While the number of new condominium units on the market in San Francisco has ticked up to roughly 1,200, which is over 80 percent higher versus the same time last year, the number of contracts signed over the past month dropped to under 30, which is 44 percent lower on a year-over-year basis, according to sales data from The Mark Company.
At the same time, the Mark Company’s pricing index for new construction condos in the city slipped another 0.3 percent last month, is running 7.9 percent lower versus the same time last year and has dropped 11.0 percent from an August 2015 peak, following the trend we first noticed emerging over a year ago.
And despite the uptick in inventory, the pace of new construction sales in San Francisco is running 34 percent lower in the first nine months of 2016 versus the year before according to our calculations.
What is current comparable data for rentals? (I’m assuming that rental unit production is still bulk of the new construction market in SF.)
To clarify, rental price trendlines in SF vs. rental production trendlines in SF seems more relevant currently.
Most sites say rents have dropped around 3-6% (Zumper, Rent Jungle, Apartment List, Trulia, etc)
SF is reaching a soft ceiling of sorts in RE prices. Prices will still appreciate but not as much as some other markets or as much as they have over the past decade. IMO.
Two things are happening.
For investors the appreciation outlook medium term is not as good in the Bay Area as Denver or Portland or Seattle. Or some other markets. I think there will be a shift of some investment money out of SF to these other markets. Better ROI. Some investors settled for very low ROIs here betting on uber-apprciation. If that appreciation lags, the appeal of Bay Area investment RE does too.
The bigger factor though is affordability.
The median home price in Portland is 345K, in Vancouver across the river 200K. That despite huge price appreciation this past year. If you google you’ll find articles about people fleeing California being responsible for the recent surge in prices (rents too) in Portland. With worries Portland could one day become unaffordable as is SF.
These much lower prices are a boon to younger tech workers who are mobile and willing to move and able to do so given the presence of tech opportunities in the NW and others areas. This group is a big portion of the market the new SF condos are targeted to. So not only is the competition from all the new inventory on the market here, but from other more affordable and attractive, in terms of the quality of housing one can get, areas.
Yes, yes, Portland, Seattle…
Newsflash: people have been leaving California for Portland for at least 20 years. It’s not news. Your comment could be found, almost verbatim, in a blog from 1995. If blogs existed then. (And yes, I know you have great returns on your rental property there. No need to go through it again.)
When I attended the University of Oregon in the 1970’s, a popular bumper sticker was “Don’t Californicate Oregon”.
So 40 years ago it was bumper stickers?
These things go in cycles for sure and there is a new “home rush” to the Northwest. And a backlash against Californians but today you see it in youtube videos.
A good many clever ones out there. One starts off narrating “Portland, the Rose City” then cuts to a rose bush with withered roses with yellowed leaves. It goes on “where traffic is calm and easy” then cuts to a guy stopped at a neighborhood intersection and a car comes up behind him horn honing and the driver saying “get a move on buddy” – then it cuts to the license plate of the honking horn and its a California plate.
Seriously, there is a huge concern up there about this and how they can avoid the mistakes San Francisco made. People are worried their young kids won’t be able to afford a home there in 20 years when they are ready to buy. As has happened here over the past 20 years plus.
345K is old pricing in Portland close in, its way higher now.
If you google you’ll find 345K listed as the current median price. That does not contradict the fact that certain neighborhoods and close-in areas have much higher prices. Its an overall number for the city as a whole. And it will move up quickly over the next 10 – 15 years.
On the MLS front, September numbers that I see show house sales even YOY (164 vs. 164) with condo/TIC sales up 20% YOY (216 vs. 180). Median/Avg prices up a bit for houses and flat for condos. Not going crazy, but certainly nothing even approaching a slowdown.
Purely anecdotal — I received a very nice hand-written card in the mail from a realtor yesterday (the realtors on this site would recognize her name) saying she had a client who was interested in buying my house with cash “for a quick close” if we were interested in selling. I’ve received a lot of generic mass mailings from realtors before, but nothing like that. Anyone waiting for SF prices to fall in a material way is probably going to be waiting quite a while.
Btw, I’m not selling. I like my house. And my wife and kids would never go along with it.
I think you’re right. Maybe a slight slip. Prices can’t go up at the most recent pace indefinitely anyway. I think we’re looking at a plateau. Not a crash or even a significant drop, though.
