
These 2 Forces Will Crush the San Francisco Housing Bubble - kdsudac
http://wolfstreet.com/2016/07/05/san-francisco-jobs-labor-force-decline-crush-housing-bubble/
======
ucaetano
I was expecting "tectonics" and "drought" to be the forces.

------
gorkemyurt
"And this crushed the SF housing market."

As far as I know even in the previous dotcom burst the housing market went
down just a little, something around 10%. In some neighborhoods rents have
been increasing more than that per year in the last 3 years. So even if there
is a tech burst the size of the 2000 dotcom burst, I don't expect real estate
prices to suffer that much.

edit: here is a good analysis; [http://www.paragon-
re.com/3_Recessions_2_Bubbles_and_a_Baby](http://www.paragon-
re.com/3_Recessions_2_Bubbles_and_a_Baby)

~~~
xbmcuser

      The previous dotcom bust happened when the property bubble was just building in most of the US which crashed in 2007-8. So in a dotcom bust property prices might not follow the same pattern as previously. In todays silicon Valley most people apart from the tech workers have been priced out of the market and they have left. Now a bust won't have the support these buyers or renters to stave off a collapse.

------
jwise0
I think there is a fair bit of "how to lie with graphs" here going on. For
instance, the 'housing construction boom' very carefully does not show any
context before 2014, and although it rockets up from the bottom left of the
graph to the top right, that's only a delta of 25%, because the bottom is not
zero. It also doesn't show how many housing units ever make it /out/ of the
pipeline -- a perennial issue in San Francisco.

It also seems to declare that employment is the only source of housing
occupancy. This is less true if you consider, for instance, real estate
speculators (and with China's economy as well as it is and is expected to be,
I don't foresee that slowing down), and also if you consider the new short-
term rental market.

So, maybe the housing bubble will collapse. But I'm not convinced that either
of those forces are as powerful as the author claims, and the author doesn't
really give any text considering and dismissing other known forces, so you can
consider me unconvinced by this article alone.

~~~
sobellian
Not to mention that the employment graph doesn't support their conclusions at
all. To say that a small negative slope at the end of your dataset suggests an
upcoming negative trend is classic bad statistics.

I don't really know one way or the other what the ultimate trend will be for
tech in the next few years but this is just numerology.

------
technofiend
As a counterpoint although the article also mentions Manhattan's alleged drop
in condo pricing, one could argue that San Francisco is smaller and therefore
more constrained. It's my understanding that much more real-estate in SF is
under rent control, so overbuilding is also less likely. And if Vancouver is
any indication there still seems to be plenty of money interested in real
estate coming out of China.

~~~
Kinnard
SF is actually bigger—

San Francisco: 46.9 square miles

Manhattan: 22.8 square miles

SF is a lot less tall than Manhattan all around too.

Did I mention that SF is hilly?

~~~
technofiend
Interesting! Not sure what's constraining supply to the point that SF's
average cost per SQFT is so much higher than Manhattan's? Restrictions on
building up? Rent control limiting supply?

~~~
mikeyouse
> Restrictions on building up?

More this one than the other one.. Here's a map of SF:

[https://static6.businessinsider.com/image/5342ef126da811ef6a...](https://static6.businessinsider.com/image/5342ef126da811ef6aba14fa-917-687/sf-
building-height-zoning-1.jpg)

All of the yellow areas have 40-ft height limits -- even though huge corridors
in the yellow areas have good transit, freeway access, etc.

The Western half of the city is all single family homes or 2/3 unit
apartments, it's insane:

[http://calphotos.berkeley.edu/imgs/512x768/1351_3151/4303/00...](http://calphotos.berkeley.edu/imgs/512x768/1351_3151/4303/0043.jpeg)

~~~
Kinnard
Insane.

------
ktRolster
When comparing employment and housing in San Francisco to predict future
housing prices, I don't think you can consider San Francisco in isolation
(like this article does). You need to consider it in terms of the surrounding
metro, because a housing boom in Belmont can reduce the demand for houses in
San Francisco.

------
dbroockman
The city doesn't have enough room to add many more jobs. This is like saying a
restaurant that fills its tables every night must be in a bubble because it
hasn't grown past its capacity. Right? (Not saying it shouldn't have more room
(building). But as a descriptive matter...)

------
dmoy
What percentage of SF people work in startups? What percentage of people
living in SF work in SF and not a surrounding burb (and v versa)?

~~~
geggam
Not sure who is living in SF unless you have rent control and have been here
for a bit.

I live in Fremont ( 45 minute BART ride ) and work in the city. I expect to
leave the bay area when my lease is up because I expect the rent to climb to
$STUPID

I could afford to live in the city if I was single. Single kids out of college
don't make what I make nor would I spend that much on a place to live.
Regardless of how much I like the City.

Edit : the rent I have paid in the last 6 years would have paid for a home...
nice one in an HOA in most markets ... and my rent is 33% below market

~~~
Kinnard
Where will you go?

When is your lease up?

>"I could afford to live in the city if I was single."

You're married with children?

#hungryfordata

~~~
geggam
I like Phoenix

October

Yes two blackholes of food aka teenage boys

#isthatenough ?

~~~
Kinnard
Well, if you lived in the City I might ask you for your address and if you
like the place and the landlord, etc :D

~~~
geggam
Good luck with that ... come in over asking ... pay a year in advance and
bring a bottle of wine

