People were saying the exact same thing before the crash in 2007.

Not saying a crash is imminent, but prices are even higher than before last crash, even taking inflation into account.

>People were saying the exact same thing before the crash in 2007.

People were buying overvalued homes they couldn't afford in the middle of nowhere on subprime adjustable mortgages, which caused the crash of '07 when the ARM rates kicked in and they couldn't afford payments. This is a fundamentally different situation.

Now, a very small number of elite highly wealthy people from around the world are treating American housing stock as their investment vehicles since there is literally no other better option in 2018. Where we go from here in terms of affordable housing, nobody knows. But I really really doubt we're going to see a housing crash any time soon. It's just simple supply and demand.

Do you have a source for foreigners "treating American housing stock as their investment vehicles" and that driving up prices?

That was the complaint in Vancouver until they actually started tracking foreigner purchases and it turned out it was 10-15% of purchases (higher in certain neighborhoods). That means the other 85-90% of demand was from Canadians.

I dont have much knowledge, but i hear asian buyers investing looked similar to japan investing in 80s.

In the period after the downturn and just before the market started to tick up in mid 2012, there were a number of Asian investors buying up large swaths of foreclosed and distressed homes in Oakland for cash.

I recall this specifically, as I was in the market for a house at the time. Fortunately, I didn't face much cash competition as I was shopping slightly upmarket. The line seemed to be $300-400k. Those folks would be seeing pretty good returns at this point as those houses are now typically worth $500-600k and might be renting for $2-3k.

I believe the pricing growth is fueled by tech wage growth which is unsustainable.

I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst.

I can’t tell you exactly why I feel it, it’s more an emotional thing, but I don’t see a better strategy than that when trying to predict long-term housing prices.

I believe tech salaries will decline starting in about 5 years, and accelerating in 10 years.

Why?

HUGE influx of people into the field, fueled by government programs, people in tech pushing for more people to join (why they would ever do this is beyond me, say goodbye to your salary), education in high school and younger, wide availability to learn online, outsourcing, etc... The influx of workers will simply outstrip demand once worker influx hits it's powerband in 5-10 years.

Programming is on the same path that many craft careers have been on in years past. Mark my words - it's a blue collar job in the making.

If you aren't specializing in some niche field of programming right now, you will be kicking yourself in 10 years.

I’m not so sure. Many tech related jobs are fundamentally hard things for the majority of people to do. Even those with college degrees.

The problem with a bad hire in tech is that they can be worse than useless. Mentoring a junior software engineer can be very expensive and not many companies want to do that in an environment like the Bay Area where people hop between jobs frequently. Personally I think this is very short sighted and sad as I love mentoring junior engineers.

Thinking logically and being able to clearly articulate your thought process is a rarer skill than you would think.

I do a lot of teaching/consulting in the Bay Area. I see a lot of people coming out of bootcamps trying to get entry level positions.

Some of the candidates graduating from these bootcamps are awesome and have lots of potential but those are few and far between. Also, their is a shortage of entry level positions.

The best bootcamps filter heavily and generally only take people with a vaguely related college degree (Economics, law, physics, biology) or who have shown an aptitude (portfolio).

I’m summary, I wouldn’t be surprised if the growth in tech jobs outstrips the supply of quality candidates. If anything having years of relevant experience is going to become even more valuable as time progresses. It’s the entry level candidates that are going to have a harder time landing a job and paying rent in the Bay.

Tend to agree. Law went through a huge spike in graduates and private law schools last decade, and when the economy hit bottom, many lawyers felt the worst of it, especially recent grads who've still never really been able to get a foot in the door, while still paying off six figures of law school debt.

The difference between law and software engineering is that you can't really BS your way in software for too long without being caught. I knew a few friends who would never have been able to pass the math and engineering courses a decent CS program requires, but they were admitted and essentially paid a huge bribe (with loans) to get a law degree from a low-tier school, cram for months for the bar, and get certified.

But they never made much money in law, and probably would have been better off choosing another path.

I agree, the situation with law school a few years ago is a good analogy. Just because you got a degree from a random law school school doesn’t mean you are going to cut it in the real world.

My girlfriend is a lawyer who is transitioning to become a UX researcher via a bootcamp. The general standard of people in her bootcamp clas is quite high. On the young end you got recent grads from top tier schools (UC Berkeley English) on the older end of the spectrum you got a VP of marketing who’s worked at reasonably high profile consumer brands and who has a pretty good undergrad degree. Some of these bootcamps can be quite selective and aren’t easy to get into. They want highly motivated people who are smart. Those kinds of people are in short supply.

https://blog.codinghorror.com/why-cant-programmers-program/ Considering articles like this and the fact FizzBuzz tests are even a thing I wouldn't be so sure. I get your point, but the problem is while with enough time one can get it, quite a few people are going to hit a wall and not be able to pass it.

That article was written over 10 years ago

Has anything significant changed? We see the same phenomenon every time we try to hire developers.

I felt this way 20 years ago before the dot net bubble popped. But I greatly miss judged the size of the demand. I am not sure the ten year outlook is that bad.

I mostly agree and would argue it's due to the slow erosion of the middle / consumer class. Advertising-based businesses slowing down might be a leading indicator of a bigger macro trend: the reversion back to pre-WW2 levels of inequality :-/

“I also think the tech sector in general (especially any company that is driven by ads) is due for a major correction soon, if not a full burst.”

Why do you say that? Haven’t all the tech companies been performing well across a variety of metrics these last few years?

Ad money ultimately flows from consumer (mostly) discretionary demand. If we were to see a significant pullback in consumer discretionary spending, you’d see a lagging pullback in ad spending.

What is the price to rent ratio?

Cap rates are hovering around 2% Hong kong is worse, i hear.

2% in SJ? That's insane. I'm paying 0.35% of the average sale price in rent for a townhouse in my community (San Mateo/Burlingame area).

Both are insane, when you consider property tax and maintenance, unless you assume a continued upward march in valuations.

That is exactly why cap rates are squeezing.

Is that per month or per year?

Per month. I generally charge my tenants (outside the Area) pretty close to 1% per month, for reference. If I can't get 0.9% per month or more, the property isn't worth the effort at renting it out.

Looks like my data was old :)