Will The Real Estate Bubble Burst?
I get asked this question multiple times a day.
The question in and of-itself implies that real estate is in a bubble — which is debatable in and of itself.
Last month there was a debate that went viral on NYC dying forever. Jerry Seinfield wrote a very heart-felt op-ed, basically attaching James Altucher’s article.
However, while I think Seinfield is hilarious in comedy — his op-ed piece didn’t really address any of the points that Mr. Altcher wrote about.
Essentially, you got to NYC for: Food, Business, Friends
Those 3 are all gone now. Crime has skyrocketed.
This same argument could easily be applied to San Francisco as well.
I cannot imagine a positive real estate market where: jobs are leaving, businesses are leaving, people are leaving, taxes are going up and crime is going up.
So yes — I think this (NYC and San Francisco) bubble will pop.
For perspective there are 19.45 million people that live in New York (8.4 million in NYC) and 39.51 million people that live in California(883K in San Francisco). That’s a lot of people considering there is only 328 million people in the United States.
However, I think there are going to be some amazing places to invest in now.
From James Altucher:
Prices are down 30–50% on both rentals and sales no matter what real estate people tell you. And rentals soaring in the second and third-tier cities.
As a life-long learner of economic history I ALWAYS roll my eyes — when people say:
This time it’s different.
However,
addresses this argument by talking about how remote work is making it different!
Summary
I think this time is different — but I also think NYC will return to its greatness. We can’t deny that it’s a global city and an epicenter of trade. In the meantime, I think cities with more natural aspects that let people get outside more are going to be great investments. Have any thoughts? Let me know in the comments!
