| Subject: | The Secret to the Home Prices in SF Bay Area |
|---|---|
| Date: | Mon, 1 Feb 2010 10:19:40 -0800 |
| From: | Jas Jain |
Is no secret at all! They are highly correlated with the stock market, in general, and the prices of the leading local tech stocks, in particular. Attached is a graph of the relative prices in the greater SF Bay area to the greater LA Area. The relative prices in the Bay Area bottomed recently exactly in the month that the stock market bottomed, March 2009.
If the stock market makes a new low, most likely within the next 6-18 months, expect the Bay Area home prices to make new lows (lower than the recent lows during March 2009). Some people have claimed that the home prices in Bay Area reflect great weather, hiking trails, windsurfing, etc. That is an amazing level of ignorance.
The general prosperity in the Bay Area has been a function of the stock market and when that old cow stops giving milk you can say goodbye to the latest Land of Milk and Honey. People forget that home prices in Detroit area used to be higher than in San Jose area. Lakshmi, the godess of wealth, does not stay put!
Jas
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