There is no “soft ceiling” because you can’t taper a ponzi scheme. The expectation is that you can always sell the property to someone else for more than you paid. As soon as that expectation is widely called into question, demand at these price levels evaporates quickly. It usually takes a shocking event to grab the attention of the Greater Fools, so it’s impossible to say when, but I’m guessing soon.
“Evaporates” and “quickly” – two foolishly used words. Tell us – when can we all publicly laugh at you because the bottom (however you define it) never falls out? 2020?
I mean, it’s pretty obvious that a 10 to 20% real drop is possible. But you seem, in your assurance and deep knowledge of local incomes and the tech industry (guffaw) to be asserting a much larger drop. Care to put a number on it? Will be funny to watch you “evaporate” from this site.
The real joke is when you guys say “slight slip” and “20% drop” as if they are one in the same. That’s just a huge cop out.
as a homeowner im happy with a 20% drop like we saw in 2009-2011, especially if we see another 100% rise in the subsequent 5 years as we did in this cycle
A ponzi scheme? That’s a new one! Is that like how Google is a Ponzi scheme?
MLS data already shows a 7% drop for condos from the recent peak, is that included in your 20% slight slip or are we talking 27% total?
I’m saying we’ll plateau (which inherently means ups and downs) for the appreciable future.
Do you have a timeframe we should expect this big drop? Next week? Next month? Next year? Next decade? Please, inform us
I already told you there is no way to predict, because the fools who are paying top dollar right now are under the spell of MSM and Realtor propaganda, and the only thing that can make them look up from their Pinterest feed is when some nasty news finally makes the headlines of the front page.
Likewise, the extent of the crash cannot be predicted, because we are no longer in a market per se. Our government is hell bent on avoiding any financial pain or asset deflation for its bankster cronies, so will come up with all manner of schemes to to prop up the debt bubble by stealing from the taxpayer and future generations.
But just for sport, I would guess we start seeing some real declines after the Fed hikes in December, and 20% would be my first target.
Ok! 20% price drop in December.
Not really a “crash”, but at least it’s a date. The clock is ticking!
I’m really just asking for laughs at this point. People have been broadcasting that the crash is right around the corner for probably 5 years now.
One thing to keep in mind is that this 11% decline is for new condo sales. From their August 2015 peak. I don’t think overall condo prices have dropped that much. Someone above said they are flat for the year.
The new condo market is affected by an uber-supply right now and also the Millenium could be having an effect. if I had the money and the inclination to buy in one of the new SOMA towers I’d be hesitant for that reason alone.
We need to have overall condo numbers and overall SFH numbers to better try to understand what is happening. The new condo market is a small subset of that.
Well, that’s a good start – that will put prices back to where they were in March of 2014 or roughly the same as the market in 2007 before prices decreased 30%. A 20% decrease is significant but hardly shocking.
Yep, I don’t expect my investments from 2011 will be negative on either the equity or rent… but I have a feeling that those who bought in the last couple of years could end up disagreeing with your word choice of “plateau”.
@ Sabbie – so this price crash will coincide with the next big earthquake on the San Andrea’s, right?
And the sharp downturn in new construction sales and significant drop in pricing over the past year? Irrelevant? Or would you consider an 11 percent drop in values insignificant?
Irrelevant or insignificant? No (nor do I believe I so much as suggested as much). But just a part of a much larger picture. Do you disagree with that?
Not just drop in values, as in apples to apples. It mix too, bro
Speaking of The Mark Co. (frequent sales agent for Trumark), the latter still has not broken ground on its 1554 Market development which was supposed to have happened late last year.
Is it possible they’re waiting for The Hub plan adoption and see if they can upzone it?
This parcel’s height limit is proposed to stay 120′ per the “urban form” document
It no longer appear at the Trumark Urban website as within its portfolio. Did they possibly sell their entitlements as they did with their 1533 Pine project, now under construction, which actually does still appear as within their “past” portfolio?
Given all the construction around the transbay terminal and the challenges with the Millineum Tower I think buyers are going to be very cautious. Like last time this isn’t going to end well…
So 18 mons ago there were 250 condos on the market in SF and way more sales, hence high prices and demand. What then in 2 years when there are 10,000 condos on the market and sales of…..what 25 a month? What then?
