What’s Changed?

What an amazing photo this is! It almost seems a little symbolic of how we all seem to be constantly trying to hold back all of the negativity and fear that’s engulfing our culture lately. When I started to reflect a bit on real estate in our area the other day, I had to ask myself…what’s changed?

Back in 2001 the San Jose Mercury News did a story about how the rapid pace of Silicon Valley growth was altering our lives here. They said that, at that time, there were 6 working individuals for every one housing unit and they were alarmed by the fact that Peninsula municipalities had been granting building permits to commercial projects in much greater numbers than they were residential permits. They also showed how the bulk of the new residential was high density condo or apartment projects and single family home development, especially in San Mateo County tended to be high end, expensive properties. I know many people who moved to places like Manteca and Tracy and commuted back to this area to work each day. Has any of that changed? Maybe the 6 to 1 ratio no longer exists…but I’ll bet it’s still at least 2 to 1. I don’t know anybody rushing back here from those outlying areas. I realize that there have indeed been some layoffs in our area lately…but this sure isn’t the Rust Belt we’re living in. Last I heard Gilead is still expanding over across 92, the local projects are still moving forward and Reardon Commerce and IBM aren’t fleeing Parkside Towers.

So, what has changed? Well, loans are harder to get. Just fogging a mirror doesn’t cut it anymore and all those zero down, stated income, sub prime loans are gone with the wind…except very few of them were used in Foster City in the first place. Inventory is a little higher, we’re at 33 single family today…that’s equal to the 2008 high, but it’s really not a significant change. No, what has changed significantly is the degree of fear that we now find ourselves living in. What we have, in fact, is a fear bubble! Major job losses have not occurred, inventory has not doubled, interest rates are still reasonable, good deals are possible…yet probably 3/4 of potential buyers have moved to the sidelines because they’re afraid of this economy, and many of us are fighting it like this lady in the photo.  I’m not immune either! It’s like we’re all feeding off of each other’s anxiety.

Well, oddly enough, Forbes came up with this article on their website yesterday…check it out:

Real Estate Markets Most Likely to Rebound

By Dorothy Pomerantz, Forbes.com

Nov 3rd, 2008

“If you’re a homeowner seeing property values plummet, look to the commercial real estate market for solace. It might tell you which areas will recover fastest–and which will likely remain weak.

The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes, pushing prices up.

The best cities in which to invest are those that are considered gateways to international investment, have vital downtowns where people can forgo cars, and don’t have a glut of condos or office space.

San Francisco comes in second (Seattle’s first) with a 6.12. The City by the Bay learned from the tech crash of 2001 not to overbuild. There is a reasonable supply of office and apartment space, which should limit vacancies. San Francisco’s port is also expected to help the city during the downturn as Americans continue to rely on Asian imports.”

On this day, of all days, I think we’re going to have lot’s a reason for hope in our future. The biggest change we’re going to see is coming tonight…and I’m thinking it’ll be a positive one!

 

Comments

  1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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