San Francisco Tests Negative for Bubble-itis
A new study from researchers at Columbia University and the University of Pennsylvania’s Wharton School does not include San Francisco on its list of overvalued markets:
The recent, rapid price increases stem not from a speculative frenzy but from basic economic factors, including low interest rates, strong income growth and abnormally low prices in the mid-1990s, said researchers at Columbia University and the University of Pennsylvania’s Wharton School.
In fact, (the researchers) found that the annual cost of owning a home relative to renting in San Francisco and other expensive cities — including Boston, Los Angeles and New York — is lower than it was in the late 1980s, just before the last major downturn in housing prices. The ratio of housing costs to income is also more favorable than at other times during the past 24 years in these cities, the survey said.
Bubble won’t burst [SF Chronicle]