And speaking of "boom and bust patterns"
And speaking of "boom and bust patterns", while aggressive Federal Reserve accommodation throws gas on the real estate fire in Southern California and elsewhere, it is worth noting that a much different story is now unfolding in the greater San Francisco Bay Area. From the San Jose Mercury News: "Bay Area Apartment Vacancies Rising – ‘This market has changed dramatically in the last 60 days,’ said Killian Byrne, vice president of Vasona Management, which has 4,000 apartments in the Bay Area. His company has reduced asking rates as much as 10 percent and is offering concessions to attract new tenants. ‘There’s no demand anymore,’ he said. ‘I would have never predicted this to happen to our industry so quickly.’" Another local property manager stated that "his portfolio has a vacancy rate of 4 percent. But when the units where tenants have given notice are added, that figure rises to 10 percent." Also from the San Jose Mercury News: "Home prices fall sharply in valley - Just 682 homes closed escrow in the county in April, a 19 percent decrease from March and a steep 40 percent fall from one year ago. The number of homes for sale continued to accumulate: There are 4,208 houses on the market and 1,247 condominiums. Last year at the same time, 1,499 houses and 352 condos were available. The average home now spends 31 days on the market, compared with 18 days one year ago." And with companies abandoning office space in droves, commercial vacancy rates throughout the San Francisco Bay Area are skyrocketing. The bursting of the tech bubble has made it to the real economy in Silicon Valley.
From today’s MarketNews International "Reality Check" column: "US Office Space Market Down Sharply, Brokers say - The commercial real estate market appears to have given up much of its year 2000 gains in what industry officials describe as a "jolting" slowdown in 2001…Preliminary data, some still unreleased, ‘shocked’ the industry and created nervousness about the second quarter and beyond, said Robert Bach, national director of market analysis at Grubb & Ellis, among the nation’s larger commercial real estate firms in Chicago. ‘The first quarter was a shock to the system,’ Bach said. ‘It was a sharp reversal of the tightening market we saw during all of 2000. The overall vacancy rate shot up.’ Grubb & Ellis’s preliminary figures show office vacancy rates nationwide soared to 10.37% in the first quarter from 8.86% in the fourth quarter." Wow!
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