Prices of housing in metro areas is rising because of sepculation in the markiet, investors buying housing isntead of equities because the returns are higher.
Thanks for trying to answer the question, John.
So basically what you are saying is that people are buying simply in anticipation of appreciation-- that they are buying but not occupying, or renting at a loss?
Yeah, I'm just going off what I see. Here in Los angeles where I go to college I see a lot of land speculation. My parents almost got in on it, and a lot of people, not all of them rich, that I know are getting in.
Another reason is that the big liberal cities have already grown so much in the past that even a modest rate of growth here in LA means a sharper rise in housing than in say, Riverside. Riverside is growing much faster than LA right now, but prices in LA are higher. Why? Because LA has already filled almost the entire LA Basin and the entire San Fernando Valley with developement, whereas there's more available land in Riverside. Riverside residents can easily acquire new land to live on and build housing and LA residents can't.
Interesting note on this: Because LA cannot grow out anymore, we are starting to grow up. High rise apartments, almost unheard west of downton 20 years ago, now constitute the bulk of developement in west LA. LA is not going to be America's flattest city much longer, as 10 and 15 story buildings become commonplace.
