The Barbell Effect

In the private school world, financial aid administrators often refer to the "barbell effect." The term was coined to explain what happens when very high tuition and large financial aid awards combine to create a school community with a bunch of wealthy families supporting a bunch of economically disadvantaged families in the name of diversity. Meanwhile, middle income families who can neither afford the tuition nor qualify for financial awards are largely squeezed out.

For the purposes of discussion, we wonder "aloud" whether something similar could be happening in the world of real estate. To wit...today's blurb on sfgate.com mentions that the upper end of the SF market is up recently and down only slightly year-over-year, while the lower and of the market has fallen by better than 9%. Put another way, if you've got a lot of money to begin with, your recent real estate investment has been relatively sound. Meanwhile, if you entered the bottom of the market a year ago, your investment has under-performed.

Okay. Admittedly, the private school analogy is a reach. But we wonder nevertheless why the "value" end of the market doesn't seem to be much of a value?