patrick.net

DC is different not so much due to the demand but due to restrictions on supply. There are height restrictions put into place about 100 or so years ago to maintain the view of federal buildings. So if builders can't build the only thing to do is to raise rents.

Technically there might not be a ban on building down..but going beyond a few stories and it would be odd.

SF is a odd market
http://www.deptofnumbers.com/asking-prices/california/san-francisco/
"The median asking price for homes in San Francisco peaked in May 2006 at $668,570 and is now $277,920 (41.6%) lower."

But the inventory is pretty low...really low..less than half from the peak are on the market.

mdovell says

"The median asking price for homes in San Francisco peaked in May 2006 at $668,570 and is now $277,920 (41.6%) lower."

Putting condos and SFH together is not helpful. Median price for SFH is not anywhere near 277K, not even in the most dangerous neighborhoods.

BigChiefEugene says

These cities have people with massive wealth including the native born and foreigners who have abandoned interest paying instruments and have put their money into real estate because of very low mortgage rates

Last week we put an offer in on a 3/2 SFH. 30K above asking, and we were completely bid out of the water by Chinese investors with all cash and no contingencies. On the market last Wednesday, pending today with 15 offers in 4 days. Not a shi-shi neighborhood, either.

Realtors Are Corrupt says

4 outer boroughs

I grew up in Manhattan and now live in SF. Comparing the boroughs to Manhattan is as ridiculous as comparing all of the East Bay to San Francisco.

I could buy a house pretty cheap if I wanted to live in Vallejo or Richmond or the Bronx or Queens.

Apples and oranges.

1sfrenter says

I grew up in Manhattan and now live in SF. Comparing the boroughs to Manhattan is as ridiculous as comparing all of the East Bay to San Francisco.
I could buy a house pretty cheap if I wanted to live in Vallejo or Richmond or the Bronx or Queens.
Apples and oranges.

Don't know much about SF, but you're right about NYC. Manhattan will never take a pounding of any significance. It is Wall Streets home, and is jam packed with rich people. The outer buroughs will see declines, but no where near as bad as the Western States or Florida did. NYC is a world city, which means the international elite will always want a place there. Its only real threat to real estate is global warming.

Funny you should ask.... Wifey and our where out and about today hiking in "The Hills" (as the locals like to say, as if Los Altos Hills is some kind of stellar place. The assumption is calling it "The Hills" is equating the area to "Beverely hills" or something... sorry I digress..

We so a WHOLE bunch of "Preview" and "Open House" signs, up in the Hills, west side of 280. I think something is afoot....

Even Beverly Hills and Malibu fell by +40% .. it was back when 90210 was the big hit on TV. Little did many across the nation know that home prices fell like bricks.

http://articles.latimes.com/1994-11-21/news/mn-9_1_santa-monica-mountains/2

At Beverly Park, a gated development scarcely a mile east near Coldwater Canyon Boulevard, basketball great Magic Johnson, Walt Disney Co. Chairman Michael Eisner, rocker Rod Stewart, six Indonesian businessmen, one Saudi prince and several Westsiders like California Pizza Kitchen co-founder Larry Flax own much bigger estates or lots. Homes still range in price up to $10 million, but developer Brian Adler said that two-acre lots once going for $4.5 million can now be had for $2.3 million. Bargain-pricing seems to work. A majority of the 64 two-acre lots he graded at the market's peak have lain vacant for four years.

It's starting to happen in LA, we just need 6 mortgage rates and it's all over.

I think he means 6%

Oil Can says

It's starting to happen in LA, we just need 6% mortgage rates and it's all over.

Don't look for 6% interest rates anytime soon. The only reason the fed raises interest rates is to try to slow down an over heated economy, and the economy is pretty dead right now. I don't foresee-higher interest rates for at least 5 more years and more like 10 years before rates hit 6% again.

Those Cities always were expensive. I remember my brother turning down a job in LA after serving in the Army back in '85 because the cost of living was triple what it was in South Florida.

I remember in NYC in the 80's even when NYC had a shady reputation, and the rest of the Country thought New Yorkers were rude. Even when NYC was a Shithole by most of Americas standards NYC was still the most expensive piece of Real Estate you could buy. Now it's actually a great city, more small town in attitude than 90% of America's small towns today.

DC? If you want business to go your way, you better pay someone to live there to stay on top of your agenda and lobby your interest. That alone sets the bidding price high.

