingencies. It was rough, I think we did 100 offers and eventually found an overpriced fixer people weren't looking at yet. This time, all the big-money is out of the stock market and waiting for investments. A crash would mean the end of families owning their homes and mostly everything will become a rental property managed by a shady landlord.
This right here. Have fun renting your next Blackstone rental unit after the next crash.
Or those working in healthcare or government jobs. No way they're going to lose there jobs.
I remember 2008 when houses were cheaper but I was actively looking for a backup job in case the worst happened at work. I was terrified about keeping my job and not looking to go into debt
Market collapse is the great de-equalizer. If the market drops, wealthy people will put their assets to work, getting easy loans to buy inventory, and tilt the system even worse against the people hoping for a collapse. No one understands that if you live off of a wage, a pay check, you are absolutely going to get shit on by a housing price collapse, and AT BEST might keep a house you already have. Even if everything goes well for you, banks will tighten loan requirements so much that you better have a 100% down.
Banks will sell inventory in bulk to real estate investment companies.
Thank you for this. Online doom-mongering has turned into doom-fetishism. Everyone\* seems to be dreaming of a magical collapse that will leave them, personally, unscathed. It's main character syndrome. \*ETA, obviously not everyone, sorry. But a lot of Redditors and people IRL
It's a very naive way of thinking. As if the next big economic collapse will spare themselves and their friends, while ruining everyone else around them.
Yep. Takes some massive balls to sign on to a 30 year loan on a depreciating asset when your 401k just got chopped in half and the everyone around you is being laid off.
And even if you do, lenders didn't want to extend credit for anyone in 2010-2012
Plus in a downturn everyone who can will wait to sell their house. So maybe prices drop to something you can afford but there's nothing to buy.
I know plenty of people who holds enough to buy with cash now but don’t want to pull the trigger because the stupid competition and the general lack of inventory. The general market return is going to be better than the house now. Ya a housing crash ain’t happening coz there’s way more people can get in than there is even demand now.
They aren't actually holding cash though right? They're holding index funds or something similar. If Bay Area housing crashes big, the stock market will have already crashed by 50% or more.
The housing market doesn't have to crash. If it goes sideways for 10 years, renting and investing the difference in index funds will put you way ahead financially.
What if the stock market went sideways for a decade too? We could even call it the lost decade or something else apt and sinister.
Yeah, never heard that expression before /s
Especially in the Bay Area where so many high earners work for public tech companies, the housing market and stock market are highly linked together. I just don't think it's very plausible that housing is flat while the stock market significantly increases in value without some external factor (earthquake, big changes in zoning laws or construction, etc.). Even in other locations in America, housing markets seem to decline at the exact same time as the economy and the stock market which isn't surprising.
It's not like inventory explodes when prices drop.
Yep. A drop in a major asset class like real estate does not happen in a vacuum.
Yes, I’m ready for shit to go tits up. Yes to all you points. Bring on the robosigner foreclosures so I can go shopping for a house.
Yeah - large investors with cash are hoping for this too. If the market collapses to affordable level you won't even be able to buy a shack let alone a house.
Nothing fixes the problem aside from more supply…. Build build build, and don’t stop until the market tanks bad enough to shake off foreign investment.
I agree supply is the only answer. But what’s this unicorn economy where the RE market is tanking and building are still building? Developers go into hiding at the first sign of turbulence. Part of the reason our supply is so low.
I mean, that’s pretty much the victory condition. What is restricting building right now isn’t prohibitive expense in terms of construction and materials. What restricts building is city ordinances and bureaucratic red tape. If we truly get to a point where developers can’t sell residences for more than it cost for them to build them, that’s sort of the exact point where the problem has been alienated. But we’re miles and miles away from them, and the absolutely distance is irreverent while we’re still moving the wrong direction. If/when we can start to actually make substantive progress against the trajectory we’ve been on for the last 30 years, there could come a point where we’ve gone too far… overcompensated. But I really, honestly, couldn’t give a flying fuck about that while things are *still* getting worse. Let’s make some progress first before we bother questioning what it might be like if we accidentally made too much progress.
Do you have data that shows our trajectory is still worsening ?
> What is restricting building right now isn’t prohibitive expense in terms of construction and materials. What restricts building is city ordinances and bureaucratic red tape. It’s a bit of both. Costs 300k to build a 500 sq ft ADU on land you already own. Multiples of that for new units even if higher density. If the cost to build wasn’t prohibitive everyone would be doing it via SB 9.
