Q:UBS report says homes in San Francisco are “significantly overvalued” and the city could experience a bubble burst. How can someone either capitalize on this or insulate themselves from a downturn?
San Francisco is landlocked; there is no room to build except up. Our housing supply is further constrained by neighborhood opposition to new development, a bureaucratic planning department working with a burdensome building code, rent control, regulatory red tape around the creation of new housing and a moratorium on condo conversion of existing buildings.
We cannot predict the future, but we can study the past and see that there are natural cycles in the market. However, property values have nearly doubled every 10 years in the last 40 years.
If you can afford to buy a home and your investment horizon is at least five years, go ahead and buy. Sitting on the sidelines is not a winning strategy when you are faced with high rents and you can take advantage of the tax benefits of ownership.
If you own property and think the UBS report has merit, please call me. I would love to sell your house.