patrick.net

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."

We are in the same boat as you 1stfrenter! We pay $3000/mo. in rent and can buy this house in Danville for about the same. Why should I rent? With all the coming foreclosures, etc. rents will only trend higher not lower.... We like Danville and do not want to have a horrible commute from Brentwood or any of those other "cheaper" areas!

Too many new homes in Danville and San Ramon, too much downward price pressure, too many underwater homeloaners. If you like the house and your commute is okay, fine, but don't expect anything in that region to hold its value.

Interesting nobody mentioned Silicon Valley pricing. San Jose is not an SF suburb, it's considered its own metro region. That means Santa Clara County isn't included in the SF Case-Shiller index. Too bad, it would push it up somewhat. Alameda and Contra Costa County are full of fail.

The Facebook IPO will have some high-end home sales when the lockup ends. Look for Palo Alto to get even More Special!

GameOver says

if Wall St takes a hit the ENTIRE COUNTRY will go down along with it,

PTB will not let Wall St take a hit. Privatize the profits, socialize the losses is the new normal

http://youtu.be/9QQ0hH4MYsk (:

Too many new houses in Danville? Do you know the area? This is not Tracy or Mountain House. They are building a total of 22 new houses this year in Danville... Hardly too many!

sheltielover1 says

Too many new houses in Danville? Do you know the area? This is not Tracy or Mountain House. They are building a total of 22 new houses this year in Danville... Hardly too many!

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

i'm a second generation real estate investor/broker. people always seem to buy into reason why prices will not go down/up in certain areas. it's bullshit. i used to live on the westside years ago when everyone was moving to the burbs. now, they want to live in the metro. there will always a plausible reason to believe prices will be sustained. but, guess what? that's right...it's bullshit.

The prices in NYC have come down a bit, but won't crash. You can't judge by some 88 million dollar place that sold - that's the extreme high end, and that stuff won't change. The price range is like a separate economy/market in and of itself.

Rents have fallen (and most people in Manhattan rent), and commercial real estate prices have dropped over the past 5 years. Like I said though...it won't crash. It's boom wasn't as drastic on the way up, so it won't be as drastic on the way down. It's price run up wasn't related to an massive influx of people, followed by a massive outflux of people a few years later (I'm looking at you, Vegas, AZ, and FL). People will always want to live in Manhattan, and there will always be good jobs there. That said - don't overestimate the overall wealth of the city. Yes, it's home to a large amount of extremely wealthy people, but the majority are people in their 20's and 30's who barely scrape by, just because they want to live in the most exciting city in the world. Only the super-wealthy own property in NYC...everyone else rents or moves to the burbs and commutes in.

Hi,

Someone here should be able to help me out...but it doesn't seem the median housing prices that get reported are ever controlled for differences inventory type. Something that is controlled for inventory type/by geography would be much more useful to get an accurate measure of the actual decline right?

Thanks.

Don’t forget us here in Boston!
The ‘Hub of the Universe’ is really just a big town, with many mini-towns within – and all have a potent mix of special interests to keep our housing insanely inflated (or – realtor speak – find our new normal!)
Our mix:
+ Universities/Colleges with the tenured Profs. - making 6+ figures - having bought in the ‘pioneer areas’ for next to nothing in the 70’s/80’s (they don’t sell – they buy ‘summer retreats’ and price up Cape Cod!) Students and T.A.’s flooding our rental market.
+ Fin. Services/V.C., BioTech and Legal - all which still has tons of money flooding through! So much for the Financial Crisis - “Lay off the back office and lower tier!”
+ Medical –see both above!
+ And as Mr. Jones mentioned in NY for Public Service Unions – we have that in spades in Boston! (I grew up in one of the worst neighborhoods in the 70’s. Of the hundred guys on my corner, I was one of four who thought of college. Five went and I’m the only one still here. Of the others not dead or in jail – cops, firemen, phone, electric and transit … and all doing quite well! I can’t tell you how many I bump into; “Ya, I live in (thirty miles outside of Boston), I got a beach house and I rent my Mom’s old Triple-Decker to a bunch of yuppies/students for $___! I’m getting-out next year – getting my retirement based on salary and overtime – I deserve it, fucking right!” This guy can’t read! And I paid off my student loans!!
+ Did I mention students! So Greg and Ashley (Xavier and Lola; Quin and Chan) – whose parents paid their tuition - landed a job, so of course their parents help them ‘get settled’ by underwriting their first condo. Of course, they deserve it!
+ We have land banks and nature trusts to ‘conserve’ that old swampy lot for viewing purposes, and realtors that eat glass for breakfast!!