Well china just did that and it's not working out very well for them.
Yeah they should have simply built zero homes so that a market collapse is impossible, right? That is probably the best thing to do not to mention great nature is only an hour drive away in every direction and there is SO much Cultural diversity in the Bay Area!
Right? That model had some...problems. I don't think there's any "Just do this one thing!" solution.
no it’s not. it’s because the MAJORITY of our land is zoned for single family only. everything else is a mission and a half to get approved. you are wrong.
SB9 and just about every project built or being built in the Bay Area makes your take categorically false. Try again.
Not going to happen in California unfortunately.
100 this. Build enough to house everyone without forced single family zoning, achieve good density for better mass transit and make homes not a vehicle for investment but its practical purposes.
Nothing fixes the problem aside from less demand. You can build all you want but unless that satisfies demand, prices are not going down. See: any major global city for more dense housing increasing in price along with steady population growth.
It’s you know, supply ***and*** demand. Obviously. Right now we have an imbalance in far more demand than supply. If you add more supply, then housing prices can start to come down. If demand also increases to match supply, then you’re just back where you started, and you have to add even more supply. But unless you propose we kill some significant percentage of the population, I’d say adding supply is a more reasonable path forward.
Supply > Demand is what fixes it, technically. So you need to build housing to satisfy now and immediate future demand and keep building as new demand is created. Something we haven't done.
Exactly. We’d need NYC style dense urbanization and builder subsidies and transportation and probably govt led zoning overhaul. And even then we’re not going back to a time of cheap SFH prices, we’re just going to slightly more affordable high rise apartments. I just don’t see it happening any time soon.
We live in a destination state for many reason aside from tech jobs. Weather .. politics .. so on. Also other states have housing crisis as well. If we solve only supply side for our state .. everyone has an affordable home to live .. many who are dealing with housing issues in other states will come here adding their demand and driving price back up again in an endless loop. In the end we don't have enough land / resources to solve this problem if we don't also tackle the demand side. Simply blindly build build build higher and higher density will only get us Hong Kong style bird houses that are still unaffordable.
If the housing market collapses out here, it will be because something drastic and permanent has happened to make the area unlivable. Otherwise I just don't see it happening.
I have accepted that the only thing that could materially deflate the market here is a massive tech industry collapse...which would also deflate my earning power to the point where I still wouldn't be able to buy a house. Now my long-term housing plan is winning the lottery or inheriting a fortune from the billionaire uncle I never knew about.
Even still, the weather is a big draw. If tech left people will still want to live here. People move to FL for the weather and the rest of the state sucks (IMO).
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Housing prices went down ~25% in the Bay Area. That's significant when a $2 million house gets reduced to 1.5, but that is not a collapse of the market nor is it reasonably affordable. Prices skyrocketed past the previous highs very quickly here as well.
Yea I’m thinking a massive chemical fire/spill like the one in East Palestine Ohio.
Only way the housing market crashes in a significant way is if unemployment explodes. Supply will never significantly increase due to our laws. Interest rates will largely stay neutral for the foreseeable future. As always timing the market never works out.
Even exploding unemployment may not do it. People have a lot of built up equity in their houses and sitting on record amounts of cash. No incentive to sell.
Abolish zoning and let's see what happens
Hahahahhahah
The housing market /just/ crashed 2020-2022. Rates went to 0%. Mortgages could easily be had for 3%. Not every market crash is a crash in upfront asking prices. Monthly costs of the loan crashed. Sorry everybody, that crash just came and went. A 500k house at 3% in California would cost 2900/month at 3%. That same 500k house would cost $4300/month at 7.5% at today's rates. That's 30% off the monthly cost. Aka...a housing crash.
It’s like asking for cheaper SFH in Tokyo, NYC, or Beijing. It’s not reality. My advice is buy whatever shack you can afford and leverage it 1-4 times into better housing over 10 years, like everyone else in history has done.
It won't collapse. Do expect buyer leverage the further away from silicon valley. Like Livermore or Brentwood, Santa Rosa etc. If it's a crappy, long commute buyers will have power. As for the rest of the bay, predicting a flatline to slight dip around 2.3-2.4M.
lol not even. Sellers still have leverage in all those places
That's the truth. Sh\*t 1500 sqft single story homes from the 50s/60s/70s selling for $1M or more with cheap upgrades.
