If the housing prices are increasing, it would mean that demand is increasing. But if so many people are leaving, demand should be decreasing and prices should be soft.
So I'd be curious to know how the survey was conducted, and whether it included families immigrating to the US.
In my county, Alameda, Ca., 30% of residents were born outside the US. That's a very strong immigration level and bound to affect the housing prices and keep demand and prices strong.
Prices can rise without demand increasing, if there is a reduction in supply. This is exactly what is happening in many housing markets in the US, due to underwater homeowners not putting their houses up for sale when they otherwise would. This causes people who would otherwise move to stay put at lousy jobs, tying into the narrative of the article.
The numbers don't lie: there is a significantly decreased supply of houses for sale compared to previous years. This is the only thing propping the still-inflated housing prices up, courtesy of the bullshit government policy of obsessing over people acquiring huge amounts of debt for "the American dream" (whatever the fuck that is).
My twin brother and his wife recently bought into the wonderful northern Virginia (dc suburb) housing bubble. They are now paying a mortgage on a $500,000 duplex, ignoring the fact that they are paying more to borrow the money to own the house than they would have paid to just borrow the house (aka rent it). The difference is high enough that investing the savings of renting over mortgage in the stock market would far outstrip any value they will get from the home in even optimistic house price inflation scenarios.
Me? My family of 4 (i'm the sole breadwinner) are renting, and I'm now considering excellent job offers in other states and cities, with no concern of a bank-forged chain to prevent me from moving to a better life.
Problem is demand is increasing at a far greater rate than the supply. In fact, I think this is -- among several other factors -- one of the primary causes of this migration.
The money an individual or a family has to spend is limited. For most, the rent is their single biggest expense: the less one makes, the more one has to give up (in terms of money that would go to savings, basic necessities, or food/entertainment) to live in a more desirable place.
Given that income distributions even with some amount of redistribution will still follow a power curve, it is quite possible that certain highly desirable areas -- themselves on a power curve of desirability -- might see great population growth, but -- on the whole -- the movement would not be to those areas. That is, unless, the supply of housing in those ares can keep up with the demand.
This makes sense, but it is a moving target and the situation of over-supply/under-supply (or more likely the degree of under-supply) will go through cycles. Under-supply will likely be served at some point by developers, save hostile zoning as Michael points out. In SV, there are several very large projects where 50 acre(?) office parks have been torn down and are being replaced by tract homes on postage stamp-sized lots. So clearly, these developers are banking on sustained or recovering demand. A lot of that demand is foreign: http://www.cnbc.com/id/101168745 and more is driven by the wealth creation at Google, Apple, Facebook, LinkedIn, Twitter, et al. : (2011) http://www.bloomberg.com/news/2011-06-15/tech-ipos-boost-dem...
Prices are really pretty incredible. Here are charts for Palo Alto, Los Altos, Mountain View and a couple of others. What is astonishing is that these are communities with 50,000 - 100,000 residents. Not small enclaves. Yet the 'median' price exceeds $2,000,000 in Los Altos: http://www.siliconvalleymls.info/blog/
So at least here in the valley, the homes are currently being purchased at incredible prices by wealthy immigrants and newly-minted millionaire-techies.
It has been a fairly common occurrence that people who have owned homes in Silicon Valley for many years reach retirement age and cash out. Then move to Oregon, Arizona, Reno or just further inland, and live well.
If the housing prices are increasing, it would mean that demand is increasing. But if so many people are leaving, demand should be decreasing and prices should be soft.
Housing has a few problems. One is that it's price inelastic. If you destroyed 5% of the housing in Manhattan, prices and rents would at least double, and possibly go up 4-10x. We know this because of the 9/11 Boom (which was actually fueled by speculators anticipating future supply destruction-- which, thankfully, never came). It's counterintuitive, but something that objectively destroys value can (with inelasticity) increase the bulk value of what's out there. If 5% of housing was destroyed and prices doubled, most people would say that the housing market "improved by 90%". Well, no.
Increasing housing prices are, make no mistake, signs of something bad. Supply problems (mostly, rooted in NIMBY regulations) are a big part of what's going wrong. Another issue is that most localities are losing jobs, while a few "star cities" (SF, NYC) win.
The second problem with housing is that, because people are emotional about it, they don't sell when there is cause for prices to go down. They hoard. This negative correlation between price and volume means that housing prices barely drop when they're "supposed to", but drop cataclysmically when the real estate problem starts destroying real wealth (as in 2008) and jobs disappear and foreclosures happen.
Real estate is the blood-engorged cancer of the economy. It's a tax that goes nowhere and anyone who thinks high rents and property prices is good is just on the wrong side.
I've been looking to move in the near future, and I'm trying to find a city with a good nightlife and good job prospects that doesn't have insane housing costs if you live in the city and insane commute times if you live outside. I'm not making a ton of money where I am right now, but anywhere I'm looking at for tech jobs I'd be taking a pay cut even if my salary doubled because cost of living is so high. Housing in cities is just insane, and investment money slash NIMBY isn't helping.
Not to sound flippant, but so are you and everybody else. I have yet to read anywhere on the Internet that someone is looking for a boring town that's dedicated solely to cars with cheap housing and crap for jobs. What you seek is in very high demand, especially with the nascent trend of moving back into cities so it will be quite expensive relative to what you get.
NIMBYism accounts for a lot because people hate change and people moved somewhere for a specific aesthetic but simple market demand accomplishes a lot.
Three years ago we made a move against this trend. We moved from a large metropolitan tech-heavy area to a low-cost but rural and isolated area. It has lots of problem - no jobs, lots of poverty, etc, but if you are entrepreneurial and can figure out how to either travel for your work or make your location irrelevant, lots of places otherwise ignored suddenly become practical.
There are plenty of people looking for just that, and most sites I've seen dedicated to housing news focus around nice places to retire, places to raise kids, places to live cheaply but with no jobs (this house only costs $280,000 with an average city salary of $38,000!).
I live in a medium sized Midwestern city with a burgeoning job market and plenty of restaurants/breweries/nightlife. I have a two bedroom apartment for less than $700/mo and it takes me less than 10 minutes to get downtown at 5pm. Meals for two cost $30 at a local restaurant with local beer. What I make isn't a lot, but it's a good deal over $38,000. That has to exist somewhere else too. I love my city, but I'm looking for new people and cultures (and I'm tired of -25F winters).
America does many things well, but it does not do cities well. So many of our "cities" are little more than a glorified suburb ringed by an arbitrary boundary.
Austin, TX is worth considering. Lower cost of living, especially with a (less than insane) commute. The city even gave itself the moniker "Silicon Hills" in the '90's, and there's a thriving tech & startup industry in the area.
Worth noting that this is quickly going away. Traffic is projected to get far, far worse over the next few years at current growth rates and public transit is still very disappointing in comparison to other large cities.
So I'd be curious to know how the survey was conducted, and whether it included families immigrating to the US.
In my county, Alameda, Ca., 30% of residents were born outside the US. That's a very strong immigration level and bound to affect the housing prices and keep demand and prices strong.