California Renter Apocalypse
The rise in rents and home prices is adding additional pressure to the bottom line of most California families. Home prices have been rising steadily for a few years largely driven by low inventory, little construction thanks to NIMBYism, and foreign money flowing into certain markets. But even areas that don’t have foreign demand are seeing prices jump all the while household incomes are stagnant. Yet that growth has hit a wall in 2016, largely because of financial turmoil. We’ve seen a big jump in the financial markets from 2009. Those big investor bets on real estate are paying off as rents continue to move up. For a place like California where net homeownership has fallen in the last decade, a growing list of new renter households is a good thing so long as you own a rental.
The problem of course is that household incomes are not moving up and more money is being siphoned off into an unproductive asset class, a house. Let us look at the changing dynamics in California households.
More renters
Many people would like to buy but simply cannot because their wages do not justify current prices for glorious crap shacks. In San Francisco even high paid tech workers can’t afford to pay $1.2 million for your typical Barbie house in a rundown neighborhood. So with little inventory investors and foreign money shift the price momentum. With the stock market moving up nonstop from 2009 there was plenty of wealth injected back into real estate. The last few months are showing cracks in that foundation.
It is still easy to get a mortgage if you have the income to back it up. You now see the resurrection of no money down mortgages. In the end however the number of renter households is up in a big way in California and homeownership is down:
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In the end a $700,000 crap shack is still a crap shack. That $1.2 million piece of junk in San Francisco is still junk. And you better make sure you can carry that housing nut for 30 years. For tech workers, mobility is key so renting serves more as an option on housing versus renting the place from the bank for 30 years. Make no mistake, in most of the US buying a home makes total sense. In California, the massive drop in the homeownership rate shows a different story. And that story is the middle class is disappearing.
http://www.zerohedge.com/news/2016-02-08/california-renter-apocalypse
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So many have left the Bay Area to live anywhere else but. An old friend moved recently after selling their personal "crap shack" for $750,000 only to buy another crap shack for $590,000 with a bunch of land to go with it. I don't know what said person will do with 65 acres of ground in a crappy area personally but, maybe it might be a good investment in 20+ years or so but said person will likely be dead and gone long before the 20 years is up. 
I can think of others that have taken out huge loans to buy these crap houses and are in debt up the yin yang and finding themselves with barely enough for basic necessities. This whole housing scenario which has been catering to the 1% cannot last for too much longer as folks can't afford $2K+++ a month rents for extended periods of time.
As for the 1%'ers out there that have been fueling this buy a dump and be grateful you found it -- well, be prepared for a huge bubble to pop in the face sooner rather than later IMO.
= new reply since forum marked as read
re: Nimbyism ...
Agree, it does provide stability to the housing market!
As for those buying these million $ dumps, well good luck as you'll be needing it is all I can say!
And thanks to Prop 13, most of what construction there is is out in the boonies. Prop 13 makes housing a financial dog for cities, so those that can angle for more office parks, malls, etc., leaving housing to be built a hella long commute away. 
There have been a few transit-oriented developments down here as well, but not nearly enough, and they don't contain enough affordable housing. 
like Metro-North in NYC. New Haven - Grand Central (75 miles) is faster than San Jose - 4th and King (45 miles)! 
If it weren't for Prop. 13, I'd be out on the street by now!
The house I live in did not cost much (and a HELL of a lot of work/money has gone into it to make it live able!).
Houses nearby are selling for 3X what I paid for this house and given my situation, I'm damn lucky to have a house (no castle believe me) and no, I'm not going anywhere any time soon!
Prop. 13 kept my late parents in their home for many years (Dad was a disabled WWII vet and got the family home via a CalVet loan). They'd had lost the home when he fell ill in his early 50s and could no longer work.
Most people end up moving around anyway and out the door goes Prop. 13 when they move. Over time, fewer and fewer people see the benefit of it being property is so expensive these days. There are no deals to be found in California best I can tell.
Three cheers for Proposition 13! 
