I collect crystal balls and magic wands. These have come in handy over the years, especially when someone is asking me to predict what the market will do. I tap a magic wand on one of my crystal balls and ask.....
Late last year, the San Francisco Chronicle's Real Estate section interviewed four economists who cover the real estate segment in California. It was an amusing article from my perspective, as each one had a different take making it difficult come to any conclusion on where our real estate market is headed. You can read the article for yourself, and come to your own conclusions. https://www.cratebuilt.com/%22http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/31/REGM6N9C4A1.DTL\">
When my clients ask me where housing prices are headed this is what I tell them. The Peninsula (San Francisco and the Peninsula) is a destination area just like New York, London, Tokyo, Dublin or any major city in the world. These cities all are expensive to live in and do business in and if you want, or need to live there, you pay the price. The Peninsula is landlocked. We are surrounded by water and the major housing areas are on the bay side and those were built out years ago. In fact, we have only a few places left for building, but 65% of the land in San Mateo County is vacant. It's amazing, but that land is either in the hands of the City and County of San Francisco, San Mateo County, privately held for agriculture or just not buildable due to teraine or lack of resources (water). We have a housing shortage here. That is why housing costs so much and why it is unlikely to cost less in the future. Basic economics of supply and demand. Therefore, no real estate bubble here.
My crystal ball tells me to buy now because prices will unlikely drop any further. We always have little corrections year-end, and those occured fourth quarter 2006. It's a new year and a new real estate market. I see pricing rising, gently, but rising. Read the article and decide for yourself, but what you should keep in mind is that San Mateo County is unique in this state. We're between San Francisco and San Jose -- finance, bio-tech, hi-tech, higher education, two medical schools and ten colleges/universities surround us. We are a destination place to live and work. That comes with a price tag. This is something none of the economists mentioned.
So far this year, I have been involved in several multiple offer situations. We are not seeing a lot of listings coming on, and although the real estate year is young, we aren't sure if we will see a lot come to market. From the conversations I've had with Title & Escrow companies and various lenders, they are seeing re-finances more than pre-approvals. It's only February, so I hope we are all wrong. My crystal ball is cloudy....but my magic wands are working! We have listings.
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