From the soon-to-be Parabolic Bitcoin to the Abysmal San Francisco Rental Market.
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How Will San Francisco Will Recover?
Podcast Transcript of Mykel Ferrantino’s Never Too Late To The Game’s Monday Morning Real Estate Update, September 21, 2020.
In my Podcast this week I cover a small tribute to Supreme Court Justice Ruth Bader Ginsburg, How I believe the San Francisco Market will recover, BlockChain / Cryptocurrency — it’s time to get educated, Voter Intimidation and The Current Sate of Affairs of the San Francisco Real Estate Market.
RUTH BADER GINSBURG
It’s hard for me to comprehend that women’s rights only just recently came out of the dark ages in the US. I can’t conceive of a world where a woman wouldn’t qualify for a mortgage or a credit card, yet this was the very case during the first 10 years of my life.
Gender restrictive laws around homeownership are based on Old English Law, where only men who owned land had a right to vote — or pretty much do anything. I have always been interested in this bit of history — the connection between landownership and a say-so in governmental affairs.
Many of these rights that are taken for granted today but one thing is certain, it was Ruth Bader Ginsburg who played a key role in achieving them.
Partisan Politics aside, we have an individual who helped to change the course of history. She reached a level of accomplishment that was previously closed out to women and moreover, very few have achieved anyway.
Justice Ginsburg inspired generations of women to be persistent in opening up doors that were (and some still are) closed to them.
Rest In Peace Ruth Bator Ginsburg.
HOW WILL SAN FRANCISCO WILL RECOVER?
Last week I covered a brief history of San Francisco. One of the take-aways I hoped was understood, was that San Francisco has a long history of housing problems — from the overnight population explosion during the gold rush, to those displaced by earthquakes, the World War II housing demands, the High Tech Housing Crunch and now the great Covid-19 exodus.
The current exodus is spurred on by a variety of factors that pre-date Covid-19 and they include (to name a few): unsustainable housing costs, closed businesses, homelessness, an anemic police force, car vandalism and package theft.
Tech workers stayed because they were tethered to their employer’s headquarters. But now, tech companies have the 4 P’s of remote work figures out: Proven, Possible, Preferable and Profitable.
Prior to Covid-19, tech companies were afraid to try Remote work — because the last time they tried it (post 2000) it was in the form of outsourcing computer engineering jobs to India, China, Russia and Poland. This proved to be a management, cultural and communication nightmare. Not to mention cyber-insecure and in some cases a threat to National Security.
In an effort to lure back “human capital” — tech companies offered the kitchen sink: a great salary, free food, arcades, woodworking shops, free busing to and from Silicon Valley and on-site medical.
Oddly enough most engineers would rather give up all those benefits to work from home.
So, not only has it now been proven possible — but it’s actually preferable to the employees and more profitable for companies. Yeah, remote work is here to stay and so an early San Francisco real estate recovery, especially for landlords, is not likely to happen.
Here are a few possibilities for how San Francisco may recover:
1. The normalizing of rent costs where it will be attractive for people to move to San Francisco, but this may also be contingent upon a Covid-19 vaccine and may require a stronger job market (or some other lure). Yeah, this is not likely to happen.
2. A green new deal that fuels the existing tech innovation infrastructure sooner rather than later. I believe this will happen organically within 5–7 years. If the government funds the R&D, then it can happen within a few years. Again, Covid-19 will still have to be better under control.
3. In the mean time, the City can offer incentives for businesses to move in. This is a fairly high-bar, as many companies have moved out due to a variety of issues, not the least of which that people no longer feel safe on San Francisco streets.
I don’t think any of these scenarios will happen overnight.
BLOCKCHAIN & CRYPTOCURRENCY
I am encouraging all of my clients to get educated about blockchain technology and cryptocurrency. Why? Because without a doubt these technologies are going to be part of how we all do business, make purchases and live our lives in the near future.
As with any new technology there are early adopters, deniers, naysayers and resisters. Somewhere in that mix, fortunes are made and the mid-adopters then jump in to make a little too. Then there are the late adopters and everyone else. They get the ultimate benefit of the tech but not much else.
If Blockchain were a baseball game, I speculate that the week before last we were at the bottom of the 2nd (where things had been stagnated for quite some time) and then bam, last week we found ourselves at the very top the 2nd inning with only a few seconds left.
If you’re wondering what changed, it was due to Micro Strategies buying $175,000,000 bitcoin. As pointed out by crypto podcasters, in the year 1995 the percentage of the world’s population that was using the internet was a half of a percent -and now 25 years later, we have 60% of the world’s population using the internet.
Today, the percentage of the world’s population using bitcoin is a half of a percent.
The most aggressive forecasters are hoping that we will see a 60% adoption rate in just 5 years.
I think 5 years is a little too bullish. My forecast is that we will see the adoption in 10 -15 years. The hurdle is the learning curve. While society continues to move toward cashless transactions, the concept of cryptocurrency is still difficult for people to understand because cash and coin are still around. Even if people don’t carry cash, there still exists the option to do so. With cryptocurrency, this will never be possible.
VOTER INTIMIDATION
Last week early voting started in Virginia where Trump supporters are engaging in voter intimidation by showing up at the polls and harassing people who are waiting in line.
First of all this is a felony. Second, this is a dangerous game to engage in because history has always proven it will backfire.
THE SAN FRANCISCO MARKET
The chart below shows a continued rise in inventory in all categories. Single Family Home prices are holding steady — but the condo market can fall out at any time. There will likely always been buyers in the Single Family Home category — but condos aren’t vey much fun during a pandemic and so the recovery may take a lot longer for them.
Of course, the real issue is the collapsing rental market in San Francisco. Many people have moved and continue to move out of the city. Rent prices have reduced but have yet to crash. Stay Tuned.
STAY POSITIVE & KEEP HOPE ALIVE
Together we will get through this time, together we will co-create a better world, a better community and a better economy that does not leave people behind by design.
If you would like to hear my Podcast of this article, please visit Never Too Late To The Game’s Monday Morning Real Estate Update for September 21, 2020.
You can also find me on Spotify, Google or Apple Podcasts. Sometimes Google takes an extra day to propagate.