Where do you get there will be 10,000 condos on the market? No way. If I recall correctly the number of new units coming onto the market in 2017 will be down from 2016.
There is not going to be a big drop in prices as some seem to think. Modest downturn yes, but no more.
A point about new projects, which have not broken ground, is that developers can hold off on building for 3 or so years and the entitlement remains in place.
There is not going to be a big drop in prices as some seem to think. Modest downturn yes, but no more.
Don’t say that. SS cant sell advertise space with a headline of 1% yoy price drop for sfh in sf.
All of you arrogant lemming bulls laughing at Sabbie’s comments further cement in my mind that we are at the top of the market cycle. Sophomoric tones about prices drops should be a textbook leading indicator of a market that is going to get throttled. If anyone will be ‘laughing’ it will be forward thinkers like Sabbie, not you condescending bulls that are unable to wrap your small minds around the concept of a frothy market.
Small minded of me indeed, to believe that Apple, Google, Facebook, Oracle, Salesforce, etc. are large businesses that pay their employees well and that those well paid employees will pay for housing.
All of those companies were around in 2008, yet they didn’t stop the median SF home price from falling over 25%. But this time it’s different because mobile phones right?
Valuations:
Apple: 2008: $130B 2016: $633B
Google: 2008: $170B 2016: $543B
FB: 2008: 0 2016: $367B
Oracle: 2008: $75B 2016: $157B
Salesforce 2008: $10B 2016: $50B
Do you see a difference? I see a difference of about $1.3T. Trillion with a T.
And yes, the big difference is smart phones. If you hadn’t noticed, we all have them now. We all use them. 350 million smart phones were sold in the first quarter of 2016. That absolutely makes an enormous difference in our economy.
Everyone has smartphones…..so what? Almost all americans own a car and live in a house, so I guess 2007-9 should have never happened by your logic.
None of these tech companies are profitable, Uber is losing a billion every 6 months yet they are valued at 70 billion.
profit and wealth are not that related
Yes, all Americans own a car. That’s why Detroit became one of the richest cities in the world in 1955. If Apple and Google start making crappy phones that no one wants to buy, then SF would likely go the way of Detroit (if that also included no one using Facebook or Linkedin or Salesforce or Oracle, or Genentech, etc. etc.)
Fed balance sheet: 2008: $850M 2016: $4.5T
Everyone had a personal computer in 2000 but that didn’t stop the dot com bust. And afterwards, even more people continued to use PCs, but many of those companies with huge valuations never came back.
If you think the dot com bust was because of the physical computers that people had, you have no idea what it was about.
Also, there’s a difference between $850M, and $850B that the fed had on balance sheet prior to the recession, but I know, I’m quibbling about three decimal places. It sounds better if debt has increased by 5,000 times instead of 5.
Ok, soccermom, that was funny. +1 to you
Bro, he was just busting your broken car logic.
Oops yes mistake on the Fed numbers. Nevertheless, you may notice something of a correlation between those shenanigans and the current valuations.
So let me get this straight. The dot com valuations had nothing to do with computers, but the current valuations have everything to do with mobile phones?
Well, there were two main drivers of the dot com boom. First was the upgrades that various companies made in anticipation of the Y2K problem. Those were obviously not recurring costs. The second was the new thing called the internet. Everyone knew the internet would be valuable, but no one knew exactly how. It turns out that most of the things that people thought about valuations were wrong and a bubble developed because those companies never earned any money. (Physical computers themselves were not new and lots of people already had them)
But you’re exactly right about smart phones. Apple’s revenue from smart phones alone is on the order of $22B per quarter, about half of their total revenue. Remember, dot com companies made no money but Apple’s revenue is more than $150B per year. That’s a ton of money, and a lot of it ends up here.
Not to mention that smartphone enable a ton of other things, e.g. AirBnB, Uber, Lyft, tons of games, etc. If you’re not aware of it, the app economy is huge, it generates real money, and a lot of that money ends up here.
Maybe you forgot already but “the thing called the internet” also “enabled a ton of other things” back in the dot com era. Online shopping, ever heard of it? It’s not going away anytime soon. Online dating, online phone calls, online pay, online learning, online TV, the list goes on. Yet still the valuations crashed, weird. I wonder if any of these current companies might also fall under “turns out that most of the things that people thought about valuations were wrong”? No that’s impossible because everyone loves their cell phone, you can use an app to order food!
