I like how most of HN is probably comfortably within the 1%, but as soon as we start talking about ‘owners of real estate in SF’, we are easily able to call them ‘the rich’, because the wealth is on a completely different level.
When REITs and the like lose money, at least those losses are tied up to their company. Worst case, they go bust - but their owners aren't personally responsible for the losses.
Now, imagine being some average tech-Joe that bought a house for $2M last year (almost entirely on a mortgage), the job market goes to sh!t, and subsequently the housing market follows after. You're forced to sell, and take a 20% loss - selling it for $1.6M
You're now $400k in the red.
That's a massive debt to carry around, if you're not able to continue in some high-earning job.
This is something you (unfortunately) see in cities that are heavily affected by boom/bust cycles.
Price volatility can be a real killer if you've stretched your resources to the max, even if the market rebounds. Solvency can be a killer.
(But as for why this could affect average people - I'd imagine there being some correlation between business real-estate, and private real-estate. The general real-estate market has a big market psychology component to it. So hysteria in one market could very well transition to another)
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