Thursday, May 26, 2005

Is the Piper About to Be Paid?

No, not John Piper (probably fooled some of you into thinking this might actually be interesting—sorry to disappoint). Actually, I'm referring to today's WSJ editorial on the potential for a devastating housing bubble in the San Francisco Bay area.

It caught my eye because in February I was in the Bay area and read a SF Chronicle article on the boom in housing prices. I'm working from memory here, but the average single-family home price was somewhere in the $600–700K range. These are ordinary homes, not mansions.

That number is shocking enough to a resident of eastern North Carolina, where you can get a brand new, 3-bedroom, 2-bath house for $130K pretty easily. But what really dropped my jaw was the fact that in the past 12 months, housing prices in the Bay area have increased more than 20% on average. That means the average home in the Bay area increased in price far more than my house is worth. In other words, if I had bought a house in San Francisco in February, 2004, I could have sold it in February, 2005 and bought my current house in Rocky Mount with the profit plus bought a 2005 Mustang and still had thousands of dollars left over.

What say y'all move down here and put a charge in our property values?

1 comment:

ExFide said...

No kidding...I pastor a church in the SF bay area. It is expensive here. A church of 200 will need approximately 7 million to buy a 2 acre lot and build a small facility. There are a lot of social ramifications as well.