A lot of speculators also bought assuming increasing property values, so if it’s flat for 5 years or whatever, then that’s going to nuke their gains. Meanwhile they’re paying out real cash every month.
The rental market in many previously hot areas (SF, South Bay) has taken a hit, but not sure where it will land long term.
Medium term there is a LOT less pressure with a lot of techies having relocated and remote work being accepted.
Don’t forget though that anyone who is a ‘bigger fish’ (looking to invest many millions or half a billion or so) in a high inflation environment is going to be looking for as sure a bet they can with as high a return they can.
And since money isn’t as cheap anymore, those are easier to find and get.
So while it may not be bad returns, it may be bad returns compared to something else (a new business, for instance).
I’m sitting on $600k+ cash for a down payment and if I see townhouses correcting I’ll snatch one up immediately. And I am a very small fish compared to the wealth that’s around.
My personal bet is that the Bay Area will just stay at 0% growth until the market recovers.