The charts below certainly reflect a rational free market trend. Right? Home prices always double in the space of three years when the economy is limping along with sub 2% GDP growth and median real household income is still 7% below the levels of 2007 and equal to levels of 1989. These are the median home prices, so they aren’t even skewed by the really high end prices.
San Francisco is now unaffordable to 99% of the US population. Only the richest of the rich can afford to live there. The titans of technology usually lean to the left and spout gibberish about equal rights, going green, and fighting poverty as they occupy gated estates with armed guards to keep the riff raff out. They want the rest of the country to do what they say, not what they do. They don’t want the peasants living near them. The help can live in Stockton and take the bus to arrive on time to clean their toilets.
We’ve been here before, twice in the last fifteen years. If you thought the Dot.com created the biggest housing bubble in SF history, you would be wrong. New construction of homes tripled from 1998 to 2002 as Greenspan reduced interest rates and creating his first bubble. They then crashed by 40% over the next couple years. Greenspan re-inflated the bubble with even lower rates, doubling the number of new home constructed over the next three years. They then crashed by 90% over the next two years. Not to be outdone by the Maestro, Bennie and Yellen have kept interest rates at zero for the last six years, creating the biggest bubble in history. New homes built in SF are now 27% above the peak in 2002 and even higher than the housing bubble high in 2008.
We live in a bubble economy created and maintained by the Ivy League hacks at the Federal Reserve, whose only purpose is to do the bidding of their Wall Street owners and the .1% who occupy the NYC penthouse suites, the summer estates in the Hamptons, and the palatial mansion in San Jose. They don’t give a shit about you – the peasants. They’ve proven they can blow bubbles. They just have a little trouble maintaining them. I wonder how many tears will be shed when the SF housing bubble pops for the third time in the last fifteen years?