Location location location! For the lower to mid rung of middle class homes, and of course bellow, housing is already more than affordable. More so than anytime in History. The problem is the lack of income to afford a home at any price.
The other problem is, a house one would consider lower middle class, and would pay accordingly in most towns. That same house in the towns you mentioned would be upper crust, border line Hoitey Toitey, due to just the cost of admission.

Realtors Are Corrupt says

NYC is just entering it's price correction phase. Look at the massive REO inventory in the 4 outer boroughs and you'll get an idea what Manhattan will look like over the coming years.

Yes, because as we all know there is absolutely no difference between the warzone of Bed Stuy and Columbus Circle.

If Manhattan real estate is going to take a beating, I guess nobody got the memo. A penthouse at 15 Central Park West just sold for $88 million. And the penthouse at One57 is currently listed for $110 million. Yes, that is $110 million.

Enjoy the view from your 5th floor walkup though.

Realtors Are Corrupt says

You're so full of shit you can see straight. Walkups in NYC IN MANHATTAN were going for back taxes everywhere in the 70's and 80's.

That may be so, but you don't understand, that back tax bill was still ten times more, than the same thing in Anderson South Carolina.

1sfrenter says

Will the bubble ever burst in NYC, DC, or SF??

Hells NO!!!!

Realtors Are Corrupt says

That tax bill is a small fraction of current inflated asking prices. It's a long way down from here.

Why is all of the other forced and artificial inflation right now fine though? That cup of rice and sugar is the same price in the middle east, people are rioting because they can't afford to eat, because pricks setting around in front of their computer buying up tonnes of food and energy commodities, that don't even have nothing to do with the supply chain. And what commodities and products that aren't artificially inflated are directly effected from energy prices being high, because G.W. Bush gave his sanctioned blessing on gas gouging.
Then the bastards in Congress are privy to know inside information on the very markets they effect by shitty legislation.

In retrospect I'll take 400K median starter home prices than this. This wont end well.

Though it's never been easier to find $100K+ jobs, it's never been harder to live off a meager income.

NYC should not fall much since there was less of a bubble there. There of course are foreclosures but it's not collapsing. NYC gets by on money from 1. Wall St 2. Media (NBC, CBS, ABC, NYTimes, etc.) 3. Fashion, tourism, zillionaires moving in.
DC should stay good *unless* politics changes to cut off the easy money to highly paid bureaucrats. I don't see this as very likely.
San Francisco seems the most vulnerable of the three to me.

clambo: Totally agree. But even with SF perhaps being the most vulnerable of the 3 today, that could change quickly. If there is another global financial meltdown, and congress does not bail out the wall street thieves, then NYC may take a hit. Until American's get fed up with corporations as people status and welfare for the rich lobby, DC is a safe bet, but then again, you have to live there. SF is probably safer in the respect that it has a very diversified economy. It also has the highest up potential as technology (pharma/biotech/internet, other tech start ups.... advancements are the only viable chance in hell the US has to regain lost prosperity.

Buster says

SF is probably safer in the respect that it has a very diversified economy. It also has the highest up potential as technology (pharma/biotech/internet, other tech start ups.... advancements are the only viable chance in hell the US has to regain lost prosperity.

I could just flag a reminder that we lost over 200 public companies, down from 400+ since 2000, down from 300+ in 1994, not to mention the shrinkage of start-ups and funding... but that would be obvious for many who already read pnet. so here is just the article...

http://www.siliconbeat.com/2010/02/17/vanishing-public-companies-lead-to-the-incredible-shrinking-silicon-valley/

I will however remind you that many or our remaining employers in SFBA especially Silicon Valley are vendors to many customers like Banks, Aerospace, Retail, and many other industries that use our products. When they feel the downturn and lower capital spending which directly impacts high tech revenues .. Back in the '80s we often said, then the general economy sneezes, silicon valley catches a cold.. And there is plenty of history to prove the point.

So no! we are in no way imune to downturns.

Dont be married to pharma/biotech.. its not the miracle industry many have envisioned.

World class cities with world class amenities will always be expensive no matter which country they're in or how miserable a local economy is. Both NYC and San Francisco, or perhaps only New York and San Francisco, are America's two truly world class cities.