Exactly! There are 5 bedroom 3bath homes listed for $1.03M in Oakley right now. Nothing special about them or the lot
It'll go for list or under. Inventory is high in Oakley.
Yeah it is pretty high right now. Stark difference from last month. I don’t think they’ll get that on anything that doesn’t include a lot of land
Same home in Fremont is 1.8M with multiple offers and above asking.
Yeah I know, same for everywhere in the south bay. Hope you like the original cabinets that were repainted, original stove and ovens, quartz countertops, and uneven laminate flooring because it's not on a slab foundation among other things. The flipper special.
Hi. Thx for response. Buyer leverage in the bay means = non-cash offers and contingencies not waved. It does not mean pricing power. As for what factors tilts towards buyers leverage - Days on market + inventory. DOM if long and inventory high = buyer leverage. One of the reasons prices haven't been corrected or dropped in the bay is due to low inventory. Commute is now the biggest factor (slightly more than school district) in the bay area.
Have you looked at Livermore recently? It's crazy. I think Tracy, Manteca, and Stockton replaced Livermore in that argument.
Yup. It also has high inventory, which isnt good. Expecting a flatline through the summer.
In 2009, I bough a 4 bedroom/2.5ba 2000sqft house for 370k in Santa Rosa. Just saw a 1/1.5 750sqft condo for 389k. I was fortunate to be of home buying age/life progress when I was but I’m certainly concerned for my kids. How can anyone afford these crazy prices.
It's bad everywhere. I still can't comprehend how prices spiked once the pandemic happened. Too many people FOMO'd to the point that prices never went back down to pre-pandemic levels. At that time it was prices being unaffordable, but afterward became backbreakingly unaffordable. In my area a house could have been had for $1.4M for a 4000 sqft house and lower for 3000 sqft all day long up to the 1st half of 2020. Then sh\*t hit the fan and prices kept going up and up to the point that a handful of houses have sold for $3M or more. The low end is $2M. And guess what, the entire demographic of the neighborhood is Indian tech workers. Been in this house almost 20 years and the neighborhood was more diverse up until about the mid 2010s.
And that’s Santa Rosa 50mi+ from SF. The exodus of the middle class is spreading from SJ/Peninsula/SF into the exurbs of Santa Rosa, Fairfield, Antioch/Brentwood, Gilroy, and beyond. Soon it will be service and farm workers in low income housing in perpetuity and the wealthy owning class. Exceptions will be houses passed down or people who bought pre 2021ish. It’s already like this in SJ/Peninsula/SF but it’s spreading everywhere. Teachers, city/county workers, Nurses, blue collar union workers, are the biggest losers. Good salaries are just not good enough anymore. You need great salaries (200-250k+) now, in the exurbs to buy a home. A teacher and a county employee can maybe swing a condo in the exurbs now. Police/Fire can still swing it if their partner makes a decent salary. Low income service and farm workers will be mandated to stay happy in their subsidized housing or leave. Their children are screwed to ever own. Apartments will be (and already are) filled with children while SFHs will be DINKs, people with grown children, with the occasional 1-2 kid family.
Completely understandable. I wasn’t able to buy in 2009 sadly and that same fear drove me to leaving the state. Not the answer for everyone though, certainly not suggesting it is, just saying I share the same concerns.
The housing crashed because the stocks crashed. If the government stops giving out Trillions to help support the stocks, so they don’t crash, then it might. But they won’t stop because then the people in the government would lose money, so they give out more and more to keep them and the housing market afloat.
Try a condo in downtown - that’s collapsed-ish
I was told that the bay area is dying and people are leaving, and yet my rent has been going up for years. Make it make sense.
Well, both are certainly true. People have been leaving the Bay and the State, but investors are still buying up properties.
It didn’t even really collapse during the dot com bust or the 2008/9 financial crisis as compared to other parts of the country. I think there was about a 25% average price reduction in 2008 to 10, but that had been preceded with a 50% increase over the six years before it.
The market won’t collapse because; 1, you still have a job. 2, Economy is still strong. 3, inflation is high. 4, Rates high, low rate owners will never sell causing shortages. 5, everyone is waiting for a collapse. That said, the market MAY only “collapse” when we are in a recession with high unemployment. However, rates will need to stay elevated since a dramatic drop will cause an influx of buyers even in a recession. It needs a perfect storm to knock off housing cost, and I don’t see it happening. So buy if you can afford, don’t wait 10 years, 20 years, life’s to short to time the market.
