Tuesday, September 06, 2016

The housing market has never been busted like this before.

My new habit lately is asking people where they live. Not because I want to be their besties, but because I want to know if they are contributing to the crazy traffic in the Bay Area lately. You see, for the past six months or so I've been hearing the craziest commute stories - on the regular. This stuff makes the commutes from before the housing crash look laughingly tame.

On one hand Silicon Valley proper is putting up office space at break neck speed which is pushing everyone who needs to live somewhere - to the interior. Since they still are not building that much housing, it's putting enormous pressure on prices. Which causes people to look further and further inland. Causing traffic to be just crazy. I even have to carefully consider my weekend stuff lately, because the traffic is just crushing.

Today I was talking to a guy I know who went through the crash with a rental like I did, but his is in the way interior. He still doesn't have any equity, and is basically break even for his rent - but still he hangs on. Which initially I thought was confusing. Today he was saying that inflation was freaking him the hell out. I figured he isn't the only one who feels that way.

While I am still on the deflation train until the end of the year, the hair on the back of my neck is standing up about inflation. All it would take is one tiny match for all that printed money to see the light of day. Just the hint of confidence would be enough. It's really the only thing the economy needs. People are hoarding money because they don't feel safe. The minute they do, they are going to spend money. It's what people do. I mean, if the economy were any more depressed - it would be a technical depression. We are exactly at stall speed. If there were any growth at all...................inflation would rapidly gain strength.

Anyway, I kind of left that guy thinking - I bet he isn't the only one more freaked about inflation than I am. But no one seems to be acting like it. You'd think they would start hoarding other things.

But maybe they are hoarding things. Like houses. There must be a reason that guy puts up with all the pain of a rental and not be making really any money off it.  He's gotta be waiting for inflation.

All I know is every single person who gave up their house is going to be sorry. I've been through many boom and bust cycles in the Bay Area, and I've never seen housing so dislocated as it is now. I don't even know how this breaks. Building has been depressed for so long that a normal recession won't let out any of the steam. There are just more people on the earth than there was 10 years ago.

You might be able to find a cheap rental but you have to pay for that with a two hour (or more) commute.

I also wanted to add this article which talks about housing inventory being at a 20 year low. Here.

"Buyers in Silicon Valley must be aggressive and innovative as well as well-heeled, especially as housing inventory here hits its lowest point in at least 20 years. In San Mateo County, which includes Redwood City, the number of homes for sale in August was 1,184. That is a drop of 62 percent from a decade ago, even as the population increased more than 70,000."

"It is a microcosm of a growing national problem. The number of homes on the market in the United States has fallen on a year-over-year basis for the last 14 months, the National Association of Realtors says. When adjusted for population, the inventory of homes for sale is the lowest it has been since modern records started being kept in 1982."

Emphasis mine.


  1. Traffic has definitely been crazy crazy lately. I left redwood city at 4:30pm this week and didn't hit Antioch for four hours and that's with carpool stickers. If you can't roll between 10am - 2pm, it triples the time for the commute. Wouldn't more traffic be a very bullish sign for prices? DF

  2. A year ago that would have completely shocked me. But I actually hear a lot of those stories now. It's completely crazy.

    I don't really think it's bullish for prices. People and companies lose productivity sitting in traffic that long. Imagine all the things you could do in the four hours you lost.

    I think overall all of this traffic is due to people trying to find cheaper housing further inland. A girl I know in my town comes in from Murphy! That's like two hours inland. People just can't really takes commutes that long, for very long periods of time. It just burns you out. They think they can for a while, but even hardcore people who thought they could tough it out - usually cave eventually.
    There is almost nothing worse than sitting in traffic for four hours.

  3. It was my own fault for running late. The traffic is a good motivator to stay on schedule. Df