CliffsNotes On SF Housing Market

in case someone was asleep the last 5 years or so…

I disagree that we have seen the last of high SF home prices. It may pause to take a breather but this city is too damn awesome to fail.

A long winded history of things we already know… :slight_smile:

I agree we have not seen the last of SF highs. No way. Supply and demand is still out of whack. That’s the immutable law of economics working.

  1. Supply and demand is out of whack
  2. Less land to build which are commutable to job centers
  3. Mortgage rates still low(& might continue to be so)
  4. Average Prices are higher by 5% in 2016 than the previous high of 2007(in 9 years) in Bay Area.(source CoreLogic)

Only a recession will turn all of those upside & housing foreclosure will not be the reason of a recession this time(That route has been plugged with requirements such as higher downpayment, higher scrutiny of ability to pay/good stable job etc).

One way to help cool down the 101-corridor market a bit is the rise of Oakland. If more companies choose to locate there, and the small cluster around Pleasanton grows more, we will see more people choose to live in the East Bay.

But that’s at best a multi-decade process.

But that is what typically happens right? See Manhattan and the burroughs. See Hong Kong and the areas outside. Let supply and demand work its magic in the marketplace without any hinderances or controls. Why can’t people see that if you actually built way more homes than demanded pricing will come down. God, it is not that hard right???

But then again, as an owner, I am not complaining…

The real risk is there are more and more unicorns outside the US. If those companies beat their American company counterparts, then the next generation of Apple, Google, Cisco, HP, etc won’t be here.

That’s a theoretical risk. But so far Silicon Valley still beats them all. There have been many episodes in the past that seemed like our dominance was weakening. The latest one was the mobile wave. Before iPhone mobile was dominated by Nokia in Finland and RIM in Canada. Now both are in ruins.

Nothing lasts forever. I get that. But in the next 10-20 years I don’t see anything even comes close to us. China is the latest strong competitor. But its companies are only good inside China. Very, very few have global footprints.


Lot of new ideas & successful implementation of those ideas(Companies) are still coming from the US(so far). [E.g. Internet Search, Social Media, Mobile, electric cars,ride share companies, house sharing,cloud computing, Data Science, AI, VR etc].

Other countries have successfully copied those ideas/companies to create a local flavor in their own countries in some cases.

I agree the risk isn’t big yet. A majority of unicorns are right here in the bay area. I don’t think it’s prudent to completely ignore the risk though either.

Then there’s the Chinese government. They seem to make up rules as they go. They allow certain products then a few months later ban the same product. Their practices are highly uncompetitive against US companies. Apple is being sued for the iPhone 6 infringing on the design of a Chinese company. A lower court ruled in favor of the Chinese company, but an appeals court overruled it. It’ll be interesting how that plays out.

Oh yeah. There is the risk & it will surely be that we will see more new companies from China.

However it’s not a zero sum game & hence China creating new companies in the future does not mean that Silicon valley would not do as well or better than today.

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Assuming we are still around after 10-20 years, should we sell in USA and buy in China? I’m almost certain either Beijing or shenzhen is an alternate SV.

Shenzhen is what most people would call Silicon Valley East.

I am still incredibly bullish on our original version of Silicon Valley. The biggest advantage I see is the diversity of talents coming in, and the entrepreneur spirits that’s hardcoded into our nation’s founding principles. China can be good, but I predict it will always play second fiddle to us, at least in the next 10 to 20 years.

We need to keep the magic going though. The government could shoot it in the foot by limiting or eliminating work visas for high-tech workers.

[quote=“marcus335, post:13, topic:276, full:true”]
… The government could shoot it in the foot by limiting or eliminating work visas for high-tech workers.
[/quote]Should that happen, is time to sell SFBA RE.

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