People are already running away from California. And it is not for the housing shortage. There are lot of things California should have and could have done. Governments can make what ever law they want. Markets have mind of their own.
I think we should pass “Every One Happy act” so that no one ever gets sad.
Here is an interesting case of a recently sold home with ADU in Willow Glen. Seems to have got top dollar (2.4M), and quite comparable with a larger sq footage main home in the same area (also sold for 2.4M)
Home with ADU:
Similar larger sq ft main home
I know your obsessed with building a 500sf ADU. After all tiny homes are all the rage. Especially prefab. My neighbor is actually going to build 47 500sf cabins for motel style short term rentals near Tahoe. Something that hasn’t been done in 50 years.
She is nuts, but plans to stick build five now even with the high cost of lumber and labor. She told me the prefab ones are wobbly on their wheels. Good luck with your tiny home. Sorry I probably won’t care what happens in 10 years.
He seems more interested in knowing whether everyone else believes ADUs make homes valuable. He may be right. And he is mining data to make his case. (motivated reasoning?)
Expansion from 1400 to 2100 sq ft, and high end remodel resulted in $3.2M sale price in 2021, compared to $2.1M for the same house in 2020. Very profitable flip, and definitely shows the premium buyers place on an expanded home
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During 2007 financial crisis, those extremely desirable neighborhoods didn’t drop much (~10% price decline, definition of consolidation) after the bubble burst. Less desirable neigborhoods went into correction (10-20% price decline) and least desirable go into bear market, >20% price decline.
Many homes in Milpitas and San Jose East side dropped as much as 40% in 2009 from 2007 peak.
Homes in Affluent areas did not drop as much because the homes (in affluent areas) were not purchased with liars loans and the owners had income and assets to be able ride through the trough. But, those who brought homes with stated income triggered a cascading homes sales and forclosures events resulting in home prices in those area a downward spiral.
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These places are good for few years speculation… buy them after RBA roars… sell after good profit… don’t wait for peak because they will decline first and is hard to sell after it starts declining. Last to appreciate, first to decline.
And these property make good rental even without ADUs. Probably you will not find one person to rent the single family home. But, You can easily bet two or three families will jointly rent them without problem.
I think there are 100-160 million Gen y and z new buyers that are going to disrupt the housing market for the next ten years. This feels like the 1970s. Huge demand and major supply constraints. In addition we have ridiculously low interest rates.
I considered selling. But I am actually buying and increasing rents.
The most houses ever built was in 2004-5. 2.5 m. https://www.google.com/amp/s/www.cnbc.com/amp/2021/05/18/housing-starts-april-2021.html
I think about half that number are being built now. And very few in the BA. The only significant number of sfhs being built in Ca are in the exburbs like Eldorado Hills. No way sfhs will ever be built in the RBA in any significant amount
Gen-z will be smaller in size than Millennials. By the way, I read a piece where the author used generation size to explain secular bull bear cycles in the stock market. He said generation sizes go up and down like a wave every 20 years. The current secular bull market is riding on the rising tide of millennials, as they overtake the boomers in size and age into their peak earning and spending years. The next one Gen-Z will be smaller in size and we will head into a secular bear market as they age into 20s and 30s in the 2030s.
Don’t know if that’s accurate or not but that’s an interesting angle.
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He has forgotten one very important factor. Medical science. It has been improving at accelerating rate. Lifespan of humans are getting much longer… So don’t expect supply to increase drastically as baby boomers are not dying at the age expected i.e. not as fast as he expected. So need a larger than expected new construction which… again an issue, inflation which you don’t believe in, and more land suitable for housing (no idea how expensive is to convert retail malls, gas stations, virgin lands, … to housing).
A few other issues which I am not sure is secular…
a. Recent trend for larger built in
b. More hispanics and blacks are going nuclear, less multi-generation or smaller family size in a house
c. Rising thought that dollar is depreciating and RE is a good store of value
Net net, instead of up and down as he expected, more likely to be up sideways up sideways
Increased lifespan will only shift the cycle, but will not change the shape much. Herry Dent is a big proponent of generational demographics as driver of economic cycles.
Anyway, what is full form of RBA. I know BA is for Bay area, but what is R for?
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Increased lifespan = fixed length. We are getting increasing lifespan… how long, I don’t know, 100+ for sure… what happen if keep increasing to 150? Btw, early discovery that the theory that we age because cell has limited number of splits may not be correct, lifespan can be extended with external influences… think about it… attach a device to your body that would extend your life by 2x to 5x… SHAPE will be modified not just shifted…
RBA = Real Bay Area… aka fortress… more or less core of SV… anyhoo, changes through time… you should do a web search to see what zip codes are considered in RBA currently.
Real Bay Area are fortress cities on the Peninsula and Silicon Valley that only barely went down during the Great Recession
“Just shy of half the buyers are coming from out of state” in the hottest markets of Idaho, Texas, and Florida. When people leave multimillion-dollar houses in, say, Los Angeles to plunk down $1 million on a house that was worth $500,000 a year ago, they turn a merely frenzied housing market into a once-in-history, hair-on-fire, what-the-hell-is-happening bonanza.
Take note. From CA to TX 
Anyhoo, is a good occurrence. Spreading the wealth no longer stay in CA esp BA and LA. Should cheer for this.
It’s interesting. When I bought here, this place was $15k lower than my Bay Area place. Now Redfin says this place is $245k more. I bought in August, 2019.
