By now, many people have heard about the New York Times article which foretells of housing prices doubling and tripling as hungry millionaires descend upon already scarce housing stock in the City. ...I’m not reading the tea leaves quite that way.
If you are a Bay Area native, reading this news thinking this is a nail in the coffin of your dreams of someday buying where you grew up, don’t despair just yet.
I wish the NYT article had cited economist sources more strongly, instead of relying heavily, as they did, on tech-based brokerages with interests in exactly the type of outcomes they themselves are predicting. They’re not wrong that the string of San Francisco IPOs this year (Uber, Lyft, Slack, Pinterest) will add more liquidity to the market. But here are the facts that the article left out:
Many of these companies are not yet profitable, there is a holding period for newly vested stock options rather than an instant infusion of cash, and even more importantly, we were running on fumes at the beginning of the year and IPOs might just keep us on the trajectory we’re on, especially with the specter of rising interest rates.
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