Bugs: I grew up there and have quite a few friends still there. Most of them are in Tech, and make good money, but I get the sense that the situation there is starting to deteriorate. Companies like Google will help prop the market up (take a look at home sales in Mountain View, Cupertino and Los Altos to get a sense of the “Google Effect” and the “Apple Effect”), but that can only last for so long.

Following the dot.bomb bust in 2000, I remember seeing neighborhoods in Mountain View lose 30% of their value over the next few years, so Bay Area housing is not immune.

I have been watching the San Francisco housing market (through SocketSite.com) and it is interesting to note two things: (1) The number of cancellations in downtown SF condo transactions, and (2) The slow declination of per square ft pricing of homes in the City of San Francisco proper. While these two events might signify nothing ultimately, they are indicators of a downward trend.