Besides the strong correlation between rent and the prices of real estate, what many members also not appreciate is that Bay Area real estate provides no value other than a place to live or work. Unless the land is to be used for growing food, timber, produce, or mineral wealth, it is just a piece of land. So, we have to always ask this question. What will make land and real estate more valuable? What will cause demand for real estate to rise?
The Bay Area has geographic boundaries and limitations which limit sprawl, and how much land is commutable to the major employment centers. This is true of most places that are premium value. Just look at NYC, Boston, and even Seattle.
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Every 10 years people would come out of the woodwork and predict the demise of Silicon Valley. SV only became a hot hub of technology innovation starting from the 50s and 60s. As a hub it’s still relatively young.
How come no one declares the death of financial hubs like New York? It has been the dominant financial center of the world since the early 1900s. Heck, London got its start even earlier and it’s still the second largest financial hub, right after NYC.
Inflection points do come about, but very rarely. People predicted 100 inflection points out of every one. All these new era predictions will look very silly 12 months from now when we finally have a working vaccine and people return to their normal lives.
To be consistent, new era believers should work out the consequences of their own predictions. Will kids stay at home forever? All restaurants and gyms will be closed forever? All human relationships will turn virtual? Game it out and see if it passes your own smell test.
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No one knew silicon valley before 1980s. The silicon Valley story is only 40 yours old. Which also coincided with the period of population growth in the valley. I do not know which well established pattern you are talking about. .
OK, I guess it’s official now. NYT has declared the death of Silicon Valley.
Silicon Valley’s economy is sputtering and risks permanently stalling, according to an annual report by a group of researchers in the region.
The drop in the number of midlevel jobs the engineers who drive much of the Valley’s growth has been sharpest. And when companies do hire, they are cautiously hiring independent contractors instead of regular employees, and are hiring abroad
Oops, sorry. My bad. Wrong date. It was published in 2010.
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Death of Silicon Valley, again:
''The tech industry is in danger of looking like Japan: it’s down and out for a long time"
''Maybe our current downsizing in the U.S. tech industry is a permanent downsizing and we are headed toward being a second-class industrial citizen in the world"
Oct 16, 2002. How many times have Silicon Valley died already? Every time, people just extrapolated on some short term trend and declared with great fanfare there is going to be a new paradigm and SV can’t ever compete again. In the 80s, it was memory chips from Japan that almost put Intel out of business. Read that classic story how Grove and Moore saved Intel by pivoting into the CPU business. How about that time when cell phones and mobile internets from Europe and Japan were all the rage and SV didn’t seem to have an answer?
This time is even stranger. Nasdaq is just a fraction off all time high and we are supposed to believe SV is on the cusp of permanent decline? Seriously?
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For something to die, it must be alive first. The things that do not exist cannot vanish. The story of silicon valley in any significant way is about 40-50 years old. In a span of 40-50 years, how many times can an industry die and resurrect? Or will a place leave a discernible pattern to be able to use for long term guidance? And The New York Time is a source of guidance?
The best way to Analyze an Industry will be to look at factors that can make or break an industry. For example, legal and economical environment, cost of doing business, demand factors, shift in market conditions, Disruption on supply side.
Added a new dimension to your position. 
Why do you consider that as young? Your opinion or from some scientific 
paper
SV is young. Not sure about 7x7 or BA in general. Don’t mix up. Seem like you like to extend SV to mean Bay Area. Might as well extend to mean California. Might as well extend to mean USA. Might as well to mean the world. Wait…
Mark moves with the wind. Monitor FB to get a sense of the future to come.
Do you know why Mark comes to SV? Are the pull factors still here and be around for a long time?
The purpose of discussions like this is not to foresee what Silicon Valley will look like in ten yeas from now. At least I cannot claim to be able to see the future and I do not make any such prediction. The idea is to understand silicon valley real estate as an investment vehicle. Will the silicon valley real estate become more valuable in next 10 years or will it give a predictable income during the holding period? Answering these question does involve looking at future. And if you take a position one way, what can be done should the silicon valley and its real estate take a different path. In other words, lets say this. Would you buy an expensive home in Cupertino hoping the price of home to double in next 10 years given the current situation? If the answer is yes, what can be exist strategy if Cupertiono real estate does not appreciate or even declines.
This question is for you who didn’t own a SFH in Cupertino. For those who have, should they exit now? CU is good. 7x7 
Bay Area in general - only @Jil know.
Can you do this fairly correct way in a month or 3 months, using relevant data points, generating 25 page report? It takes enormous amount of research, to gain proper data, and come to a conclusion. People will be wasting their time and money.
