Economic & Demographic Factors in San Francisco Bay Area Real Estate Markets
A Compass Special Report in Charts
Household, Federal Corporate & International Debt Trends
June 2019 Review
Throughout the world, debt has increased to new heights in recent years, typically surging past previous peaks seen before the 2008 financial markets crash. However, due to the large drop in interest rates since then, the cost of serving this debt is much lower than it was at the time. Low rates have encouraged consumers, companies, and governments around the world to take on more debt, and for investors searching for yield to purchase the debt of lower quality and more risk. Debt that must be serviced, and typically paid back at some point.
Interest rates are currently close to historic lows, but rates can be subject to sudden, dramatic changes, affecting and cost of serving. Internationally, the currency upon which a particular debt is based can also be subject to such changes.
Debt and debt defaults often play a very large role in economic crises, acting as precipitating, destabilizing, and/or heightening factors, as well as significantly limiting the ability of indebted parties - whether individual, corporate or governmental entities - to respond effectively to ameliorate such crises. At times of such crises, the collateral upon which debt was extended in the first place (stocks, homes, and other assets) can decline rapidly in value, putting the debtor "underwater," i.e. the sale of the collateral cannot cover the debt. The supreme-financing foreclosure crisis is a classic example.
For all these reasons, increasing levels of debt - and the inability to service or pay back the debt - often harbinger of a positive economic upcycle moving toward a negative downcycle, whether characterized by a market crash, recession, or downturn of lesser scale.
It is impossible to know how median and average value statistics apply to any particular home without a specific comparative market analysis. These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its unique dynamics. Median prices and average dollar-per-square-foot values can be and often are affected by other factors besides changes in fair market value. Longer-term trends are much more meaningful than short-term ones.
Compass is a real estate broker licensed by the State of California, DRE 01527235. Equal Housing Opportunity. This report has been prepared solely for information purposes. The information herein is based on or derived from information generally available to the public and/or from sources believed to be reliable. No representation or warranty can be given concerning the accuracy or completeness of the information. Compass disclaims any liability relating to this report, including without limitation any express or implied representations or warranties for statements contained in, and omissions from, the information. Nothing contained herein is intended to be or should be read as any regulatory, legal, tax, accounting or other advice and Compass does not provide such advice. All opinions are subject to change without notice. Compass makes no representation regarding the accuracy of any statements regarding any references to the laws, statutes, or regulations of any state are those of the author(s). Past performance is no guarantee of future results.
