* SF: 784
* San Jose: 106
Still high numbers IMO but SF for example has ~800k residents, so this only represents ~0.1% of the total population. Not super convinced yet that it's going to have any immediate impact on housing in the city unless this triggers a much larger avalanche of firings that don't have an associated swarm of smaller companies waiting in the wings to pick good employees up at a discount.
[0] https://www.sfchronicle.com/bayarea/article/Here-s-how-many-...
It's not "Twitter layoffs cause issues" - it's more that if you can identify 5, 10, 15+ well known companies doing layoffs concentrated in that area there is probably also a very long tail of smaller companies doing layoffs also. Cumulative effect of it all can be quite large.
> ~40% of the workforce
This is an enormous exaggeration. However, even a 4-5% reduction in jobs in the area can have an enormous effect on the economy and housing market.
784 / 815,201 = 0.00096 = 0.1%
It's not exact, but small changes can have large effects.
However SF likely has a huge waiting list of people who would like to move in, so it's not likely to take effect immediately.
Unlikely -- take a look at the average rent trends. It hasn't recovered to even pre-pandemic levels. https://www.zumper.com/rent-research/san-francisco-ca
I think there are a number of recently completed or near-completion condo buildings that are going to be in trouble, having been planned around sale-price expectations which now seem hard to reach. But in the broader and longer-term view, doesn't the fact still remain that we have too little housing in the region?
Two sides of the same coin. It'll be brutal. Bay area home prices will fall by at least 40% from 2021 highs by end of 2024.
Even through the dotcom bubble and 2008 financial crisis.
"And you'll have a yard without committing to a 3 million dollar investment!"
Oh well, back to patching the grout on my dilapidated million dollar shithole condo..
Maybe I'm misunderstanding, but it kinda looks like a national forest or something when you drive along 280
One of the perks of living in Silicon Valley; you can get out of the office and go hiking or biking in nature
$1.5m @ 2.50% yielded a ~$6k/mo P&I payment last year
$868k @ 7.25% yields a ~$6k/mo P&I payment currently.
The price of this theoretical home need to drop ~40% to result in the same monthly payment. Home prices won't drop until people are forced to sell and widespread layoffs are just the catalyst necessary.
Outside of SV, I expect you'll see such a drop.
Point being, if most of those cash offers are really a 30-year mortgage in a trench coat, the peninsula might slump very quickly in the near future.
But just like any market the prices may not be connected to those fundamentals. It depends on expectations.
But yes, the perfect storm was always going to be rates going up and a recession and if this isn't the perfect storm then what is. Well, my house is up 40% since I bought it exactly two years ago so I think I'll survive (I knew I was taking some risk). [EDIT: Not in the Bay Area]
https://lao.ca.gov/1995/010195_calguide/cgep1.html
Edit:not in SV, but the real estate prices probably felt it
This is a perfect distillation of "bad news leads". A year ago, threads like this were filled with complaints that bay area housing development and pricing was completely unsustainable and that the values and rents were simply too high to permit the needed workforce to live there.
Now fast forward, the situation is correcting itself, and... that's not good. In fact it's "brutal".
Really, what did we actually want? This is what dropping housing prices looks like. Any time prices change some people win and some people lose.
(From my perspective, FWIW: yeah, this is a sorely needed correction and while it must suck to be a property owner right now there's no way we were ever going to sustain that ridiculous bubble.)
In fact salaries in the bay area have been rising ahead of and faster than inflation, so yes, it seems like a good bet. Also property owners (remember them from upthread?) are broadly helped by inflation as their mortgages aren't inflation-indexed (i.e. inflation makes their total debt go down in real value).
But none of that nuance matters, because bad news leads.
But even if raises and such occur, they don't happen instantaneously, and so people don't like inflation. Gas prices can go up tomorrow, but you won't get a cost-of-living increase for half a year or more.
For those who have the vast majority of their debt in a 30 year fixed loan on a house, inflation is kinda nice once you get past the rough parts.
And what if prices are going up tomorrow BECAUSE everyone got a "cost-of-living" increase last year? They did! And they tried to buy stuff with the excess cash, and there wasn't enough stuff, so prices went up. (Obviously real causes are complicated, and supply shock is a big part of the current inflation drivers and not just demand, but you get the point.)
This is exactly what I'm saying: bad news leads. We don't want to talk about the flip side of natural relationships, we just want to complain.
[1] That's not a thing, by the way. All raises are for cause, even if they call it "cost of living" what they really mean is "retention".
Interest rate changes could (will) reduce demand because people can’t “afford” what they used to be able to.
Mass layoffs can lead to people being forced to sell because they can no longer afford payments, or have to move. Edit: and increase supply. Somehow I missed saying this explicitly.
These two things together could be particularly bad for the local area.
CA housing was hit hard though. Yes. LA was one of the worst hit
1) Tech job openings have fallen by ~50% since a year ago
2) Total comp packages are materially lower, creating a strain on people's ability to pay for their housing
There are still great jobs out there, but you can't just bang out a day of Leetcode and collect a batch of $600k offers at the moment