patrick.net

You guys look a lot at the median income, or median rent, of a locality as the basis for your evaluation, but that won't account for external demand.

Take SF for example. Prices are 11x income, which is stupid. BUT it COULD be justified if there is demand from outside of the valley.

Let's say every rich person in NY, Shanghai, Hong Kong, London, Geneva, and every other crazy rich person in the world wants a home in SF. Then prices might be right as the global demand is much higher than the limited supply of SF housing.

Note this theory only works in Global cities (NY, SF, Miami, LA) and not land locked places with less global appeal (San Antonio or Phoenix).

Thoughts?

#housing