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Is it time to put a price cap on the real estate market?


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2018 May 17, 8:37pm   1,525 views  3 comments

by Patrick   ➕follow (55)   💰tip   ignore  

https://born2invest.com/articles/price-cap-real-estate-market/

Prices are slowing or backing off on the high end. Hot markets have gone from $10 million plus to $5 million plus. Manhattan condo sales have plummeted to a six-year low. The biggest drops are in the high-end townhouses that foreign buyers most prefer.

The number of landlords offering incentives on leases rose from 25 percent in August 2017 to 50 percent in December as the number of new leases dropped from 7,500 to 4,200.

In January, house prices in London fell 2.6 percent year-over-year, while the posh, centrally located Wandsworth borough fell 14.9 percent. That’s the fastest rate of decline since the financial crisis.

And in the fourth quarter of 2017, San Francisco lost more people than any city in America.

Forty-nine percent said they could consider moving out of that $1.5 million median home. It would take a $303,000 annual income with a $300,000 (20 percent) down payment to afford that.

How many people have that kind of income, even in high-income San Francisco?

Only 12 percent of residents can now afford that.

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1   Strategist   2018 May 19, 6:37pm  

Patrick says
Forty-nine percent said they could consider moving out of that $1.5 million median home. It would take a $303,000 annual income with a $300,000 (20 percent) down payment to afford that.

How many people have that kind of income, even in high-income San Francisco?

Only 12 percent of residents can now afford that.


You can substitute lower income with a higher down payment. Lots of people do have large amounts of cash they can put down. Some 20% buy with all cash.
2   Strategist   2018 May 19, 7:15pm  

Patrick says
And in the fourth quarter of 2017, San Francisco lost more people than any city in America.


When I was in Florida last month, so many of the locals stated they wanted to move to Southern California. They were not happy living in Florida for one reason or another, even though they were freaked out about the home prices in So California. And here I am, touting Florida as the best place to move to, because I see Florida to be a bargain with a tremendous potential. I guess the other side always looks greener.
3   Hircus   2018 May 20, 12:50pm  

WarrenTheApe says

For the Bay Area, the simplest thing to do is make it illegal for H1-B visa holders to take out mortgages and for H1-B holders with mortgages already to pay them off as part of a requirement for them to either get the H1-B renewed or to get citizenship.


I think that would just shift their demand to rentals. And, these H1-B homeowners would likely rent a home, and an American would buy the home to rent it to them, and so housing demand would stay fairly similar, IMO.

Well, maybe. The price to rent ratios in the tech areas make it hard to cashflow a SFH. The landlord would need to accept a rent that doesn't cover their expenses, in hopes that they make it back in appreciation. SOme would make that bet, but not all, so maybe it would lower home prices a bit (but then rents would certainly rise).

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