Comment by jpollock

Speaking as someone who just sold a house in the Bay Area (Dec!), house prices here are very much "buying the payment".

The valuation of the property goes up and down directly with the interest rate.

The ROI of the house (we bought in 2016) was ~8% on the down payment over the past 10 years, excluding maintenance and interest charges. As an investment, property is not a very good one.

To get that 8% on the down payment, I spent 4% on the remainder. It really doesn't net positive after the mortgage interest (with a 20% down payment). It's about "forced savings" and having control over your environment.

As an aside, since people are stuck in houses (mortgage rates and prop-13), there is a definite lack of starter homes. Everyone adds the second bathroom, meaning there aren't any single bathroom homes to be found. That increases the market floor.