If anything can dampen enthusiasm for these two cities, it is the nanny government trying to strangle them both.

gardener1 says

World class cities with world class amenities will always be expensive no matter which country they're in or how miserable a local economy is

SF has been around since the west was won.. and hardly been as expensive as today. It certainly wasnt expensive decades before compared to incomes as some think today. Prices certainly dont go up 200-300% in short period of time.. its not the norm by any measure.

thomas.wong1986 says

gardener1 says

World class cities with world class amenities will always be expensive no matter which country they're in or how miserable a local economy is

SF has been around since the west was won.. and hardly been as expensive as today. It certainly wasnt expensive decades before compared to incomes as some think today. Prices certainly dont go up 200-300% in short period of time.. its not the norm by any measure.

Econobabble, thomas.

SF is a beautiful place surrounded by the Pacific Ocean, the Bay, the Golden Gate Bridge: with a favorable climate, a tradition of supporting the Fine Arts, parks, beaches, shopping and food, international trade.

NYC is a metropolis of international shipping, a strong tradition of the arts, street life, ocean access, beaches, shopping, a wealth of amazing food, nightlife, money.

Do you have any idea of what a world class city is? It's not about the income/housing ratio. It's about amenities and access to the things that people value.....

Like food and beaches and money and nightlife and parks and the arts and higher education and international ports and trade.

Hello Mr. wong 1986. World class cities are ALL expensive and they all have these things in common.

NYC and SF will remain expensive because they're the kind of places that people from everywhere want to be no matter how out of whack local economics are or what a rathole apartment cost 30 or 100 years ago.

gardener1 says

NYC and SF will remain expensive because they're the kind of places that people from everywhere want to be no matter how out of whack local economics are

Art cannot exist without wealthy businessmen to appreciate them. Why do you think artists tend to flock to cities? They don't profit from common peasants in the same way as movies or music.

When the economy goes, crime rate goes up, severely affecting nightlife. Parks, beaches, and the streets will get trashed as more bums hang out and the city's spending gets cut back. When all these amenities are gone, businesses and rich people will leave. A good economy is what makes a World class city possible.

You can make the same argument for New Orleans. It was such a beautiful city. Great art, food, music and culture. Heart of Cajun cuisine. It's a total ghetto now.

gardener1 says

nightlife,

There is no nightlife today .. that era came and went and is very over.. only found on some video on a website so future generations can ponder on the meanings.

http://www.youtube.com/embed/XIpqzeWxaCU&feature=related

It's real simple. You have Wall Street and the federal gov working together to steal all the money from the rest of the population. So, of course they are doing better. They are flush with your cash. But, when the market collapses again soon. We'll see.

And...If San Fran is so world class and high in demand, why do they have 5,000 foreclosures currently. Down go prices. LOL Good luck SF. I don't know what people need to see happen to understand that values are false and way inflated world wide. Wake up. No city will avoid the collapse, it's over. Especially a city in the state of fiscal chaos (361 Billion in debt to date and growing still) 75% of all homes that used option ARM loans in the US are in California. All will default. once again. Good luck fighting against basic math. LOL

IT already has! LOL LOL LOL It's over. California is one giant welfare state/ ponzi scheme. Why else do they need FHA to loan them purchase money on 700K homes with 3% down. They can't even afford a normal down payment. Wait til FHA goes under and rates return to normal 6-10%. I here people are still big on 5 year arm loans. What idiots.

Wrong. The inflation is real. It is from printing money at the fed to keep the banks from going bankrupt like they should and would in a true free market. Destroying the dollar makes prices go up on real goods. Demand doesn't need to change if there is more money chasing the same supply.

We are currently under contract to buy a "fixer" in Danville for about $200k under comps. It' s near the 680, but I think it is a good deal as it would rent for about what I will be paying monthly. I think prices will go down more, but it will save me in taxes and rent. My current rent is about $500/mo. less (it is artificially low for now)

We are sick of renting and being under some else's thumb.. You only live once and we both work in IT and make good money. Life isn't all about money... I have been a "bitter" renter for 7 years and am sick of it.

Plus there are NO realtor games or "bidding" on this deal!!! I don't play games and hate all the HOUSING crap fixation in CA! I just want to buy a house and be left alone! I don't want to have to COMPETE with an investor or foreigner to buy a house. I think they will be jumping in enmass if prices go down another $100k - $200k...

I am NOT a realtor! I HATE realtors and am only looking for thoughts... Realtors are the SCUM of the earth! Luckily I have 2 good ones on this deal. It is not a short sale/forclosure. It is in a trust and a regular property that they need to get rid of.

