Is there a way to short real estate values in San Francisco?
SF does have geographical limitations and is a hub for technology companies. Its not that crazy to have extremely high real estate values. Id like to see how it compares to similar situations like Manhattan.
So let's say you find a reit that has options in san francisco, like EES or others.
What is your next step? April at the money puts trade at $4 per share and July are $14. Do you have the cash available to pull a big short type of situation and roll those puts month on month?
That seems unsustainable if only 30% of ess is held in san fran and the 2001 drop was 50% of value.
I'm calling out the author's BS. Not every line on a chart that mirrors a previous direction will mean the same thing will happen.
There's a huge difference between 2000 and 2015 for the Bay Area. Google was a small fry, Apple was rebounding, and Facebook and Twitter hadn't been created yet. There are a ton of web companies that are creating things in 2015 instead of making rainbow farts and unicorns in 2000.
The main reason why housing values are high is between homeowners who don't want mixed use development. I mean creating new single family homes is economically infeasible, but the NIMBYs don't want mixed use development so single family home construction has to occur. The solution is for local city councils and state legislators to find ways to increase affordable and densify housing in the Bay Area.
Why does it have to crash? SF housing isn't artificially high, it's high because they have very little space, and any that's left is being developed. Not only that, but the companies there are only going to expand at this point, which means more and more people will want, and need to live there.
Supply growth takes years. SF already has a bunch of housing developments in progress. Rising interest rates and a bunch of new housing supply coming onto the markets in the next couple years is pretty bearish for prices. Excessive VC funding in SF is highly tied to the fact that getting yield has been impossible for the past few years. Rates are rising.
Bay area residents have been warned. You're buying near the peak.
What new housing? City hall has projected that the SF alone would need to build 100,000 units to meet demand, not even considering the fact that all suburbs are building less than nothing currently.
The current situation has at worst a plateau of prices, similar to how post-2008 the maximum price decreased only fell about 10% before coming back up sharply.
I believe there's something like 60k units in development. That number is only going to grow. The upper end of the market is already fairly saturated. I don't think demand is going to be constant in an environment with rising interest rates.
If prices don't plateau or go down in the next year, they're pretty close to doing so.
Back when she was trying to be miss Arkansas I though she might have been anorexic or bulemic. She got over it though.
I live in the Bay Area and hope shit finally crashes so I can finally move out of the house, its near impossible to live here as a single male unless you have room mates or live in bumfuck nowhere 1 hour from anywhere in the Bay
The tech crash of 2001 is the result of deregulation of hte financial sector in 1999 and investment banks selling tech companies as "high-grade" even though in private most of the brokers and bankers knew they were shit. Does this sound familiar to you guys? We have google, twatter, and faceshit worth over 550 billion, 150, and 350 billion. These stocks are overvalued.
nothing m8. 2007 happened because banks were giving loans to mexican janitors on minimal wage. by contrast you have to be rich and well financed to own property in these cities, whether it's insurance for a rainy day or tax dodging, they own it and can afford to take a hit even if property prices take a nose dive.
For everybody talking about the inevitability of the crash, a simple look at supply and demand will tell us the future, but the devil is in the details.
Just look at the situation realistically: SF is spatially constrained, which makes shoehorning in more houses difficult. And more people want to go to SF to work for a tech company, so we get a classic liquidity squeeze.
I note that the American wage growth for the sorts of people who can afford to live in SF is still shooting up. I can therefore imagine plenty of room for prices to continue to rise, and the simple reason is that there is plenty of room to drive standards down.
Here in the UK we have much higher housing densities and much smaller living spaces. In London it has become utterly insane. People paying for a room what people in SF pay for an apartment. If it's good enough for Londoners, then SF can continue to drive their standards down. If you can't build more houses, it's time to shoehorn in more people into the houses.
Let me break this down piece by piece.
1. Tech stocks are grossly inflated. Massively. Facebook, Twitter, Yahoo, most of silicon valley. About half of the current players are due for a major correction. That's bad for the Bay Area economy.
2. Federal and state subsidies are flowing into the housing market there. California is moving perpetually towards insolvency, and is likely to have to make budget cuts. There is a high probability of those being cut due to necessity or just trimming fat from the budget.
3. Look at prices. Fucking look at them. Around a million dollars for a 3 bedroom, 2 bathroom house with no yard? That's fucking bullshit and only people who are hoping to ride the bubble up a little further are capable of enough self delusion to think that it's sustainable.
4. Tech centers are moving. My town is getting a sudden influx of refugees from Silicon Valley. So is Oregon. So are other places. Decentralizing corporate headquarters is going to kill demand.
5. Urbanization, suburbanization, gentrification, and urban flight happen cyclically. This is a bubble.
>a million dollars for a 3 bedroom, 2 bathroom house with no yard
That actually sounds low to me, from what I heard. My dad is in real estate and works with a lot of bankers, and he said some major analyst predicted the bubble would last for another 16 months. This conversation was about 3-4 months ago.
What the fuck could possibly flourish when tech and housing are getting corrected (assuming they happen at the same time)?
I'm probably just dumb, but I think everything will drop when they are being corrected.
>Trading at less than the cash it has on hand
> Look at prices. Fucking look at them. Around a million dollars for a 3 bedroom, 2 bathroom house with no yard?
I can see similar shit in New York, and you'd have to be delusional to think New York's housing market was about to crash
>My town is getting a sudden influx of refugees from Silicon Valley. Decentralizing corporate headquarters is going to kill demand.
Oh your cousin moved back from SF! The Bubble is ending!
Stop being delusional. SF is a coastal city, with the most NIMBY population, and a huge tourist city (5th largest in the US). As long as it has any sort of economy (and it will given its location), if it does not fix its political problems, prices will continue to rise.
The tech industry only exacerbates the problem, but it doesn't create it. SF has had real estate issues for over 50 years.