Is It The Right Time To Buy A House In The Bay Area?
Is Now A Good Time To Buy In The SF Bay Area?
For three key factors, 2020 and beyond is forming a good period for property in the SF Bay Area:
- A turnaround at the tech and S&P 500 stocks. In 2019, the S&P 500 returned 31 percent, while tech companies like Apple, Facebook , Google, and now Tesla had years of GIANT.
- After the Fed telegraphed no more from two hikes, a fast and unexpected decline in mortgage prices.
- Tech IPO boom of about 2,000 – 3,000 potential new investors and 10,000 new millionaires entering the streets. In 2020, they'll all get air.
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When you see the mortgage rates, you will know that with a recovery in equity, tech IPO millionaires, and now higher affordability, the real estate of SF Bay Area is ready to continue to increase in value.
There's also another interesting factor to consider. It's seasonal, and hasn't been listed.
By Stacey Baca - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=12222368
How Immigration Boosts SF Bay Area Real Estate Prices
This information was written by a 20-year SF Bay Area veteran, Terry Lambert. Since 2003, I myself owned SF real estate, and have been here since 2001.
The pressure on the real estate market in the Bay Area starts around November and continues up until around May, when the EB-5 visa season is over.
This is because having an EB-5 visa costs $1 M, and by owning a home and hiring a few gardeners, a couple of maids, etc., you can effectively meet the employment requirements for a business.
Note: That is how the process for Kapok 's investment in St. Croix in the U.S. Virgin Islands fought to get the federal tax break of 90 percent that comes from running and hiring citizens in an economic development zone.
It has been used in the wrong way by many companies; Kapok was not one of them.
As long as you've stayed in St. Croix or anywhere else in the USA. Virgin Islands-great misery, right? -- You've been lucky for 186 days or more a year.
If you had U.S. firms, you could then settle down there and offer your management consultancy services to the businesses you owned in the U.S., and you'd get a 90 percent federal income tax exemption.
International investors will play the same game to effectively buy U.S. citizenship from an EB-5 investor visa in the form of a green card.
Yet to do so, you have to drive the price of your investment up to $1 M, and practically guarantee the same property rivalry won't beat you out for it.
So you bid $1M on an $800K house — 25% over actual market value as real estate… but not as an EB-5 mechanism.
Huge upward pressure on rates everywhere you can put the strategy to use, and the Bay Area ends up with about 17 percent of next year's 10,000 EB-5 visas — the new EB-5 limit.
This runs out by the beginning of May, but there's momentum going on at the end of June that keeps it moving on a ballistic line.
Since the EB-5 system is over-subscribed by about 300 percent, the result is to consume 10,000 * 17 percent = 1,700 housing units off the market indefinitely, and consume another 200 percent or 3,400 housing units off the market for a temporary duration.
That is some pretty big pressure from the market. And there's an epicycle in the Bay Area real estate market that most buyers don't know.