September 21, 2005
There’s no housing bubble in the Bay Area
Bubble won’t burst / Study finds Bay Area housing prices in line with economic growth
San Francisco’s housing market doesn’t suffer from bubble mania, according to a new study.
The recent, rapid price increases stem not from a speculative frenzy but from basic economic factors, including low interest rates, strong income growth and abnormally low prices in the mid-1990s, said researchers at Columbia University and the University of Pennsylvania’s Wharton School.
“The bubble fears are over people paying money for housing today because they’re expecting unreasonable (price increases),” said Todd Sinai, associate professor of real estate at the Wharton School. “Our calculation says that if people are expecting something reasonable, house prices today are justified — and they are in San Francisco.”
Whoa!
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