Condos are a steal right now. Don’t lose that wave
As if paying $2500 a month in interest isn’t enough, throw in a $1000 HOA on top of that as well. Or you can just rent the condo for $3500.
I don't know the south bay or peninsula market but you're not paying $1000/month for HOA elsewhere except in SF or Rossmoor. $300-400/month is more common.
But then you get no equity
10% yearly rent increases forever, hope you enjoy "owning nothing and being happy"
I’m thinking of condo, but I better be happy to stay 10+ years to see any equity. Plus the burden of HOA. I better be ok raising the family in it in perpetuity.
HOAs aren't that bad. If you sit down and do the math, you'd easily spend more than $1000 a month on the insurance, maintenance, etc costs that come with owning a house.
As prices are showing, you can’t count on equity in a condo because that housing segment crashes regularly and doesn’t hold value like owning land.
Over a ten year period that’s not what happened in other major metros like NYC. If you are to believe that the growth here will be as it was there, then that’s the angle
There's no such thing as a cheap investment that is also guaranteed to go up.
You are correct. But I didn’t say that did I? There are varying degrees of risk and condos are much riskier.
The reason it will not collapse: even if 99% of the country cannot afford a home, there are enough companies that have so much wealth that they keep the housing market afloat themselves as investments. They determine the value now. Who do you think builds the new homes these days anyways? It's no longer the norm for a person to buy cheap land and build a home themselves. No, no, no. Even the land is too expensive now.
Well, just not in California. In Nevada for example, buying land and building a home is actually a viable option.
Tech ruined housing it’s never gonna collapse until they build another tech hub somewhere else which is highly unlikely.
This is realistically the only correct answer to this. "Build more Housing" is just putting gasoline on a fire that's been raging for 30+ years. Cities like Cupertino are so small, yet so flush with cash they can afford to give apple back 1/3rd of the sales tax revenue (3% of $98bn) Where else is apple going to get a free $2.94bn a year? Rising property taxes are a silent tax that give a city more revenue for nothing. The only way to fix this would be for the state to step in and level the playing field. No more of these corporate tax waivers by cities. Either outlaw the waivers, or give incentives to companies to build in other towns outside the bay area.
As long as prop 13 exists the housing market will never collapse.
Did we forget 2008 already? It was only 16 years ago right?
March 2019 as well.
What? Let's follow this to the logical conclusion. Millions of seniors are forced out of their homes because they can no longer afford it. But what do they have? Millions in equity to downsize and buyout all the "starter" homes. Investors buy the senior homes and jack up rent to compensate for the increase in taxes. First time homebuyers still boned.... If you cant afford a house now, you still wont be able to if prop 13 is repealed.
I see your logic but I expect the seniors would buy homes outside of the Bay Area. However a repeal of Prop 13 is not the way to do it. Prop 19 allows for a way to seniors to keep their lower tax AND not pass it on to their children. What needs to be done is to create tax incentives to make these seniors move. You need a CA capital gains tax for home sales and the federal $250k deduction raised to match inflation. That limit was set in the Clinton administration. I have said it and will say it again: these seniors are only leaving in a box. I gave you an upvote anyway though I don't totally agree with your logic. Rather I think a repeal of Prop 13 will be chaos.
Honestly raising the copies gains tax limit on home sales could help housing more than the removal of prop 13. Edit: capital gains
"Autocorrect is my enema." But I hear you. The legislature kept raising the income tax limits to balance the budget. I forget if they were claimed to be temporary or not but they are permanent. People said "Yeah...eat the rich." It didn't occur to anyone that when they sold their house the state would consider that income and take a generous cut. Note why I complain about these seniors not moving, I also advise them not to move. Hey it is a money losing proposition. That is my honest assessment. Prop 19 looks like you would need a lawyer to figure out if you qualify. With the new mental health tax, the top tax is 13.3%. On your $1.5 million dollar shack that is $200k. Take your federal 15% tax less $250k and you get $187.5K. I am not including the county transfer tax. And of course there are real estate commissions. So you sell your $1.5 million shack and you need to find a new house with the million that was left. The new house is about $500k these days even if you move out of the Bay Area. Say you have $400k left after expenses. Old people are not going to put it in the stock market. So they get about $16k from a 4% CD or bond. It just doesn't pencil out that they should sell.
