Could this cause the next bubble decline

I’ve been stating that it’ll take a financial disaster to cause the next bubble. Shortage of oil for example, resulting in a run on inflation followed by high interest rates, causing unemployment which dampens demand.

 

However, here’s another idea. The next buyer simply can’t afford to pay the price offered for the unit. Basically we run out of wealthy buyers. Such that the next home has to sell for less in order for the transaction to happen.

 

Let’s take a look at where these wealthy buyers are coming from. Based on the meetings I have with new buyers each week: the preponderance are in high-tech, some doctors, some PhDs working in biotech. Most of these people have considered living in the Peninsula or SF and realized they can’t get much for their budgets. So they come to Fremont because our schools have very high APIs and our home prices are 25-50% less than the peninsula so they have no problem paying what it takes to get the home.

 

My belief is that SF and the peninsula become strictly the land of the uber wealthy, that the supply of buyers for Fremont (east bay) will be there until rates rise enough to cause layoffs in the valley.

 

 

 

 

- Sunil Sethi

SUNIL SETHI REAL ESTATE

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