The Paragon charts speak loudly to the millions of “deep pocketed” residents in the area, esp those longtime residents of THREE counties (SF, Marin and SM). Notice that during the “Big Bubble” (2004 – 2007), it was the lower-end segment of housing (<=$510K) situated in FIVE bay area counties (incl the east bay counties of Contra Costa and Alameda) which suffered the biggest downturn. Why? It was due to the proliferation of NINA loans and other forms of predatory lending offered to a captive audience of homebuyers and highly leveraged “owners” who relied on purchase money mortgages and equity from their homes to send their kids to college, travel, buy vehicles etc, or just simply exist with a source of monthly income. (Buyers of mid-tier and higher-tier homes aren’t as reliant on mortgages for purchase money or “cash-out” needs.)
In SFR’s, those lower-end prices (<=$510K) actually haven't existed in SM, Marin and SF Counties since the early-mid nineties (and only in certain micro-areas). They existed in neighboring Santa Clara County up until late 2000.
The middle tier of housing in the five counties ($510K to $925K) was hardly affected by the "Big Bubble." Its effect on the higher tier (above $925K) was short-lived and its values have now far exceeded those of the "Big Bubble."
There have been no SFR tract subdivisions built in SM or Marin County for 35-50 years, depending on micro-area. Of course, SF County does not have any SFR tract subdivisions, except for possibly those 65+ year old tracts of "row homes" in SSF.
IIRC, the only SFR tract subdivisions built in SM County in the past 45+ years were within its 1971 Foster City annexation which was dredged from a former landfill buried in marsh in the bay.
The dearth of new construction over several decades and preservation of open space within SF, SM and Marin Counties heavily contributes to the exclusivity of residing there and the resultant high RE prices.
In my mind, SF and Marin Counties are "recession-proof" and SM County's SFR stock is probably "recession proof" as well (no matter what happens in the tech sector). The reason being is that there are just too many well-established property owners in those counties (both in residence and non-resident) who are still alive and whose heirs will eventually utilize Props 58 and 193 to pass those properties to themselves with a very low assessment attached to them. I predict 90+% of them will never be listed as long as Props 13, 58 and 193 are still on CA’s books.
I’ve been looking online again recently (in June) at smallish houses to retire in in Norcal Counties (in mostly rural and semi-rural locales) and those thousands of well-established and deep-pocketed bay area residents have taken over this segment (my brethren boomers) and driven up the prices to over $700K in nearly all towns with a population of 1K or more which are within 60 miles of the coast. They buy them, furnish them and go there whichever weekends they can and let family members use them (for wine-tasting, biking thru the redwoods, etc). Virtually NONE are rented out. I’ve now been relegated to 1950’s ranch homes in South Lake Tahoe (almost too far for a bay area semi-retired person to go to for just 1-2 nights at a time), which is okay. But I feel if I don’t act fast, I’m going to be relegated to Carson City, NV or Truckee (ugh) or Redding/Yreka/Mt Shasta and surrounds, which are much too hot in the summers for my taste :=(
I can’t even buy back my modest (1530 sf) childhood (tract) home today (located 20 miles SE of Oakland) for which my parents paid $17K!
In some ways, I feel I made a huge life mistake back in the ’70’s when I returned to CA. My original plan was to return to the bay area. I had a good job lined up in Half Moon Bay (SM) through my current employer but my prospective roommate for that locale backed out at the last minute to enroll in University of Michigan (their home state). I ended up moving to SD County with a co-worker from La Mesa (who quickly moved back “home” after our arrival in SD to attend SDSU) … and the rest is history. I should have just moved to the SF peninsula by myself and taken the good job offer/transfer! Of course, I don’t regret my kids but I feel I would have been much better off today had I taken that route.
