patrick.net

urk. so the $550 in 1980 was really $400 or something at the time? (and which of the dollars are 'real'? ;) )

in that case, median rent, after adjusting for inflation or CPI increases, has gone up 300% in 26 years in real terms? due to the info tech boom in CA? then maybe you need to adjust for median wages as well...

FAB,

thanks for the very insightful information on the Peninsula, an area that I know little about. It's just incredible that a small stretch can have so much variance of micro-weather. The South Bay, on the other hand, seems to have a bit less difference in weather except up in the mountains.

I've been to Half Moon bay over a couple dozen times and I only saw it once without fog.

Randy,

I fear the correction will be a lot more drawn out. Bernanke is no Volcker and a mercifully quick correction seems unlikely. The political outlook for quite action is very bad. Bush II is the lamest of lame ducks and the legislature is gonna be close and combative after the November elections.

i will arbitrage some socialized medicine from over here, newsfreak... ;)

DS,

Those are the numbers. Come to my blog if you want to download the data sets.

300% increase in 26 years in real terms is not out of line for expectations. Even depressed areas of the US like the Midwest have experienced over 100% increases during the same period.

Further, the medians for this area moved dramatically over the past 26 years as the demographics & population changed rapidly. Real rent medians can climb quickly when more high-rent units are constructed over 20 years (which includes SFH rentals).

You're an empirically literate sort. Don't just mock the data; come up with some contradicting data and we'll talk. I love contradicting data.

test message trying to post from the treo.

You’re an empirically literate sort. Don’t just mock the data; come up with some contradicting data and we’ll talk. I love contradicting data.

??? I'm not mocking it -- i'm looking for explanations for 300% increases in asking rents -- as per the 30% of household income housing distress benchmark. i just want to make sure the data is adjusted for wage inflation before drawing any conclusions... there has probably been a huge demographic shift due to hi tech industries starting up in the last 25 years. a number of factors have to be controlled for or explained before making any firm conclusions...

Larry Nusbaum,

You are correct, but you are ignoring something. Alternative returns.

In your analysis, the owner who sells out of the bubble before the top did nothing with her extracted equity + her net savings from renting versus owning (which is about 2.5x in the Bay Area).

There were really only slightly less than 2 years of real-gains in housing prices in the Bay Area that significantly exceeded the returns one could have earned in a well-diversified, tax-managed investment portfolio.

Given that, the owner who exited, banked their equity, invested both the extracted equity and incremental savings, then buys back in when price reversion occurs: comes out dramatically ahead of the "buy & hold" owner.

That's assuming the bubble bursts, and in a timely fashion -- sometimes they take years to unwind. I think another faulty premise is the assumption that you should be 'playing' residential real estate like some sort of speculative penny stock, rather than just letting people buy places and live in them at reasonable, affordable prices and thus ensure a decent social settlement.

Larry's site on the one hand seems to be downplaying fears of a bubble, and on the other hand providing huge amounts of advice on how to buy foreclosing properties cheaply. a lot of foreclosure purchase advice is stock standard seminar material, already written up in lots of books and binders over and over, in large type with big margins and lots of empty pages for 'notes' -- every time the seminars blow through town, the Town Clerk gets hit with frenzied requests for foreclosure lists from 100 people at once...

The advice is mostly about how to exploit others' unfortunate situations for your own attempted profit.

I see. People want to know about foreclosures. Some of them may be on the pointy end of a foreclosure themselves before long, they have reached record highs in the last 2 years in this country due to the boom unravelling and interest rate hikes. One place bought for $260K in 2003 just sold for $90K. Another bought for $460K sold for $240K. I've posted links to both these stories recently in this blog. Both of these 'corrections' brought asking price reasonably back into line with rental returns, pointing to prior irrational exuberance (aka 'bubble'). It would seem to me that right now IS a good time to be discussing cashing in on foreclosure sales if you had a mind to.

I am the calm in the eye of the storm.

The "still point" of the "turning world"?