At Least Some of the U.S. Housing Market is Apparently Doing Fine

The San Francisco Bay Area’s ability to defy the slump in housing can be no better demonstrated than by this photo of a 3-bedroom home that “needs work” and will be sold “as is” for $825,000.

To quote Bill Murray and Steve Martin “What the hell IS that?”

Author: Keith Humphreys

Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College London. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over thirteen thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.

9 thoughts on “At Least Some of the U.S. Housing Market is Apparently Doing Fine”

  1. No one’s going to comment on this? Okay, “location, location, location” is a much louder mantra in the California Bay Area than in most other parts of the country. I am told that in most of the U.S., the physical cost of the house itself accounts for most of the price of buying a home (the land itself is cheap). Here, I’ve heard it said that the physical structure averages about a third of the buying price.

    Still, $825,000 for a *San Carlos* home? All I can think is that the lot size is larger than the photo would indicate.

  2. I can confirm that. I own a home in the Easy Bay, bought for $850,000 in 2005 (currently estimated to be worth about $600,000, btw). My homeowner’s insurance covers the full replacement value of my 1,200 sq ft house. It provides $275,000 in coverage.

  3. Three bedrooms in San Carlos? $825K is apparently in the ballpark:

    All I can say in response is “Holy crap”.

    1. I was just in the Bay Area last month for a conference at Cal and, as a (very) old Cal Grad was amazed at the pricing on housing–at least the asking prices. Things appeared to be at least twice what the more-or-less equivalent prices in L.A. would be and around four times, say, Chicago area. Wonder how this looks to a prospective prof when he or she is being recruited?

      For a little perspective: when I was at Cal, Bay Area housing was substantially cheaper than housing back East. For a while, after college, I worked for an investment firm whose investment model included a prediction that Bay Area housing was way under-priced and would be going up. Guess they were right.

      Now, I have to wonder how a metro area which is losing population can continue to have housing prices which are way out of line with whatever the employed in the area make. Not everyone in the Bay Area can be a Google billionaire.

      1. The flip side of high housing prices in the Bay Area is that jobs are far more plentiful there than they are in LA at least in the private sector and outside of academia. Unemployment in LA leads the state and the major employers in the city are in the entertainment industry, which has been in a major contraction for several years. As the migration to digital continues, power and jobs have also shifted from LA to the Bay area technology companies which increasingly operate the pipelines and distribute the content that does continue to get produced in LA. So while a prospective prof being recruited from outside the state may be able to compare compensation packages in the two regions and make a rational decision in favor of the cheaper city, that is not the case for the downsized mid-level marketing, finance, operations, legal and other mid-career unemployed people I know in LA.

        1. I believe I read LA has the most small businesses per capita of any American city?

          It’s a city of small and self employed, I think. That is where your unemployed people are going to go: as consultants, small businesses etc.

          But it’s hard and not everyone is cut out for that.

          Re technology, copying killed the Hong Kong movie industry, and it could yet Hollywood (3D slows it, but does not stop it). The drop in DVD sales has crippled industry economics– movies were financed off the projected DVD sales– and so product has dropped sharply.

          A similar thing seems to be happening to the adult entertainment industry, where again LA (San Fernando Valley?) led the world in production, I think it was a $1.5bn pa industry at its peak. Once again technology disruption: amateur uploads to the web plus, I presume, file sharing.

  4. I call BS. The parts of Los Angeles where I’d be willing to live have eye-popping housing prices, easily the same or more than the Bay Area. Sure, if you want a condo in Gardena, it won’t cost much, but who wants to live in Gardena?

    1. This is true in the Bay Area too. I bought my Oakland fixer-upper for a fantastically reasonable price in part because each of the three springs I’ve lived there have come with festive gunfire as a few of the OG’s celebrate longer days with murder. It’s a long term investment though, I’m 60′ above sea level and 1/4 mile from a main BART station that makes my access to downtown SF easier than from most places actually in SF. In the coming hot, wet, immobile world my competently DIY renovated house with 1916 charm, modern plumbing and electrical, the best insulation money can buy, and a surprisingly roomy floor plan will hopefully fund my dotage in a way my 401(k) never will.

      Or I’ll cut my arm off accidentally and then be murdered on my way to the hospital by somebody from a low-social-capital community who jacks the ambulance for its diesel fuel and medical supplies. YMMV.

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