One of the most fatuous (translation: “dumbest”) reasons I’ve ever heard for renting instead of owning came from perhaps the most successful–or at least noisiest–bubble bloggers of all time: “Rents can’t go up faster than income.”
I’ve always said that buyers have to fall in love (with a house, that is) to be successful. And whenever I say this to buyers, I get looks of disbelief. “Not me, John. You must have me confused with some sappy emotional fool. I’m more the analytical type.”
It probably won’t surprise you to learn that your hard-earned dollar doesn’t go far in California. According to taxfoundation.org, the relative value of $100 in California is $88.57. In Mississippi the relative purchasing power of your $100 bill is a thrifty $115.74, plus people who live in Mississippi get to spell the name of their state frequently. M-I-S-S-I-S-S-I-P-P-I. Goodness, I haven’t had that much fun in years.
An infographic from the California Association of REALTORS(R) shows nothing less than a transformation in seller attitude between 2012, the start of the current boom in many parts of California, and 2013–and we can only imagine how euphoric sellers are now, in 2014.
The following will or will not be cause for celebration, depending on whether you’re a Peninsula home buyer or a Peninsula home seller:
“For a seventh consecutive quarter, San Francisco-San Mateo-Redwood City, Calif. was the nation’s least affordable major market, with only 11.1 percent of homes sold in the second quarter [of 2014] affordable to a family earning the area’s media income of $100,400.”
Just recently a client who knew first-hand how hot the competition is for anything with Cupertino schools asked me if I thought this mania for ‘burbs with platinum-level schools has staying power. After all, the tech industry is well-established in San Francisco. Twitter, Salesforce, Pininterest, Zynga and others employ an estimated 68,000 techies who are making the City their own and presumably loving every minute of it.
Real estate booms are huge social movements that sweep all but the most cynical or alienated before them. Everyone is either buying a house, or talking about buying a house, or talking about why this is the wrong time to buy a house. This kind of momentum, bordering on mass obsession, sucks people into the market who may not belong there.
So ask yourself, why am I in the market?
How old is Silicon Valley’s housing stock? Older than most Silicon Valley homebuyers, is the short answer. The long answer isn’t that much longer.