When I was a kid, a million dollar house was a mansion. People in million dollar houses were rich, very rich. Now, a million dollar house (in the SF Bay Area) is nothing. It’s a 3 bedroom, 1,700 sq ft house in San Mateo. San Mateo is not a rich neighborhood at all. Someone owning that house sends their kids to public school and doesn’t have excess money in the bank. In Palo Alto (more affluence), that same house would be 3+ million dollars. Insane!
One of the problems is that there just isn’t enough land developed for housing in the Bay Area. Too many mountains and hills, not enough infrastructure to support new communities. Without doubt, we need to increase supply. That will help lower prices based on the same demand.
Another problem is public transportation. New York City is surrounded by awesome public transit stretching for over a hundred miles. The Bay doesn’t have the advantage of a single destination like Manhattan, but the public transit could be MUCH better. The East Bay (Oakland, Berkeley, etc) have terrible commutes. The highways are jam packed and BART is terrible. No express trains and comfort level is near zero.
Without more housing and public transportation which would allow us to spread out, I have to believe the price will continue to go up and up. Considering that I want a short commute, it leaves me very few options. Luckily, we bought our house before the price got out of reach. Otherwise, we would be paying a fortune in rent.
This whole problem is deeply troubling to the Silicon Valley ecosystem. It could drive people out of the Bay to other cities in the country with engineering talent and more reasonable housing prices. I am not sure what will happen, but these prices, I feel, are going to change the culture over time.
How has pricing been in your neck of the woods?