It seems 50% think there is a real estate bubble, and 50% don't. So who is right? First off, my background includes a dot-com stint, and I lived through that bursting bubble. I've been in Real Estate roughly two years and I was oringally on the side that believed our Real Estate market might burst thanks to my dot-com experience. My reasons for believing there might be a bubble was largely based on the number of buyers getting low down payment interest-only loans. If in 5 years, when many of those loans become variable, interest rates are significantly higher, those home owners may be in deep trouble if the market is flat or down. Rising interest rates also reduce home affordability and could therefore slow or stop appreciation.
So why have I changed my mind? Because of the laws of Supply & Demand.
There is enormous demand, aka Buyers. And there is very little supply, aka Sellers or homes for sale. And many of those buyers have an amazing amount of money. Parents and Grandparents are helping out younger buyers, others are getting inheritance money, Google just created a bunch of millionaires, many of whom are buying in San Francisco, and weathy people around the world love San Francisco. And that demand simply will not abate. Why? Well think about how many people you know who make good money, have money saved up, and still rent. Every one of them is hoping there's a bubble and should the market drop they will jump in and push the market right back up.
Think about it. Demand is and will far outstrip supply in San Francisco for as far into the future as I can see. And those sitting on the side line are losing money every day they wait. They're losing their rent money, they're losing the profits from price appreciation of any home they would have bought, and they're losing the tax write offs that home ownership provides. The only way this market will drop is if all the wealthy people in this town (and those planning to move here) pick up and leave. An earthquake could cause this to happen temporarily, but just as in 1989, that won't last long. The Marina, one of the hardest hit areas in the '89 quake, is one of the most expensive neighborhoods in the city.
If you'd like to find out how much you can afford, drop me a line and I'll send you some lenders you can contact.