IMO, there really is no fundamental reason why the residential RE in “close in” (=<45 miles from SF) bay area cities will "crash" for any reason.
Firstly, there are MANY industries up there besides the tech industry which are large employers. Secondly (and most importantly) is that that the close-in bay area cities never had the HUGE amount of new construction in the last 15 years that SD County and Southern OC did. It was never built because much of the open space situated close in was set aside for just that .... permanent use for public recreational enjoyment. Thus, there are very few (a handful) of CFD’s close-in and a couple of these CFD’s (the largest ones) are primarily commercial (situated within the old Naval Weapons Surface Center in Vallejo).
Because there was very little newer residential tract construction built close in, the close-in SF bay area cities never had entire subdivisions of homeowners who “paid too much” during the “lending spree” of 2004 – 2007 (as did SD Co and So OC).
And any homeowner in the close-in bay area who still owns their property today (after ATM’ing it to death from 2004-2007) has likely more than recovered by now thru appreciation. As we all know, scarcity of housing alone in a particular locale creates stabilization and appreciation in home values.
If any part of the bay area falls in value due to a “tech crash,” it will be the areas in which tech worker bees bought into which are a long commute from SV (Parts of Dublin and Livermore, Tracy, Morgan Hill down to Gilroy and Patterson, Modesto and Turlock, etc). These cities could only marginally be considered “close-in” bay area cities (Dublin, Livermore & Morgan Hill) or not at all (Tracy, Patterson, Modesto, Turlock and Gilroy) but some tech workers with jobs in SV may have been stupid enough to buy into them, even given the arduous daily commute to work to/from these locations.
Dublin and Livermore residents still have Lawrence Livermore Labs, a Federal prison (Pleasanton) and a few other big employers out there (incl Big Oil) who pay well. So these cities may not be as hard hit if the tech bubble bursts.
Contra Costa and Marin Counties are essentially immune from any downturns in RE values (as is SF, mentioned above) for a variety of reasons unrelated to the tech industry … mostly to do with entrenched land-use and zoning laws which will never be repealed. As it should be.
Essentially, what causes falling RE values in CA coastal counties is the proliferation of CFDs which ended up creating 50-250% more housing available in a particular county. Resdiential RE will continue to trend stable to increasing in value in those cities and counties which didn’t permit the rampant creation of CFDs.
I haven’t even touched upon the proliferation of those (millions?) residing in the close-in bay area cities and SF who “retired in place” in their long-owned home and aren’t going anywhere. Just like in SD County, the vast majority of these people bought their current residences in the 60’s, 70’s and 80’s and either have a very small mortgage or none at all. Many “inherited” their homes. So, I don’t see any potential “distress” in this demographic of homeowners even if the tech industry falls through the floor. If members of this group decide they want to “retire” in their vacation homes in the wine country or Tahoe, they’ll just rent out their current homes in the city for income. This group doesn’t need to sell and they would be fools to sell due to their ultra-low tax assessments pursuant to Prop 13.
