for all you who think the bay area is going to crash read this.

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for all you who think the bay area is going to crash read this.

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

https://www.theatlantic.com/technology/archive/201...   

this really puts into perspective why the Bay Area and SF peninsula in particular is in a world of their own and is world class real estate with very few comps.. Only NYC  prime LA  north side Chicago  Washington DC  and Boston.. are really comps.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

@Jay Hinrichs great read.  That actually helps me understand San Fran housing a little bit better, since it always kind of dumbfounded me that incomes there are a lot lower than DC, but housing prices are a lot more than DC....but thats driven largely by money that isnt actually income (stock from IPO).

I actually love this chart below, which shows many of the major metro areas as measured against income, which I think is a much better barometer of expensive vs affordable. I always felt DC is very affordable with housing prices at just 4.8x income, as opposed to Boston where I am originally from at 8.5x income.

https://www.numbeo.com/property-investment/region_rankings.jsp?title=2019®ion=021

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    @Jay Hinrichs great read.  That actually helps me understand San Fran housing a little bit better, since it always kind of dumbfounded me that incomes there are a lot lower than DC, but housing prices are a lot more than DC....but thats driven largely by money that isnt actually income (stock from IPO).

    I actually love this chart below, which shows many of the major metro areas as measured against income, which I think is a much better barometer of expensive vs affordable. I always felt DC is very affordable with housing prices at just 4.8x income, as opposed to Boston where I am originally from at 8.5x income.

    https://www.numbeo.com/property-investment/region_rankings.jsp?title=2019®ion=021

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    @Russell Brazil  Keep in mind incomes are not low for many in the right tech jobs..  3rd year goggler is at 250k a year and marries another googler.. plus their living expenses are nothing.. only housing food is all free.. and great food at that.. Coffee bars are free.. its quite the thing I got to make a little presentation there on RE investing a year ago and got a tour of the main campus.. and its great restaurants.. Unless you see it you simply cant fathom it.. 

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  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    Yup, 80% of my clients are in tech.  The housing shortage is real out here.  Not many new developments in primetime areas of the Peninsula, SF, and South Bay.  There is still land in the Tri-Valley and that area is booming with new development but other than that not much. 

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Frank Wong:

    Yup, 80% of my clients are in tech.  The housing shortage is real out here.  Not many new developments in primetime areas of the Peninsula, SF, and South Bay.  There is still land in the Tri-Valley and that area is booming with new development but other than that not much. 

    Last week I drove ( or should I say my Tesla drove) from Vegas to Napa   passed by Patterson and there had to be 150 homes under construction.. just off the freeway.. booming again.  and for those who don't know that is about 75 miles out into the central valley from SF  people will commute to east bay and San Jose I guess from there.

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  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y
    Originally posted by @Jay Hinrichs:
    Originally posted by @Frank Wong:

    Yup, 80% of my clients are in tech.  The housing shortage is real out here.  Not many new developments in primetime areas of the Peninsula, SF, and South Bay.  There is still land in the Tri-Valley and that area is booming with new development but other than that not much. 

    Last week I drove ( or should I say my Tesla drove) from Vegas to Napa   passed by Patterson and there had to be 150 homes under construction.. just off the freeway.. booming again.  and for those who don't know that is about 75 miles out into the central valley from SF  people will commute to east bay and San Jose I guess from there.

    Oh Wow, I haven't heard of Patterson since 2005.  That was the next booming city bc of the distance to San Jose. I guess things are finally going full circle for that area. 

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Frank Wong:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Frank Wong:

    Yup, 80% of my clients are in tech.  The housing shortage is real out here.  Not many new developments in primetime areas of the Peninsula, SF, and South Bay.  There is still land in the Tri-Valley and that area is booming with new development but other than that not much. 

    Last week I drove ( or should I say my Tesla drove) from Vegas to Napa   passed by Patterson and there had to be 150 homes under construction.. just off the freeway.. booming again.  and for those who don't know that is about 75 miles out into the central valley from SF  people will commute to east bay and San Jose I guess from there.

    Oh Wow, I haven't heard of Patterson since 2005.  That was the next booming city bc of the distance to San Jose. I guess things are finally going full circle for that area. 

     ya you can always go over 152  Pacheco pass to southern Santa Clara county..   I don't know I grew up in Cupertino in the 60s  before 280 was built .. before hwy 680 was built from SF to Walnut Creek and of course 580 was just someone's dream.. 

    And in those days it was aerospace.. how Lockheed went was how the South bay went..  HP came in and Varian and a few others and then it just grew.. Apple changed it INtel changed it.. and now well its just what it is.. 

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  • Alex Mao
    Rental Property Investor · San Francisco, CA · Member since 2018 · 37 posts · 18 votes
    7y

    @Jay Hinrichs

    Thanks for sharing this Jay. This is a very fascinating read with fact based data.

    While reading, I kept wondering, what has the greater impact on the Bay Area housing market - global growth of our existing tech giants or the fleeing of them and their workforce to other states. The latter, I believe, may continue to gain momentum as it gets increasingly difficult to attract and retain talent given the high cost of living in the Bay Area. Not to mention the more favorable business climate being offered elsewhere.

    One of the reasons I decided to invest out of state is because of the massive fluctuations in home prices here. While appreciation is where many make fortunes, I've experienced the housing crash where many (friends included) have lost it all, and not because of greed.

    Nonetheless the impact of the global growth of our homemade tech companies here is undoubtedly apparent.

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alex Mao:

    @Jay Hinrichs

    Thanks for sharing this Jay. This is a very fascinating read with fact based data.