Speaking of of revenue selling products, you might remember a company called Cisco… in 2000 they did $19B in sales yet in 2001 their stock fell from $77 to $7.
You might also not know this but tech only employs about 11% of Bay Area workers. That’s a lot of money riding on one horse.
This sort of reminds me of that company Twitter, they’re one of those app companies right? Turns out that in 2014 when the went public, people thought they were worth about $74 per share, but now they’re at $17 per share and being rejected for buyout. Oh yeah, and their sister company Square is trying to sell their food delivery unit Caviar, but also no takers.
Companies in the dot com boom never made any money. Apple’s revenue is north of $150 billion each year. Each year. If you don’t see the difference between $150B and nothing, well, I can’t help. Keep in mind that’s one company. There are many others. (also: $19B < $150B. Your comparison may be a touch off)
Now maybe you're right. Maybe we'll stop using our smartphones. (The term is "smart phones". Not "cell phones". There's a significant difference.) If that happens, then yes, our real estate will crash. I doubt it, but maybe.
Twitter is a great example of missing the big picture. Its maximum market cap was about $45B, today it’s $11B. If you’re keeping track at home, $45B < $367B, which is Facebook's market cap. The better, more innovative company, has taken away market from the less innovative company.
dotcom boom was due to the confluence of advances in integrated optics (photonics, lasers on silicon), computer networking protocols/standards integrating the entire stack from BGP to HTTP, and a finance feedback cycle of VC to IPO exit without requiring profit and each cycle drawing in additional free cash seeking boom returns until the investment levels were multiples of the current rate of VC investment in SV/SF. The IPO sans profit was a new ‘innovation’ AFAIK and is still a source of frothy instability underlying our unicornia (how many billions have Uber and Airbnb lost?)
Real tech companies made yuge profits in the dotcom, including Corning (fiber optic glass installed under the streets of the SF FiDi and SoMa and along the longhaul ROW worldwide), as well as the usual suspects (Intel, Cisco, Microsoft, IBM, Sun, Oracle, Nortel, Lucent, the hundreds of Telecommies, …).
FWIW, the boom/bust cycle that predated the dotcom was the PC boom of the 1980s that bust around 1990 as the market somewhat saturated. That’s a better model for the potential smartphone market becoming less profitable near term.
Oh, and smartphones are little more than gameboys+ipods+walkytalkies without stuffing ever more bits into all those microwaves passing through your body care of wifi and your cell carrier, as well as the massive bunkers of computers known as data centers they connect to via the optical fiber backhaul from the cell towers (clouds), and a whole lotta scaleable sw. There’s more money in those than in the phone warming your shorts.
Don’t get me started on our future of IoT, drones, and self-driving taco trucks on every corner.
tldr: Moore’s Law + sw + $$$; recurse ……
Facebook is nothing more than the new AOL, a web portal that could easily fall out of fashion when the next big thing comes along.
If you want to see what sort of crash we’re dealing with here, look no further than this chart.
Another very poorly normalized graph, Sabbie. 1991 was a recession, which helps to explain why the two variables on this graph tend towards each other during recessions and only during recessions. If this graph indicates anything useful (very questionable), then it would be to indicate a bottom, not a likelihood of a recession that would drive down asset prices.
Given that this is over a 25 year interval with booms and busts, it would be more illustrative to normalize to the average or the mean, unless you think somehow 1991 had a perfect eternal Platonic balance between US asset price and GDP.
Now, about the influence of profit in the conversion of income into assets…
And thefacebook is a network not a portal. Try to enter the new millennium.
You’re right, here’s the raw data, I’m sure this upward trajectory is totally sustainable because mobile phones.
“Facebook is nothing more than the new AOL”
Wait, really? Do you honestly believe that? (Do you use Facebook?) If you don’t see the difference between AOL and Facebook, you will never appreciate the importance of smart phones. .
Sabbie, the upward trajectory is more than “totally sustainable”, it is expected based on the raw data you yourself referenced. The relationship between these two quantities is a polynomial with the second order dominant over the medium term. When they don’t diverge by at least the square over time is the anomaly. That is what the data shows, and quite clearly. Only takes a few minutes to fit the curves to see that.
