Real Data SF: The Supply-Demand Crunch

Generally I try to cherry pick from the incredible data that our Market Analytics Guru (aka Patrick Carlisle) puts out each month and then draw some conclusions for my readers. This month, however, I think Patrick’s newsletter tells such a compelling and coherent story that I suggest you peruse the whole thing.

In a nutshell, the story of today’s market in San Francisco is about an incredible lack of supply relative to demand. Here’s one of my favorite charts from Patrick’s data.

Paragon Real Estate Group

Now the question is whether, in such a market, it is “too late” to buy in? I’ve argued elsewhere that viewed strictly as an “investment,” there are probably better places to put your money than your home. People want to own their home because, IMO, we have a deep — even primal – need for a cave we can call our own.

At the same time, no one wants to feel that they are grossly “overpaying” or at risk of losing a significant chunk of their equity in the event of a market correction. Patrick’s analysis takes a long-term view of SF real estate cycles to argue that we are probably just at the beginning of an improving market and that there is therefore plenty of “upside” left. Finally, he makes the case that buying a house still makes sense given skyrocketing rents.

If you’ve got time for nothing else, take a quick look at the charts to get a quick sense of the imbalance between demand and supply right now.

Oh, and it’s come to my attention that some of you may not be receiving an RSS feed of my blog since I moved to Paragon (new server host). If you wish to do so, please click on the RSS button below. And please consider “liking” Real Data SF on Facebook too.

Thanks!

Misha

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