You guys keep trying to rationalize and irrational market that is based on IPO/stock option wealth known in that area, more so than what mortgage interest makes a huge difference.
There’s a shitload of money flowing through the Valley, and that’s an understatement. There’s a lot of people moving there, still, and young tech people will always gravitate to that area, trying to hit the big one there. Supply of housing there is constrained, because there really isn’t that many new places to add more homes… What does supply and demand tell you in this situation? Silly valley real estate is less impacted by mortgage interest rates, and more impacted by the valuation of the “Yo!” app. Bluntly put, “poor” people rent there, and slightly less poor people depend on mortgages. My 25 year old cousin banked $1.2 million by selling his LinkedIn stock recently. He’s like a system admin. And I think that’s totally fvcking cool. Because, unless he’s an financial idiot, he did pretty well for a techie, that doesn’t have a masters, phd, mba, MD, or law degree. He’s set.
Unless you’ve lived there and have experienced how quickly some people’s fortunate can change, you just won’t understand. What is “hot” in creating millionaires there might come and go, but just as fast as something falls out of fashion, something usually starts up and replaces it a few years later. Naturally, there is a washing out/weeding out process in that eventually people who haven’t made it move out, and/or a down cycle forces them out, but those boom bust cycles do create a demand for (1) people want want to be there to catch the next craze, and (2) a select few people who have made it an can actually afford to live there.
Just ask around here in San Diego. Despite, how insanely expensive things are, you do have plenty of people from San Diego relocating back to the bay area simply because Apple or Google or Facebook threw them a pretty big bone. Ask some of the qualcomm folks that moved there, even before the layoff. Ask some of my old broadcom colleagues that did the same thing.
Is it insane and completely irrational, yeah probably. Will prices correct there, probably. Will it significantly decline, probably not. Why are you guys trying to predict when the insanity will stop? Have we not learned that as rational as we would like think things should work, the shit doesn’t always work that way. Unless the tech scene changes such that Silly Valley is no longer the tech hub, this area won’t ever stop being an expensive place to live. It would be like expecting Del Mar /LJ will correct 30-40%+, which let’s face it, those you that were expecting that to happen were pretty much wrong about that too…Come on, let’s be realistic.
