Insane Housing costs in the SF Bay Area. …and other metro areas and college towns across the US. I don’t think this is endemic to the US — this is happening in Canada’s cities and elsewhere I am certain. This, however, is where I choose to live, and this is the area in which I have direct knowledge.
It’s not normal to have to pay a million dollars for a small house (900 sq.ft.).
For the record.
In my next few articles we’ll be explaining why and how housing prices have gone insane enough that a total junker house can be One Million Dollars in a small college town.
Initial hypothesized reasons are:
- Baby boomer house hoarding. The means owning more houses than you need (hint: you only *need* one.)
- The advent of monetized services that used to be free, like couch surfing, temporarily trading houses, etc, making it so you can turn your house into a temporary hotel but not be regulated by hotelier laws. Neat trick airbnb & vrbo! This takes many homes off the market that would normally be rented or sold. How many? This remains to be seen.
- Investment bankers entered the housing market after the massive financial fraud Wall Street got away with in 2008. For example, Blackrock is the largest homeowner in the US right now.
- Banks holding onto foreclosed housing stock. What are the laws around the timeframe allowed? Housing is part of our societal system: it is Needed.
- Foreign investment and lack of laws in US, making money laundering… a thing here. There was going to be a Federal law making it harder to do so, which involved tracking people who were buying and where the money was coming from, however the National Realtors Association lobbied successfully against it. Hey, Thanks NRA!
- Foreign investment tied to the ability to get a green card. This was advertised by the US State Department at the least in China, and I assume elsewhere (I don’t know if it is still happening or not). The Intention was to draw investment to towns that are being abandoned and don’t have much work available. This is not how it turned out to work. People buying homes for unborn future children in university towns is more like what has been happening.
- This is an artificially constrained housing market (see 3, 4, 5)
Research sources will follow when I go into these more deeply.