Before anyone calls me an underground Realtor – no go! I waited patiently (lurked!) in the last downturn and finally got my place on an RTC auction in ‘93. Can now sell with almost a zero on the end! And, I have not bought into the ‘buy-up’ bull pressed by my Realtor ‘friends’. However, I believe the ‘Fortress-World Cities’ may no longer adhere to market fundamentals?!

Is it more reasonable to recognize this - swallow the fact that I don’t make 7 figures and those who do don’t care about these ‘market conditions’ ‘cause they got the $ to spare - and make the decision to move along to a more reasonable location – since there doesn’t appear to be an honest way to wait out – if possible - this market?!

gardener1 says

Both NYC and San Francisco, or perhaps only New York and San Francisco, are America's two truly world class cities.

NYC is a world class city, but San Francisco is not. Most people outside of the US, have never even heard of San Francisco.

dunnross says

NYC is a world class city, but San Francisco is not. Most people outside of the US, have never even heard of San Francisco.

Gotta defend my city by the Bay:

"Today, San Francisco is one of the top tourist destinations in the world, ranking 33rd out of the 100 most visited cities worldwide" (from Wikipedia)

"The most popular U.S. destinations for foreign visitors included New York, Orlando, Las Vegas, San Francisco, Los Angeles and Chicago"

from http://www.dailyfinance.com/2011/01/16/us-cities-attract-more-global-tourists/

1sfrenter says

ranking 33rd out of the 100 most visited cities worldwide

Does that include all the homeless people who visit SF every winter to escape from the cold temperatures in other cities?

1sfrenter says

Gotta defend my city by the Bay:

There is a fine line between defending and hyping. Frankly we did very well for decades without the hype.

If you decide to hype, expect higher prices which kills off the economy. We already lost too many jobs due to higher costs.

Is that what you want..

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

Windemere is a Chinese ghetto! You couldn't pay me enough to live there! We are moving within walking distance of downtown Danville which is quite different than Chan-Ramon! Danville is NOT San Ramon!

Justthefactsplease says

Hi,

Someone here should be able to help me out...but it doesn't seem the median housing prices that get reported are ever controlled for differences inventory type. Something that is controlled for inventory type/by geography would be much more useful to get an accurate measure of the actual decline right?

Thanks.

The Case-Shiller Inex is very accurate partly because it is perfectly controlled for inventory type, since it tracks re-sales of the same house over time.

Also, it's not controlled by realtors!

sheltielover1 says

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

grywlfbg says

There's that abomination that is Windemere. They're still adding houses to that monstrosity.

Windemere is a Chinese ghetto! You couldn't pay me enough to live there! We are moving within walking distance of downtown Danville which is quite different than Chan-Ramon! Danville is NOT San Ramon!

Knowing Danville very well, by the sounds of your posts you fit in very well there. Which is why you couldn't pay me to live there.

dunnross says

Does that include all the homeless people who visit SF every winter to escape from the cold temperatures in other cities?

Yes, but don't worry. Most other cities sweep the reflections of our choices under the rug.

New York is indeed the Capital of the World (but please have lower prices when I move there in 5-10 years), and America's best world class city, but San Francisco is pretty well-known to just about every educated person in every country. If you've heard of NY, Chicago, Boston, Philadelphia, and Los Angeles, then you've heard of San Francisco.