Piggington Goes North

Submitted by Rich Toscano on January 3, 2006 - 8:43pm

Southern California is our beat here at the Econo-Almanac. But when an enterprising reader sent me a table full of data on the San Francisco Bay Area, I couldn't help but throw it into a graph. I figured that with the effects of the dot-com boom and subsequent bust, the Bay Area would be an altogether different animal than SoCal. But that wasn't really the case at all. While Bay Area home prices took off sooner and have proved a little more volatile, the end result is very similar: home sale prices rose much faster than rents.

This suggests that Bay Area home prices have risen not on structural fundamentals such as population or income growth, but on more ephemeral factors such as optimism, over-ownership, speculation, and E-Z credit. Sounds familiar, doesn't it? I guess these two animals are not so different after all.

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Submitted by ARMwrestling on January 3, 2006 - 11:00pm.

A quick note for anyone wondering what happened to the Bay Area's infamous dot-com "rent spike" of 1998-2000 and why the red line on the chart doesn't reflect it: I'm the guilty party who gave the professor this data and lacking a rental CPI, I substituted the Bay Area's generic CPI from 1995-2005.

So, while this broader CPI doesn't reflect the jump in rents in the late 1990s, it also doesn't show the 20-30% *drop* in Bay Area rents from 2001-present. A bit of a wash, then, and it's fair to say the comparison between home prices and rents, as of 2005, is accurate.

Submitted by kgruskin on January 3, 2006 - 11:08pm.

Is this content from patrick.net?

Submitted by marinite on January 6, 2006 - 11:49am.

You can find Marin County's rent data at:

http://tinyurl.com/dgq6m

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