This isn't TX! I lived there for 10 yrs and it's a DUMP!

In TX! NOT! I have been extremely anti-housing for years, but am sick of renting... I don't think prices will go down much more than 10 - 20% over the next few years. I don't want to wait another 10 years to buy when all the boomers start to sell. My husband and I are in our 40's and think it's a decent buy right now.

Realtors Are Corrupt says

mdovell says

"The median asking price for homes in San Francisco peaked in May 2006 at $668,570 and is now $277,920 (41.6%) lower."

lmao.... there isn't a house on the planet worth $688k. Not now, not ever.

Living in the empty skulls of realtors. Rent-Free.

Um...there's plenty of homes I've seen that are more than that. maybe they might not be "worth" it but they still sell for it. If people have more money and want to pay it then that's what will be paid.

1sfrenter says

Putting condos and SFH together is not helpful. Median price for SFH is not anywhere near 277K, not even in the most dangerous neighborhoods

Well condos are still livable space. Yes of course there are fees but it is still a unit that is bought and sold. To argue that housing should factor out housing would also be misleading. I think there was a slight typo. If you read it again and look at the data the 277 was looking at the 25th percentile. The median price is about 400k

I have been studying the New York market for years, waiting patiently for prices to normalize. Several factors allowed NY to defy reality.

1. The RoboSigning scandal hit NY hard, right after the second tax credit expired. NY Attorney General required lawyers to certify documents and Steven J. Baum, the firm that processed 40% of NY foreclosures was forced to close. In stead of 1,500 foreclosures per month, we are processing 200-300. This is finally changing.

2. Public Employees - This is not a Democrat or Republican rant. At least on Long Island (included in NYC housing stats), a cop starting salary is $105k / yr. Teachers earn $80-$90k. Median HOUSEHOLD income on long island is $78k for two income earners. I feel for teachers and cops in places like Wisconsin and FL where they don't make much, but here they earn much more than private sector workers. Declines in property taxes have caused mass layoffs in this area which are finally impacting the local economy.

The good news:

1. Prices are finally crashing in NY. Redfin now covers New York, and allows you to search by recent price declines. Houses that used to sell for $600k are finally moving through the 400s and into the 300s.

http://www.redfin.com/NY/Blue-Point/22-Maple-St-11715/home/21113685

Based on median income on Long Island, median house price should be $240k. It is currently in the upper $300s and falling.

2. Remember, NY has the highest backlog of potential foreclosures. Close to 1/4 Million homes in New York state are 90+ days late or in foreclosure. I won't buy until this backlog starts to ease.

Patience. It's coming.

DC has risen more and corrected less than just about any other market. It is still 90% above 2000 prices, far more than NY and SF and any other city.

Why? One word: government. Government spending in the area increased far faster than the economy in good times. In bad times? Even faster! Government is trying to compensate from the collapse of the economy in other areas.

It has flooded the area in cash and made DC the richest metropolitan area. Also, 9 of the top wealthiest 13 counties in the country are in the DC area.

But it will have an ugly end when either the public or bond market no longer allows the USG to run trillion dollar deficits. In the next 3-5 years, budget cuts and higher interest rates will hit the DC market HARD.

I can't say for DC proper (or VA), but in Baltimore City and some places in suburban DC in Maryland prices are way down from their peak (I have noticed Laurel, MD pricing close to 2003 levels). I think that same thing has happened in VA, especially in places farther from DC, but I'm sure that there are other people here and other places on the internet that know better.

Great comments here. Thanks everyone.

I also believe that prices should and will come down in these fortress cities, but the issue of needing a place to live is very real.

Our $2700 month SFH rental is becoming untenable (for a variety of reasons which I won't go into but crazy landlady being at the top of the list) and renting another SFH with 2 kids and pets looks like either a LONG commute (and switching the kid's schools) for all of us or renting in a sketchy neighborhood.

With rents and owning being fairly even, interest rates being low, looming inflation, and planning to stay in whatever we buy for 10-15 years, and the low vacancy rate for rentals, waiting for this bubble to burst is exhausting us.

We are looking at rentals and open homes simultaneously, and both are overpriced.

Quit both our jobs, get an RV, and home school the kids on the road???

1sfrenter says

Median price for SFH is not anywhere near 277K

That's not what s/he said. Read it again: "...median asking price for homes in San Francisco ... is now $277,920 lower."