People would love to buy, but the banks are holding on to their money because there is too much uncertainty in the markets. The only sure thing seems to be the rental market, which according to the experts, has legs.
There is a boom going on in the Silicon Valley. The rental market is where the money is.
"In the Bay Area, rents are up 12 percent year over year; it's a huge number, the best in the country," UC Berkeley Fisher Center for Real Estate and Urban Economics Chairman Kenneth Rosen said.
The Fisher Center's much anticipated yearly symposium held in San Francisco talked about how new jobs have created a huge demand for rental property.
"Forty thousand jobs in the Silicon valley, 19,000 jobs in San Francisco, so we are adding jobs because of the social media business, the technology business, bio-tech, so the strongest economy is leading people to need to have a place to live and we don't build stuff as rapidly here," Rosen said.
With interest rates so low, the best time to buy a home is now. But the banks have made it harder to get a loan.
In other Bay Area cities like Antioch, prices have adjusted, the market has bottomed out and foreclosures have been sold, mostly to investors. But these market analysts say don't expect a big price appreciation in places like Antioch.
Overall, the lack of confidence is driving the economy in a negative way. That's why the banks are not lending.
"If you are a company why are they sitting with huge capital, cash, they are making profits and huge amounts of cash, it's because they won't know if they will need that cash later on and are afraid to invest it because of the uncertainty," Robert Edelstein, also from the Fisher Center, said.
Adding to that uncertainty is Monday's failure of the congressional super-committee to agree on a deficit reduction plan. Without a deficit solution for America, the uncertainly lingers on.
For now real estate continues to be a good investment according to Rosen. But he wasn't too optimistic about treasury bonds. He says the yield is too low and there may be a small bubble.
