One million for a no-view 2 bdr apartment in SF highlights the real estate bubble currently enveloping San Francisco and Silicon Valley. Prices are driven by play money. Startups get huge funding even though they have no possibility of profits for the forseeable future. Those who work at tech companies often get stock options. In both cases they take what is essentially free money for them and bid up real estate prices. High housing prices drive out even those making good money. It makes the market unstable. It will end, because all bubbles end. This time is not different. It will end when something causes the hot money to stop flowing it. Sue and I are moving to Vegas from San Jose soon. Housing prices are the primary reason. We want to own a house again and can’t afford it here. From Wolf Richter, who lives in and loves SF.
In the current climate, hundreds of transactions, large and small, take place every month, including a slew of IPOs. That’s the great hot-money-transfer machine. And San Francisco sits at the receiving end. There are some drawbacks, however. Number one, it won’t last. It just prepares the way for the next bust. Number two (and in the interim), it forces out real businesses with real revenues and profits. And it drives out people who find themselves – though well-employed – financially unable to live here any longer.
Another reason we are moving is the sanctimonious odor emanating from all those “disruptors” is becoming unbearable. No, your iPhone app to track social media scores across multiple platforms is not and never will be a game-changer.