As I’ve alluded to above and previously on SS, smartphones are just an example or packaging of dramatic improvements in a wide range of technologies. Mobile video-grade Internet is useful and key to some businesses, but I’m not sure it is more of an economic driver than sensor networks, or big data and AI, or nanotech, or many other advances happening every day. Despite the innumeracy prevalent in the populace, science and engineering advance and their advances compound, in this case to yield increases in wealth faster than increases in income, as is to be expected, based on the facts anyway.
When the ratio has gotten above 4.5 we have seen a big downturn.
Tech actually makes this problem worse, not better (see the Productivity Paradox.)
Sabbie, if somebody said it on the internet, it must be true! Because they don’t just let anybody write anything on the internet, do they?
Interesting that at the depths of the Great Recession, we were still at about a wealth/GDP ratio of 4, higher than the go-go ’80s, and way higher than the three recessions in the ’80s and ’90s. And those recessions don’t seem to have correlated with any run-up in this ratio. But, for some reason, 4.5 means a recession must be coming because a guy on the internet says so (15 months ago – yet, still no recession)? Jake has it right on this one.
You don’t have to get this exotic to look for recession indicators. No need to focus on one that doesn’t correlate strongly with recessions at all.
It’s just common sense. How do you get increasing wealth without productivity? Rent seeking, debt… at some point either real growth will have to catch up, which does not appear to be happening at all, or wealth will have to revert down. The wealth to GDP ratio can be likened to price to sales ratio for a company.
Sabbie, you’re last link (Dunkelberg) is not using the same data as the “raw data” from your link to the Federal Reserve Bank. BTW, you can verify this by downloading the Fed data. Only takes a few seconds due to the advances in networking, data storage, and software that underlie so many of our productivity gains.
According to the Fed data, the ratio was always below 3.5 before 2005, and it increased from about 0.75 in 1970 to about 2.5 by the end of 1994. FWIW, a second degree polynomial is a better fit to the data for this period than a first degree polynomial, just like I told you before. Not a linear relationship even in Dunkelberg’s golden age of econobalance. And we all know the US economy of the 1970s, 1980s and early 1990s was at the ideal of all time every moment.
Look, I don’t know why you expect to find some simple stat that will foretell the next economic downturn, but at least be consistent. It would also be nice if you would respond to what is addressed to you instead of ignoring it to throw up garbage as if it is genius.
And no, what you are promulgating is not “common sense”, it is common non-sense. It is deeply ignorant as it ignores contrary data and ignores it’s own internal inconsistencies.
Finally, we (both the USA and earthlings general) have improved productivity over time, and it compounds. Here from the BLS: Productivity change in the nonfarm business sector, 1947-2015: Average annual percent change:
2.8 1947-1973
1.2 1973-1979
1.5 1979-1990
2.2 1990-2000
2.6 2000-2007
1.3 2007-2015
GDP ≠ Productivity
You’re mixing apples and oranges.
You can spin it any way you want but you’re missing the forest for the trees. Wealth has grown much faster than GDP or productivity since the past recession. Please explain the exact mechanism by which this can continue indefinitely?
Their employees are well paid, but how do they save the $250,000 downpayment on a new SoMa condo living the young, techie lifestyle?
I don’t see RE bulls on this site. The breakdown I do see is more along the lines of those who think RE prices will be flat in SF for the next few years, as opposed to those who see a modest (20% or so) decline in the coming years. I’m in the latter group.
While I don’t see a crash in the Bay Area, I don’t think it is a good RE investment market for the small scale investor. It hasn’t been, IMO, since 2014 or so. I would not invest here, but that does not equate to my feeling RE investment is bad generally. There are good markets such as Pittsburgh which has recently been called out by Forbes and other business sites – as perhaps the best housing market in the US for investors..
Playing devil’s advocate – if prices and rents collapsed nationally (whatever that number would be) I can take a 50% decline in the rents I’m getting and still flow positive. That’s a factor one should consider in evaluating a property. Worst case scenario and can you ride it out.
20% drop on a $1.3M home (our median) is $260K . if you bought recently with 20% down ($260K), that means you lost 100% of your investment. thats not trivial or modest
I used the term modest – not trivial. Given the recent run-up in prices, I’d call a 20% drop modest. I don’t know what the drop will be other than I think there will be one and it could go as high as 20%. But it could be less.
If someone put 20% down on a 1.3 million home two years ago they’ve seen a significant gain and a 20% drop would not net out to 260K.