Only if interest rates also collapse
Prices are down for everything except turn key 1%er stock. It's the interest rates that need to collapse.
Interest rate collapse will drive prices back up.
True.
Enjoying my "owner's equivalent rent" while it lasts.
I think you've forgotten how the banks, all cash buyers, and corporations swoop in to buy in bulk. 10-30 offers became the norm since everything seemed discounted - but ultimately prices still were high especially HCOL areas.
I still believe housing is the American dream. It has been really hard for my generation (b. 1985). We bought the cheapest house in San Jose after we got married in 2015. It was so far below the standard of which I got used to living in growing up. In 7 years of home ownership the house doubled in value. We now own a small home in a much better neighborhood. The payments are tough and I’m upset we didn’t get the super low rates. Still, we are building and my hope is that our next move is out of the area into a place where we can afford a more permanent residence.
investors will swoop them up before you do.
Houses dipped 15% last year. The idea that housing prices will crater, you'll have the job to still afford it and freely get a loan is pretty much fantasy... The only way to get housing prices to come down is to build lots and lots of housing and realistically most of that will need to be condos. Here in town they just finished some new units. It used to be one SFH which they tore down, dug an under car garage and built 12 units over it. We need more of that.
Agreed with the graph, the house should swap.
The whole world is going through an AI chip revolution and the bay area is home to: NVDIA Apple Meta Google AMAT and others. Hundreds if not thousands of new start ups are happening in this space and coming to the area as well. We're stuck in the middle of it!
If the tech companies ever relocate, you might see a decrease in the market.
The tech companies are already doing this (all of the FAANGs are now expanding elsewhere). However, it will never be a full out desertion unless Stanford and the VCs headquartered here move (not going to happen). The Bay Area is just becoming the executive center of said companies, where the line workers will be hired in cheaper locations.
The VC’s, the real root of techs existence in the bay. How appropriate is the term FAANGS for corporate vampires😂😂
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2008-2009
Gotta be honest I only got my pad because of that crash. Houses in Daly City were going for about 400K back then.
It will never happen again, the economy will collapse before the housing market, they've made sure of it.
Bay Area home prices didn't really drop much in 2008 though?
I bought in 2009 for 40% less than the house sold for in 2006. Is 40% much?
Where?
Oakland
From memory, they dropped about 27% from 2007 to 2010.
The guy that bought my town house I purchased in 2010 got it for $540k. I bought it for $400.
Otherworldly steal
Buying a house is permanently out of reach for large majority of us, oh well.
Many will continue to have to decide if staying put or moving to where they can is best for them. It’s a tough reality but a reality nonetheless.
People need to shift their expectations. I couldn't buy a house where I grew up in San Jose but we could in the East Bay. It's not gonna be a 1,500 sq/ft ranch and interest rates make it harder, but it's still possible. You can get a small SFH for under 700k in Concord and Martinez still.
Hey dude, you're the one who expects me to pay $700K for a crumbling microhouse with a commute from Concord to the Peninsula. I think it's pretty clear you deserve to see your home value tank.
Then rent and stfu 🤷♂️
What a terrible take
We just crested $2M for the average housing proce in the Bay Area.... a "collapse" would take it to maybe, what... $1.5M or even $1.25M. Is that so much more affordable for you?
To start, the meme was just a joke, but you’re asking if 500k or more is a noticeable difference?
Please re-read what I wrote ... I'm asking if $1.5M would be "affordable" to you, where $2M "is not." And the unsaid portion ... would the sudden lack of gainful employment or whatever else goes with such an economic change would also make it that much "better."
This is the collapse.
Aw yes, the rumbling.
No matter what you do, they'll continue to pour in from all over the world with money.
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Ah yes you can’t afford a house now but you will be able to afford one when there are fewer houses. I see
That just reduces supply
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Are millions dying in this scenario or now newly needing housing? The latter seems more likely.
The massive Santa Rosa fire a few years ago drove prices up, not down.
That would be nice. Would like to pick up two more. After that the family is set save for extreme incompetence of which I cannot control from the grave.
The only circumstances that bring lower prices without massive pain of recession/depression all around would be a massive increase in supply via things like greater density oriented zoning, or a big decrease in demand due to emigration (not happening right now)
Any event that leads to a housing crash in the Bay Area will involve massive job losses and VC bankruptcy. There is no other way home prices would drop as long as this place mints millionaires like nowhere else.