Technological revolution has been happening and will continue to happen. It can spread to other cities, but SFBA will continue its own phase as usual.
10-15 years before google started from scratch became trillion company, same way FB,NFLX,AAPL, TSLA, V, MA, PYPL came to height, and continue to grow. It is like honeybee, wherever cash/earnings are there, people will continue to immigrate no matter WFH or any other concept is there.
Why NYC & LA, why not some remote villages in USA? => It is like honeybee, wherever cash/earnings are there, people will continue to immigrate. SFBA is one among them, Tech and bio-tech center.
I take back this sentence, as it will go into endless discussion.
Yes, feel free to compare (not detroit) elsewhere in bay area. It may not be crazy, but will reflect similar.
We have seen redfin forum (lot of bears at that time) how many felt $500k is too much for Fremont home in 2008-2011, but now we can not get such a price.
The WFH concept and 11% unemployment in USA will create a temporary distortion to bay area growth for next few years, but thereafter going back again like the current bull run.
Refer to my explanation to @notabene about the various scenarios. For hedging, lower price is opportunity to upgrade
@manch has insisted that startups must start in SFBA. Why should this be so for WFH/ Remote work? Also why must managers of commoditized SWEs stay in SFBA?
AFAIK, startups want to start in SFBA because of funding and availabilities of talents. If these talents can be sourced from worldwide, why start in SFBA? If can source for funds worldwide, why need to start in SFBA?
Network effect can be broken by exogenous events such as Covid-19.
The problem is that SF bayarea if not whole California cannot be run solely based on Software apps development. All Europe is building there own Software and Hardware.
huge run up in gold prices and lower bond yields to countries can give competitive advantage to other countries.to spend money on long term projects.
These are stocks related counter-weights when downturn/recessionary period. This was the case for 2000 and 2008 also. Nothing to do with SFBA.
This is again common since 1975 technological revolution period start onwards.
It is like TSLA vs all other EV cars. With all competition, TSLA is still strong and leading. When other worlds are increasing competition, even competition from within USA, SFBA has it is own niche and charm, that is hard to erode in next 10 years.
I have seen last 25 years in SFBA, Warren buffet has seen it 75+ years in USA. We have not seen the deep impact in SFBA, but it will recover the same way we had in year 2000 and year 2008.
I may not be in real estate, but other young people (less than 50s) should not miss such opportunities.
If they do not believe in it, feel free to sell their holdings and come back later to get in (and see how it is!).
Let me re-post this about returns form Real Estate to be able to do apple to apple comparison across different regions :
Appreciation in price and current income (rent) must add up to make economic sense:
In rough terms for homes:
Returns in Texas and elsewhere = income 7 - 8 + appreciation 2 - 3 = about 10% ROI
Returns In SFBA = income 3% + appreciation 7% = about 10% ROI
Because of huge swings in real estate prices (like the volatility of stock price), a lot of investors do not like CA (or SFBA) real estate because you end up locking your money for the same rate of return. I know some investors who could not sell their homes after 2009 for almost 5 years. Some investors love SFBA, on the other hand, just because it appreciates better.
The point is low bond yield and high gold prices giving alot of economic stability to competitors outside US. higher stock prices are symptom of low bond yield and higher Gold prices.
They are building huge datacenters, huge investment in public transport, 5G, nuclear power, cheaper healthcare, low cost education, cheaper water supply, cheaper trash collection. Everything that make cost of living sustainable.
Tesla or what ever need battteries from Panasonic, CATL, LG CHEM.
Tesla is building all factories outside SFbay. and this factory may close down in next two years. next is Biotech. I have friend very high up. her firm was bought up in biotech. Merger and acquisitons are shrinking the space.
TSLA is growing up the way google, facebook, amazon, microsoft and apple grown up. Growth introduces multiple manufacturing facilities for various strategic reasons the same way these big five expanded.
Biotech has been here for a longer time like tech. Merger and acquisitons are very common and will not affect overall bay area economy.
All these are very common in big/growing companies. Those who really see SFBA is going down like Detroit, sell their holdings and see after 5 to 7 years, from now, they can not even touch the same property they sold !
Exactly similar discussions happened in 2008-2011 and bay area came back with bigger unimaginable level (at that time).
Are investors in Detriot RE loosing money? I do not know. But, I have a feeling they will be earning same rate of return as RE investors anywhere else for the risk they take. Actually, if a ROI in a market is above average, it will attract more investments and bring the ROI back to the average.
People make millions by being in business of processing/recycling trash, and people loose tons of money in gold. The investment and the product itself are two separate things.
Are you sure Apple growing same way as it was growing in 2011?. Apple no longer put handset numbers. while cost of Apple employee has grown exponentially.
Apple is not infrastructure firm like Ericson/Nokia/Huawei.
Google, Facebook, Amazon are Ad tech firms. No physical product. Rest of world is building similar products. so they dont care regulating them.
Entire Tesla growth prior quarter was from Chinese factory. SF bay area has simply become expensive to create product locally and sell it globally… I am not saying Bayarea will goes the way of Detroit as we still have enough local tax revenue to maintain essential services of safety, parks, education. but those people salary and pensions are eating into reserves.
buying stock in 2020 is not the same as buying stock in 1998 even for the same firm. Now alot people just want to get 401K matching contributions/ deductions and Life insurance/ Asset managements are huge players. they moved the indices.
It does not change the fundamental fact. Apple is no longer a growth firm or a leader in tech. It is more and more dependent on vendors in Asia and EU. which in turn supply to its competitors.which are getting bigger and bigger
When Cargo train goes from China to Germany in 12 days. It gives you the scale of advancement. It is not 1970s when rest of world infrastructure was decades behind for doing R&D.
Elon went all the way to Berlin and Shanghai (Not exactly cheap places compared to East bay) to build factories despite no longer a growth firm. The word Growth in quantity matter as the greater quantity the more bargaining power with suppliers.
Apple has a never been a leader in the tech. We must, however, admire Steve Jobs for borrowing/stealing/copying technologies from other companies and making them available to the consumers and providing them a toy like user friendly interface.
I can understand moving cargo at a faster pace. But, are the regions outside Bay Area or even USA capable of doing fundamental research and commercializing product innovation? That is the key point.
I recall a talk on NPR back in 1995 when everyone in USA was talking about US loosing its lead with Malaysia able to build buildings taller than World Trade Center. The guest said that US was focusing more on information super highway and not on civil structures. Tall buildings have been found inefficient anyway in USA ,where there is plenty of land is available.
you still need world class infrastructure and productive discipline population to commericalize a fundamental research considering the computing and robotics are well advanced outside US now. US was decades ahead in 1970s/80s. that momentum helped
for couple of decades to keep high standard of living. We had one Disney land. Now we have many Disney lands.
I gave Cargo train example it is signal to firms in Korea and Japan that China and EU are now so fast connect.
The problem with command and control economy is that the investments are not driven by the market but by the bureaucrats in the planning commission. Therefore, an investment done just for the sake of investment or to meet a social goal does not work well either for the investors or for those who are expected to benefit from it ( except the well connected who get their cut from the budget .) That is why BRI initiative of China is going nowhere. What is the point in moving things in 12 days vs 17 days if it is only a book or coal, or manufactured good or the things that are not to be consumed shortly after production (perishable goods), if that improvement comes with a huge cost?
Is a statement!
Just let him say it since he knows.