patrick.net

Intrest rates are about 25% lower than 2010.

Thus prices are that much higher.

Simple math.

Anecdote: there is a "white elephant" house near me. Built on spec, never sold, finally foreclosed on, still empty. While it was listed for sale, the price varied from $2.9 mil to $3.9 mil. It's called fishing. Sellers around the bay area always seem to be looking for suckers. Don't be one.

I would still like to buy if the numbers pencil out for me. But what I won't do is get caught up in hype either way - I won't go to outrageous lengths to buy something that doesn't make fiscal sense, and I won't wait forever for a price that is 'cheap' and just won't come around here. It has to be an acceptable place to live for a price I am willing to pay - i.e. somewhere in the same universe as the lifestyle I enjoy and numbers I pay for rent.

leo9 says

There is VERY BIG bubble forming again.

Forming again? California is still a massive bubble. $550k for 1500 sq. ft townhouse is insane. You could buy that same place in a nice neighborhood for 1/4 that price anywhere else.

I feel bad for anyone trying to scrap by in California. You pay a fortune for housing, and because the state is epically broke, they will eventually start taxing you to death. I hope a couple extra sunny days a year is worth fighting to keep your head above water.

Facebook man Facebook.
It was the third shoe.

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

Listing price does not mean anything. How about analyzing comp sales to see where the market is heading compared to 2010.

Wife and I were in the same boat. Whether this is a bubble or not, I have no clue. But at least here in the east bay it seemed that things changed really quick. Over the winter houses were just sitting. By the time we started looking in the Spring suddenly houses started selling and inventory totally dried up.

Inventory now is the biggest problem. There's a few guesses as to why. One is that those who bought in the boom and had to sell already sold or foreclosed. The rest can afford to keep their homes but they're also heavily underwater. So they don't sell and thus there's less supply, which means there are less homes to bid on and so the resulting competition makes it feel like a bubble.

We got sort of lucky and won the house we wanted, but it was definitely not an easy situation.

As far as the areas around Silicon Valley, well the situation there sounds like a whole different story- as too is SF...

RentingForHalfTheCost says

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

I heard they don't even have a high school and students must be bussed into mateo.

I'm sort of unsympathetic. There's a unit for sale in Foster City for $699,000 that sold for $430k back in 2011. The question is why you didn't buy last year. You tried to time the market and failed.

Delurking says

This does not deny the possibility that rents will keep going up regardless.

unlike 1997-99 there isnt a shortage of rentals... the last time rents went up, renters picked up and moved. And your correct neither higher incomes nor new hiring are supporting higher rents...

RentingForHalfTheCost says

DON'T BUY IN FOSTER CITY. THE PLACE IS UNDER SEA-LEVEL AND HAS A BIKE PATH FOR PROTECTION!!!

I'm not kidding at all with my comment. Even 499K is a joke in Foster City. You are living in a swamp and at any time there could be a traffic jam trying to get across the lagoons and out of town. You really want to park your hard earned money in a swamp? Seriously.

http://earthquake.usgs.gov/regional/nca/qmap/

And I thought a rent increase was bad enough.