K1052
Elite Member
- Aug 21, 2003
- 46,901
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I wouldn't pay big money to live in a fly-over state, because land is cheap, there is room to build, and there are few inherent incentives to the area. But in a metro area like Silicon Valley, consider the situation:
- There's no more land.
- The population is continuing to rise.
- The job market continues to increase.
- There are insufficient candidates for high-paid jobs.
- As traffic gets worse, long commutes to rural areas are less attractive.
- It's still very hard to get home financing compared to the bubble.
- Most homes are being purchased with cash. Rates are irrelevant.
- There are arts, culture, scenery, and good weather. It's a nice place to live.
So please explain to me how this is a bubble. What would make it pop? Interest rates rise? No one is buying with financing, so it doesn't matter. Job market goes down? No real change in employment percentages because there aren't enough candidates anyway. Opportunity to telecommute? Go ahead, raise your brown-skinned kid in South Dakota and see how that goes.
No, this isn't a bubble. This is socio-economic stratification and you're either on the bus or off it, but it doesn't have any reason to slow down.
Sure, there are pockets of bubbling. San Francisco as a city is inflated and when the techno-weenies get tired of the urine smell, they will leave it back to the arts and finance people. But they're just going to move back down to Mountain View, not out of the area entirely.
Housing production is also extremely slow in the SF and the peninsula due to politics. This has to be the hardest place to get something built that I've ever seen. The money burning, flesh rending, sanity taxing gauntlet that they call the entitlement process is absurd. Only the deepest of deep pocketed patient developers and REITs can even make a go of it anymore.
I see horrifically underused land basically everywhere in the metro. Yea, technically the area is constrained but that vacant K mart or dilapidated strip mall could be put to higher and better uses. They need to start whacking a bunch more stuff with the upzoning stick particularly areas right next to transit.