Re: Re: A note on the housing bubble

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

My uncle's very, very modest Palo Alto home, small lot with 2 very small
bedrooms in a modest neighborhood, was worth $1.25 mill.  Nobody would buy
the house for that much -- just the lot.  Any buyer would have to cover
the expense of demolition.

On Mon, Apr 01, 2002 at 06:41:03PM -0800, Sabri Oncu wrote:
> Michael writes:
>
> > Here in Chico, housing has been booming for
> > quite some time.  The realtors explain that
> > majority of the increasing demand comes
> > from people in more southern parts of the
> > state whose houses have been soaring in value.
> > They sell out, buy a comparable or bigger
> > house here, and pocket a tidy sum.  We're
> > expecting Jim Devine to move here soon.
>
> If Jim moves there, I am coming too. But you need to find me a
> job in your department, something like teaching a statistics or
> continuous time finance course.
>
> The situation here in Berkeley is somewhat different. Most people
> (mostly tenured academics) in Berkeley have stable jobs and
> incomes, so they are not willing to sell their houses for low,
> unless there is a pressing reason. So supply has been short for
> quite some time and demand, which was quite high until recently
> because of dot.com incomes, is still okay, especially because of
> the low mortgage rates. Over the past four to five years, most
> Berkeley houses gained anywhere from 30% to 100% (these are the
> ones in North Berkeley). I find this amazing. Despite the fiscal
> stimulus from the military-Keynesian economy Jim mentioned, I
> have doubts that this price level is sustainable. A two bedroom
> Mediterranean house with a Bay view is selling at about $700,000
> and we don't have Wall Street Bankers here. Who is going to pay
> these prices?
>
> Well. This is just one special city, so I stop here.
>
> Sabri
>

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx