I am always being asked by people on whether it’s a good idea to buy a house in the Bay Area. If you are going for the long haul, as in willing to hold for more than 5 years I’d say you are making the right move. I am expecting a dip of 10% to 15% in 2019 depending in which neighborhood you live. But that’s not all that significant since a $1.5M house would now still be worth $1.35M. That’s a $300k vs $270k down payment. Really no difference and your mortgage doesn’t change too much.
One thing is for sure, we are at the highest point in the curve than we have ever been in the past, and the higher you are the harder you fall. People are expecting a crash on the same scale of 2000 and 2008. But those were once in a century crashes even though only 8 years separates them. We don’t have a dot com situation and we don’t have a sub-prime problem out here in Silicon Valley.
Check out this chart provided by Paragon Research:
The Bay Area is price protected as there is no more free land to develop and a huge percentage of the population can pay cash, liquidate stocks or have access to other windfalls to use as purchase. Way, way more buyers exist than sellers. Inventory continues to remain insanely low because people don’t want to sell. Foreign money, company exits, RSU’s, VCs, lawyers, dentists, doctors, are your competition when buying a home in this area.
SV has exceeded the critical mass point. It’s too big too fail. It’s the tech capital of the world and nothing is threatening that position. The perfect weather and tech industry is why people flock to the Bay Area. With over 40,000 startups and a myriad of large cap corporations, the next 15 years will bring about more technological advancement than the last 50 years have. Buy housing now or forever hold your peace.