Two things:
(1) To pay taxes, people have to cut money from other expenses they have (like buying new clothes or a pair of shoes).
(2) People understand their priorities better. People spend their own money better for themselves than a bureaucrat will do for them.
And the third:
If the population is rising and the taxes are rising and government expenses are also rising, it means the new population is a net money taker. It could mean more welfare recipients are arriving legally or illegaly.
The people who need government handout to survive do not make Bay area housing more expensive.
The worst period of real estate was 2008-2011 by RE downturn and massive bank failures. This time failure is by coronavirus and impacted companies are service industry and entertainment areas.
Technological revolution continue to happen and transformation is common. The impacts are temporary as economies will adjust soon after a downturn.
Conditional thinking : If Apple goes to $99/share, or google goes to $250/share or TSLA goes to $200, or similar changes are with big companies like FB NFLX , and they are permanently stay at that price, Bay Area real estate will come down and stay low.
Will this happen?
By moving jobs from Bay Area to elsewhere using wfh policy, do you think companies profit is reduced or increased ?
If CU home comes back to $800k, any one holding tonnes of such company shares run away or buy one more home?
That depends on your perspective. Theoretically you can say cosine leads sine but in real life, who knows. Leads by 90 degrees equivalent to Lags by 270 degrees.
Also in real life, both house prices and interest rates can be drivers and dependent depending on circumstances. Interest rates are not influenced by house prices solely.
True, but leader gets max share. SV being leader in tech, they get lions share!
See here, companies are moving jobs overseas by H1B restriction, Remote working comes to practicality, but the main driver is cost reduction which improves the profit margin ! This compensates the profit loss of covid impact.
When economy improves, revenue increases result in more profits, share price of AAPL, GOOGL, NFLX, TSLA, FB may go up after a downturn.
This was exactly happened in 2000 and 2008 and will repeat again. We have seen ultimate recovery in real estate dramatically coming up crazily after 2012 onwards.
Not only last two downturns, but this has been happening since 1929 onwards.
The current downturn is not tech (unlike dot.com), neither real estate (unlike 2008), but service industry. The impact to bay area will be low, many may not even visibility notice the change, and will be back strongly.
Agreed but the difference is never like for like in time - my driving commute (in normal traffic) would be 2+ hours in stop and go traffic (pre covid) vs 1.5 hr in thoughtless stress free sitting in a car / most of the time napping or just not doing anything.
Wait a minute. Thought we are talking about residential house prices?
Minimum impact to house prices? Don’t agree.
Exactly. AFAIK, most H1B rents apartments/ condos and townhouses. With less H1Bs and WFHs, rents (possibly prices) of apartments/ condos and townhouses are likely be in a secular downturn. Anyhoo, it means many plans to construct apartments/ condos and townhouses would be put on hold. Could be a good thing since they can become affordable and citizens/green cards guys staying in East Bay can move back to Fortress
Huh? Apartment prices are always linked to rents. So my view has not changed. However is not true for SFHs. Read the details. Read back past blogs, I specifically say there are many kinds of housing and their dynamics vary.
One more thing, I am referring to SV. In Austin, price and rent are correlated somewhat. I need to define the bound for you Apparently, you have forgotten about basic mathematics. Formula are true for certain domain and constraints only.
It does not have to be a choice among two bad options. Overbuilding and Overconcentration of housing and office in a small area create traffic problems. That is why I support spreading out and less density so that people can move around and live relaxed.
Apartments and Condo living is subsidizing the cost of recycling/water resources for single family home due to them collected at one place. If less renters and more SFH. the costs are likely to increase. Real property taxe bill in places in areas like Richmond/Berkeley already reaching 2% of values. I will not be surprized it spread around whole bayarea.
Elon is already sellling all his real estate and all further investments are going outside bayarea…Rich are fleeing and the rest will face the tax bills.
i am not going into how much hospitals will charge for insurance. if head count for services goes down.
The state’s budget deal, announced Monday, does not include the California Hospital Association’s request for $1 billion in the current budget year, which ends June 30, nor does it include its $3.1 billion request from the state’s share of a federal emergency waiver in next year’s budget, which begins July 1. (Bannow, 6/22)
I will not be surprised if the house prices in Bay Area is reduced into half within a few years and even more later. I know it never happened in the recent past. Permanent remote work and rise of smaller cleaner healthier and less congested small towns in beautiful backdrops will lead to this change. It will be foolish for someone to pay 4x the price for mediocre home in dilapidated neighborhood with congested streets and poor demographics. You cannot beat the fundamentals forever. The driver for exponential growth over last 4-5 decades is gone now with remote work.
US comes with new innovations time to time. 20 years before we were using AAA maps when no cell phones were there. QCOM came out, then GPS, now waze…
100 years car industry is Totally getting changed by EV transformation.
Changes/disruption is always there as long as funding is there. US has got good infrastructure for economy, money generation (bonds, ipos…etc).
New companies will be formed and new changes will come to USA, including bay area. Every downturn provides an opportunity.
Now, you agree about CU ( as you and me know in detail about it). I can go on with mountain view and Sunnyvale, then with another city by city.
It will be endless discussion for 5 years by that time you will see recovery.
Regarding real estate, I was really amazed how bay area turned after 2008-2011. It was worst for real estate. When that itself recovered, it is very easy recovery for current downturn which is not real estate.
Let me stop here as I do not want to blog any more on this subject.
SF has now highest inventory for sale and rent that despite recent IPOs. we are entering new era for SF bay area that it never faced.
it is not just lack of investments but the skills. AG Barr a recent speech to business conference where he lumped together Apple with Hollywood with strong warning about there behaviour. It means they no longer consider it as engineering firm. SF bay area simply cannot contribute to built and buy America.
now its the schools with cuts. Remote learning at cheaper places.
Doesn’t mean true for Bay Area, even if true for SV, doesn’t mean true for 7x7 
Apparently, you have forgotten about basic mathematics. Formula are true for certain domain and constraints only.
, buy sports car 
, sell & expand footage of Primary, upgrade from San Jose to Cupertino 
, sell & invest in hedge fund 