Recently, reporter Jessica Quandt wrote the sad story of
Hollister natives who no longer able to afford to live here. Though
they were born and raised in Hollister, and want to raise their own
families here, there are a number of people who are forced to look
elsewhere to buy a home. As median home prices soar into the
mid-$500,000 range and beyond, generations of local families are
being driven apart.
Recently, reporter Jessica Quandt wrote the sad story of Hollister natives who no longer able to afford to live here. Though they were born and raised in Hollister, and want to raise their own families here, there are a number of people who are forced to look elsewhere to buy a home. As median home prices soar into the mid-$500,000 range and beyond, generations of local families are being driven apart.
We wish we were surprised, but, sadly, we’re not. Like everyone who watches the Bay Area real estate market, we’ve seen home prices spiral during the dot-com boom, then continue to spiral in the wake of the dot-com bust.
It’s important to remember that the hot Bay Area housing market is a double-edged sword.
For those of us who are fortunate enough to own Bay Area real estate, the continued rise in prices is good news, leading to higher and higher amounts of equity and increased net values of our assets, at least on paper.
For those of us who have not been able to purchase homes, the seemingly unstoppable real estate market places the American dream of home ownership out of reach.
Whether you’re a homeowner rooting for the real estate bubble to continue to grow, or a renter hoping it will burst, we all have to wonder: When will it burst, and what will serve as the needle that punctures it?
Will it be higher mortgage rates, fueled by increasing national debt?
Will it be continued weak employment, due to outsourcing of jobs to cheaper labor markets like India and China?
Will it be the impending retirements of huge numbers of baby boomers eager to cash out their equity, causing a flood of listings?
Lacking a crystal ball, we can’t say when or why the bubble will burst. But we do know this much, lessons learned painfully from stock-market corrections and the dot-com crash: The real estate market can’t continue like this forever.
While soaring local home prices are dizzying, they are also a warning sign: Be careful with how you finance your home purchase, with how you’re planning to pay for your retirement or children’s college educations, with the timing of a first-time or moving-up home purchase.
Because when the real estate bubble bursts, it will hurt some and help others. As much as possible, plan ahead, spend your housing dollars prudently, and finance carefully so that you and your family are in a position to benefit as much as possible and be hurt as little as possible when the market finally pops.
