Peak Real Estate, Part 2

(Note: part 1 here)

National housing sales have been falling for four straight years:

A combination of rising mortgage rates and high home prices, a dearth of inventory and a new tax law that reduces incentives for homeownership have weighed on the housing sector this year.

(CNN image)

People think that the red-hot Bay Area housing market is immune, but even last March I doubted such a pollyannish outlook:

The Tax Cut and Jobs Act reduces the deductions for state and local taxes and for mortgage interest. The elimination of these tax subsidies may well cool off the overheated real estate market in New York and California.

Now it looks like more shoes are dropping. All the factors mentioned in February are now at hand:

The warning signs are widespread. I don't know what may trigger the fall; perhaps it will be rising interest rates, dropping tech stock prices, or fed-up tourists, but it would not be surprising to see a collapse, and an exodus of individual and business taxpayers, in San Francisco's near future.

If I could short Bay Area real estate (no, I'm staying in my paid-up house) as easily as I could short a stock, I would.