It took me last 4 years of my own time to start my stock algorithm and almost $12000 to hold servers and lot of research time efforts to come to fairly 75% accurate system. I see the major benefit only this year after almost 3.5 years dead-investments.
Even though I do not want to blog more, I felt it worth for forum users to know. I may not be in real estate as I completely moved to stocks, but bay area real estate investors should not be wrongly guided by news/media articles.
What Manch showed is two sample posts from New York times. During 2000 and 2008, I would have seen almost all news/media was posting same or similar stories. Do you expect a blogger like me or Manch to prove that every news/media posting the same.
Remember that I was saying
“When stocks/economy going down, News/Media produces/picks nice stories about it after the fact.”
“When the stocks/economy is doing fine, they pick different positive story after that fact”
It is about their circulation and ratings perspective.
The current situation is start of the fall, and we have not seen deep troubled period yet, both in stocks and real estate. People have not seen the depth of the issue yet, but down the road 18-24 months.
For real estate, worst period was 2008-2011 and this recession can not beat that standard, and no way.
Do not be swayed by pessimistic looks, be intelligent, carefully wait for opportunity and grab it. Bay Area will come back, after a short dip of 2 years, as usual.
Silicon Valley will not be dead, it will flourish with more vigor and force.
If someone believes that SV is not going to recover, after a dip in 18-24 months, they will permanently missing the boat.
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Congratulations 
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If Cupertino real estate does not appreciate or even declines. => There is no question about this as this condition becomes FALSE !
During 2008-2011, there were only 3-5 foreclosures at any time in Cupertino and the price drop was just 5%-7%.
It is not only Cupertino, but Sunnyvale and Mountain view are also strong hold areas now. These are the places where cash Rich people bought or living. You can not expect median prices coming down more than 7%-10%.
Take the mercury news median price and let me know if you see 10% drop in median price YOY of Cupertino, Sunnyvale and Mountain view in next 2-3 years.
Do not show me individual homes (as it can not be compared) but look out for MEDIAN PRICE.
I will sell my stocks and jump on real estate in any of the three cities.
The next best area is around new google complex in San Jose downtown, best opportunity to buy during dip.
As a side story, my friend has two homes, one at Dublin, 4500 sqft home bought at 900k during 2011 and another at Cupertino, 10k lot bought at 1M during 2008. We had a discussion recently and finalized this plan.
Sell Dublin home, current primary, which is appx 1.5M now and pay off full debt and rebuild Cupertino home, and live as primary home. He is doing it now. He has been here appx 25 years in bay area.
Bay Area real estate is massive and strong wealth building strategy if affordable to take mortgage leverage !
Stocks are not easy.
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As far as I can see, the purpose of what-if analysis is not to achieve perfection because it is not always possible to work with perfect dataset or to have a perfect model of the future. I think what I stressed is that one should plan both sides of the move. What will an investor do if market moves as predicted, and What will an investor do if market changes mind and follows a different path.
Is New York Time a good investment advisor? (from 8 Really Bad Investments That Lost a Bundle | ThinkAdvisor)
When The New York Times Co. purchased the Boston Globe in 1993 for $1.1 billion ($1.72 billion today), the price was astounding. Still, despite the record price for the Beantown newspapers and some other media properties, it seemed like The Times could still turn a profit on the deal. Then the Internet changed the newspaper business, and what was once the most valuable newspaper in the world became an albatross around the Gray Lady’s neck. An attempt to sell the Globe in 2009 reportedly netted an offer of $59 million plus the assumption of pension obligations. Other newspapers that were part of the Globe chain were sold for $143 million in late 2011. This year, The Times hopes to fetch $150 million for thr Globe and Worcester Telegram.
Not all knowledgeable people can convert their knowledge into obscene profits. Most remain in the median. Call it Cassandra’s curse, or curse of knowledge. But, I agree that in the recent years, the politics of jealousy has taken root in our society and the rich people are resented, shamed, and sometimes even punished. Part of the reason could be belief that someone with college degree should be among the top 10 richest people. How can that even be possible? If there are 1 Million people with college degree, how can they all be among the 10 richest people?
The word Silicon valley is now associated with anti-trust , Tax avoidence, along with privacy and data concerns. It is no longer associated with leading innovation. It has become irrelevant to the rest of the word. On top of that expensive services costs. Just look at plumber and electrician costs. Any decrease in demand will force those people to leave the area and what is left will become more expensive.
Not only anti-trust. Some believe the Silicon Valley giants (Facebook, google, Apple, twitter, etc) do not care about traditional American Values : freedom of speech, free market etc. While these companies will bend over backwards to accommodate demands of Chinese government, they will do very little to address the concerns of the those Americans whom they do not like.
So are you one of these people that believe the dollar should be backed by gold?
Been betting on that for years.
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