Dave what’s your overall LTV ratio?
40%. I’m a very conservative RE investor and don’t use leverage to the extent I could. It’s my choice and others invest differently which is fine.
Not quite sure how you can take a 50% hit to your rents and still be ok, unless you have a 9-5 and aren’t relying on your RE income to cover any living expenses.
I can’t speak for Dave and Pittsburgh but I have heard the market is similar to where I’m investing, Kansas City, MO, SFH’s close to downtown in the $250K range. Consistent across 4 homes, I could take a 50% hit on rents and still be cash flow neutral. Not quite as conservative on LTV.
And Twitter
So 1 year ago we had about 14 months of supply working those numbers backwards. Now we have 40 months of supply and more supply coming. If I owned a nice new condo tower I would definitely think about lowering my price to unload the stuff quick. Money 40 months from now is worth what 20% less than money today right?
this is largely driven by Rincon Hill new construction. It’s a disaster of a location, with cheap new construction not on par with even the last cycle’s cheap construction, and a headquarters of traffic and human feces.
Rincon Hill will be the driver of prices and inventory for a while to come… location is everything.
I’m puzzled by a lot of comments on here saying the market has not depreciated or started to decline. I’ve been on the market for a condo for the last year, and I check very often – multiple times a week. Over the last 6+ months, there has been a noticeable (i) increase in condos staying on the market, and (ii) number of price reductions. If any of you all have been looking at the same thing (2-3 bedroom condos), I’d be shocked if you have been seeing anything different.
This leads to me to ask – for those of you who think prices haven’t been declining or think we’re at a plateau – do you all have a vested interested in seeing the prices remain the same, healthy and not decrease? One just needs to look at redfin or zillow and pick a random set of favorites…you’ll see almost all of them have had multiple price reductions over the YTD period…
I am one who thinks there will be a modest decline. New condo prices have slipped but, overall, home prices are up YOY – just at a slower pace and quite a bit slower than Denver or Seattle.
I don’t think, for most, it’s a vested interest in not seeing a decline, but an attempt to figure out where the market will go in the next few years. Many who think prices are in a plateau seem also to believe there is a possibility of a price drop.
Personally, I own a home here but still think a modest price decline would be a good thing.
Dave – can you link me an example of where home prices are up YOY? I have about 20 houses in my favorites, and 10 that have sold over the last year – all of them are below or sold below their initial asking. I’m not disagreeing with you but curious where your data applies too. Are you talking SF proper or Oakland, East bay?
Per Case Schiller the gain is about 6% or so. SS has posted references to the slowing appreciation here but still a gain. That CS includes all homes. Not just new condos which have seen a price drop.
CS does not use asking price. Just sale prices now and a year ago. The trend toward selling for less than initial asking is growing. Especially on the high end. I think that is due partly to an irrational exuberance that is causing some sellers to initially price their homes unrealistically high.
[Editor’s Note: Bay Area Condo Values Slip for the Second Time, House Values Stall, which actually excludes new construction activity altogether but is being skewed by a disproportionate rise in traditionally lower-cost areas, such as in the East Bay.]
Vested interest, bingo. We’re talking landlords, flippers, people who hope that overstretching to live in sketchy neighborhoods will pay off some day, guys who put all their 401k in FANG stocks, those dreaming of retiring early with their real estate riches. When someone comes along and tries to mention quality of life issues they are called a NIMBY, or tries to point out how artificially low interest rates cause asset bubbles and a lame food delivery app is probably not worth a billion dollars they get nothing but ridicule. Gotta keep the gravy train rolling!
I wasn’t gonna take it that far…but I get your point. I do understand why we as humans would want to data mine and only see what we wanna hear – but that doesn’t help anybody – the market will act accordingly and it’s in all our best interest to know what will happen (not what we WISH to happen) so we can all plan our lives accordingly.
“I don’t think, for most, it’s a vested interest in not seeing a decline, but an attempt to figure out where the market will go in the next few years. Many who think prices are in a plateau seem also to believe there is a possibility of a price drop.”
I agree with this.
I have a 9 – 5 and am not using the rental income to cover living expenses.
Ahh, so not a true rentier, unlike optimists like sabbie or insult spewing mr. miyagi. Guess those RE investors are so rich that they can afford the apocalyptic vision of SF RE that they like to paint.