    While reading, I kept wondering, what has the greater impact on the Bay Area housing market - global growth of our existing tech giants or the fleeing of them and their workforce to other states. The latter, I believe, may continue to gain momentum as it gets increasingly difficult to attract and retain talent given the high cost of living in the Bay Area. Not to mention the more favorable business climate being offered elsewhere.

    One of the reasons I decided to invest out of state is because of the massive fluctuations in home prices here. While appreciation is where many make fortunes, I've experienced the housing crash where many (friends included) have lost it all, and not because of greed.

    Nonetheless the impact of the global growth of our homemade tech companies here is undoubtedly apparent. 

    Keep in mind when people lost it all in CA  they also lost it all in NV  GA FLA  MS TN and any number of other states.. when its bad its bad and its just not the bay area.. No market is immune..

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  • Alex Mao
    Rental Property Investor · San Francisco, CA · Member since 2018 · 37 posts · 18 votes
    7y

    @Jay Hinrichs

    Good valid point

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alex Mao:

    @Jay Hinrichs

    Good valid point

    And I had bay area investor who bought 4 plexs in PHX  for 350 k each and in 2010 they were trading for under 100k each.. when they go hundred % vacant and stay that way for more than a year.. you lose them.  and these were attorneys and other professionals.

    I sold them duplexs in Vancouver WA and 4 plexs in Portland and those held just fine.. did not go up but did not crash .. so it was very regional.. but the numbers at the time when they bought were better in PHX so instead of loading up on Portland they loaded up in PHX and got wiped out. actually forced them to sell Portland and VAN  they broke even thankfully in this market. 

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  • Jonathan PfluegerPro Member
    Ben Lomond, CA · Member since 2016 · 338 posts · 337 votes
    7y

    I could not agree more. People tend to underestimate or fear what they do not understand - the Bay Area being one of these things. Granted, the Bay Area is not recession proof and will have its fair share of dips and blips - but the forces driving it are far from standard, requiring an evolving perspective and altogether informed investor type.

    Lots of people believe the San Francisco Bay Area and the term "speculation" are one and the same - this only goes to show the depth of understanding those people have for the market and its driving forces. Armed with the right knowledge and understanding, high cost markets become gold mines for the investor savvy individuals - this is anyone and everyone who is willing to put themselves out there to learn and network - thereby mitigating the mental and emotional aspects these unique markets tend to bring out in otherwise uninformed investors.

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  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    7y

    Definitely a different world.

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  • Amber Turner
    Turlock, CA · Member since 2016 · 77 posts · 15 votes
    7y

    @Jay Hinrichs I enjoyed the article. I live in Turlock, which is about 20 miles east of Patterson. But Bay Area people move to the Turlock/Modesto/Manteca area also and commute to work once the housing prices rise in the bay. We usually know the market is getting towards the top (maybe a few years out) around my area once the Bay Area residents start moving over here. However, new developments aren’t going up like the last cycle.

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Amber Turner:

    @Jay Hinrichs I enjoyed the article. I live in Turlock, which is about 20 miles east of Patterson. But Bay Area people move to the Turlock/Modesto/Manteca area also and commute to work once the housing prices rise in the bay. We usually know the market is getting towards the top (maybe a few years out) around my area once the Bay Area residents start moving over here. However, new developments aren’t going up like the last cycle.

    I just noticed the one right next to EYE 5 and saw like I said at least 50 to 100 specs going up.. I mean my bank will only give me 2 a month LOL.. But I hear you.. 

    I think the article puts it into perspective what why and how SF and peninsula can command prices that those that live in the mid west deep sought or other areas were median price homes are in the 150k range.. it maybe allows them to understand why.. and why it wont come crumbling down.. keep in mind the move up.. anyone who bought in mid 90s has a few million in CASH equity. as well. 

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  • Amber Turner
    Turlock, CA · Member since 2016 · 77 posts · 15 votes
    7y

    @Jay Hinrichs yeah. The equity some have there is crazy, and then they come to my area and pay cash for investment properties, and obviously increase our housing prices since they will pay more for the homes . I am off of 99. I wish my bank would allow my husband and I to purchase two a mouth haha! We would love to buy more, actually commercial, but thats hard to find. Therefore, we started investing into syndication deals.

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Amber Turner:

    @Jay Hinrichs yeah. The equity some have there is crazy, and then they come to my area and pay cash for investment properties, and obviously increase our housing prices since they will pay more for the homes . I am off of 99. I wish my bank would allow my husband and I to purchase two a mouth haha! We would love to buy more, actually commercial, but thats hard to find. Therefore, we started investing into syndication deals.

    I am talking about spec loans.. for new construction I don't buy rentals personally..  

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  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    7y

     The Bay area techs are earning 80% of the entire planets advertising revenue. It is like a monopoly in scope and size we have never seen before. Some of these areas would need to build 1000s upon 1000s of homes just to stay even, which is politically impossible. It may crash still and investors will swoop those up quick too.

    Btw Jay, that Inglewood is in full blow up stage right now. 

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  • Jay HinrichsBusiness Member
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    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Matt R.:

     The Bay area techs are earning 80% of the entire planets advertising revenue. It is like a monopoly in scope and size we have never seen before. Some of these areas would need to build 1000s upon 1000s of homes just to stay even, which is politically impossible. It may crash still and investors will swoop those up quick too.

    Btw Jay, that Inglewood is in full blow up stage right now. 

    I got a perspectus on Inglewood a few years ago.. I don't think they started but I like the play.. its the same exact situation we are experiencing in Charleston SC.. change in values and demographics. 

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