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Why are SF Bay Area Folks still buying real estate with the tech wreck of 2018?

Started by Sam, October 30, 2018, 09:46:24 AM

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I'm curious to know the psychology  behind real estate buyers at this point in the market. It's clear we've had a great run, interest rates are rising, inventory as increasing, and the stock market is showing signs of weakening corporate profitability in the future.

It is so obvious to me that The most expensive real estate markets in the country are weakening and will continue to weaken.  Why are people leveraging up now? What are they seeing that I am not seeing?

It takes 2 to 4 years for house prices to bottom out.





My 2 cents worth as someone who has recently relocated away from the Bay Area.

I think the simple answer is there are a lot of people associated with tech who have a lot of money and don't know what to do with it. Many of those smart techies are clueless when it comes to money. Many have never lived through a market correction, all they know is good times, so they are of the belief those good times will continue. Many of them have never been in a work environment where to meet their numbers companies will suddenly doing a mass lay offs.  If you are a young techie bringing in $300k+ a year and your only expense is $2k in a shared rental, your bank balance grows quickly.  There are plenty of couples late 20s early 30s bringing in $500k+ so to them it's probably not a big deal if there is a dip in prices immediately after they buy. That is of course until they need to sell.



Having sold my condo in San Jose this August, I am glad to have cashed out. I had reservations 10, 20 years ago buying a home here and each time it seems to have worked out in my favor. I guess there is an element of hoping for the best when you buy in the Bay area. I think it has rarely felt rational to purchase a house here, but people keep doing it. The horror stories of foreclosure and short sales have faded from the collective memory.


Quote from: Toula on October 31, 2018, 10:45:30 AM
Many of them have never been in a work environment where to meet their numbers companies will suddenly doing a mass lay offs. 

This will be the wake-up call for people who bought a house here. A job feels like it will last forever, until it doesn't. I graduated in 2008 with a Masters degree in electrical engineering and tried to find a better job, but no one was hiring. Luckily I still had a crappy job. That is what convinced me that the SF bay area is not paved in gold.



I sold our current home in SF and moving to South Bay. With the slowing of RE market in Bay Area, I feel the nicer area of South Bay is already at a discount. And since we're "moving up", price damp across all market seems in our favor (if both Palo Alto and SF went down by 10%, Palo Alto is more bargain in absolute $ terms).

Do you see a huge dip in the market?


Rycole - I've looked at three houses that have all been sitting. In the first 1:45 thousand and 18, they would have all sold for 5% to 10% higher. The shift is palatable.