Housing is one hundred percent correlated with employment. More jobs, more employees who need place to live, more value to existing houses and apartments. Less jobs, fewer people, less value to existing houses. Keep in mind that housing prices right now are inflated in Bay Area. The implication is that the further they are from employers the more likely the inflation will experience a sudden deflation. Houses in Palo Alto or Cupertino will continue to appreciate, all those folks in Mountain House who bought in the 2000 bubble are still not thrilled with the values of their houses.
The recommendation is to think strategically when you buy a house. Treat it as a home and not an investment. Buy something with a good location, and be prepared to ride out the next economy adjustment which historically comes every 10 years.
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