” Please don’t generalize and blame the Indian and Chinese for driving up the prices. SV has no land to build and many professionals with high paying jobs. It’s supply and demand that drives up the price. They are not the ones with subprime load that will cause this housing market to implode. They also not the ones that take out a large chunk of money to spend on a hummer and vacations. Most them save for raining days and have at least 20% down payment for the home.
I also don’t see homes in Cupertino, Las Altos, or Palo Alto go down anytime soon due to good schools and neighborhoods. ”
I am not blaming them. I am not generalizing. It is true that they have kept the housing market in Silicon Valley afloat. Given their good financial habbits and good salaries they are unlikely to sell. Bottom line – do not expect any large declines in Fremont, Palo Alto, Mt View, Cupertino, Campbell.
BTW the homes in Palo Alto that sell for $1 million are crappy.
Silicon Valley has a lot of Indian and Chinese professionals who make it as a rule to buy homes. They are responsible for driving up prices in this cycle 2002 – present.
I expect areas south of San Jose and in the East Bay to be hit hard. I doubt areas with good school districts to fall much. In any case I expect SV real estate to be stagnant over extended period of time.
Bubble does not imply that all assets in the bubble are worthless. Amazon, Yahoo, Akamai and Cisco did well in the tech bubble even though you would have lost $$$ if you bought at the peak.
Houses in Del Mar and La Jolla will have some value as opposed to a home in Temecula.
I feel areas like La Jolla, Del Mar, Newport Beach, Laguna Beach will always be unaffordable for middle class or upper middle class folks. There is too much money floating around. A lot of them seem to congregrate in coastal California. La Jolla home falling from $3 million to $1.5 million is an non-event for me and probably most folks on this forum.
Ohio has high foreclosure rate due to exodus of manufacturing jobs to China. The defaulting homeowners are being compensated to avoid blight. It is a lot different than the situation in California, Florida, Las Vegas, Arizona
ARM reset is not bad in itself. 30 year fixed loan interest rates are still low (below 6%).The question is how many of the ARM borrowers can afford the increased payments.
I am fiscally conservative. But I think something has to be done towards housing for poor people. The old approach of low income housing created terrible places to live – housing projects in Chicago, New York etc.
