Why Boom Towns: The Ups & Downs of San Francisco

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‘Our city just at this time is dull except [for] Real Estate Speculations, upon which our people seem crazy. I drew papers of a piece of property today for my friend “Hood” which in 1846 cost him five dollars. It sold today [in 1853] for sixty thousand.'”


It is really interesting to see the historical surge and retreat of real estate prices has been with San Francisco nearly as long as the tides. It does make me ask, why does SF have such a volatile profile, while many other cities plod along for decades with growth near the point of inflation?

What makes one city an equity market while another dominantly cashflow?

(P.S. don't turn this into a debate about the merits, I just want to understand the economic and social drivers that cause the different cycles)

1) Little Land - Surrounded by water - they ain't makin' any more of it..
2) NIMBYism - Don't build that here! Or there! Or there.. Or there..
3) JOBS JOBS JOBS - And high paying ones too..
4) Beautiful place, major metropolitan area with international pulls & money, no snow..
5) Coastal usually doesn't hurt
6) Lots of wealth within 60 miles

@Shane Pearlman , looking forward to seeing you tomorrow/today/Friday evening! Thanks again for letting me crash!

In 1846, the estimated population of SF was 200.
By 1852, the estimated population of SF was 36,151.
By 2013, the estimated population of SF was 837,442.
So density has increased over time..


Ok, I'm "local" so I can explain what's happening, mainly related to the High Tech Tides and Rent Control :). The bad part is rent control, that landlords hike the prices to make sure it will last them till tenant moves out.

Also look at the population profile. Young professionals will be renters, real estate in SF City is already super expensive hence appreciation is limited since the addressable market size is very small, creates no demand for such pricey piece, except high end affluent people. When appreciation doesn't keep up with job market, your pool of buyers will shrink quite fast.

Today there's a crazy race on High Tech jobs. Rents have increased about 20-30% over 12 months. That's insane. See below stats.

and the 12 mo trends:

and city breakdown:

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