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March 14, 2005
crash
golly, if i needed any more reason to stop thinking about buying in SF, here it is.
update: i asked a friend who's a loan broker for comments on this essay. here's what he had to say:
Interesting read, but I see many major flaws.
The drop in sales was compared between December and January. This Patrick guy compared sales from this past summer to January to paint an even bleaker picture. Home sales are slowest in the winter months. That has been true in the real estate market forever. What he failed to note was that this January was still the 7th best January in terms of sales for all of recorded US history.
Also, regarding the drop in the Median price of homes, that is accounted more by the increase of less expensive homes rather than the drop in larger value homes.
However... San Francisco is still overpriced and will see a correction. There won't be a big pop like the dot com stock bubble, but SF and parts of the peninsula/south bay will take a hit in housing prices. However, certain places (like parts of Oakland) are still bargains. I don't recommend buying in SF unless you really want to.
The lack of sales will just mean that home prices will begin to taper off and not increase in value as much as it has in the past few years. Those that sell in such a market will lose money. Those that hold on to the property will recoup any possible loss and make money when values start to rise again in a few years (which it always will).
The guy who wrote this article seems somewhat embittered... some of the assertions he makes are flat out wrong. He states that the median house price in the Bay Area is $910,000. A quick google search will reveal that the current median value of homes as of 2005 is $556,000 (San Francisco's Median is $713,000) [SFGate]. Getting a simple fact like that wrong calls into question the rest of the numbers used in the article.
Like a great number of demagogues, this guy mixes some truth with a lot of lies to prove his point.
Bottom line, certain housing markets nationwide are overpriced and will probably see a correction. To say that this holds true for every location (or even the entire Bay Area) is just plain false.
Posted by bcm at March 14, 2005 11:33 AM
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