Silicon Valley economy ‘frothy’ and facing headwinds, says market expert

Silicon Valley has seen massive growth since the 2008 Great Recession, but one local market expert estimates the market is “frothy,” signaling that the region may have finally hit a peak and could begin to slow in the near future.

“Most of the people from San Francisco, Silicon Valley, think that we’re probably in the top of the cycle,” said Alexander Quinn, JLL’s director of research for Northern California, during the annual Silicon Valley Economic Development Alliance conference in Santa Cruz this month. “(In) Oakland, East Bay, Sacramento, there is still some room for growth there.”

Yawn. Even at current growth rate, job growth is faster than housing units are being built. History says experts don’t agree on a slowdown before it happens.

Yes, “experts” are usually wrong. The fact that they are predicting slowdown makes me happy. :smile:

First, the boy who cried wolf wasn’t lying about the last one.
Second, what slowdown they are talking about? According to zillow, my house has already declined 20% since mid Oct 2018 inspite of no recession. Still may or could?
Third, time to move east.

And though companies are still looking for millions of square feet of space to lease in the region, Quinn said companies are also beginning to look elsewhere for growth.

“What you’re going to hear in the next few months — we might hear it already — is major lease agreements in New York, Chicago, with Google making plays outside of California,” he said. “It’s not because it’s incredibly expensive (in Silicon Valley), which is part of it, but it’s because room to grow in terms of labor does not exist in the Bay Area.

Push cost centers out of Bay Area, only critical R&D and important personnel stay in Bay Area.

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Like the guy said in the article, this kind of cycles have played out before. So what happened the last few times?

What happen to the boy who cried wolf?

A better question is what happen to the villagers who trusted the boy every time.

Refer to diagram below.

You assumed 1) his analysis is correct and that 2) his timing is perfect.

Even if you assumed 1, what happened if his timing is off, that we are actually at the second woof in your chart instead of the final?

Whatever happened to your chart after 2015? Is the best course of action to bail at the last woof? Or just sit tight and continue to DCA?

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I am talking about 势 :wink:

If you know the future,
Sell and buy back, sell and buy back :slight_smile:

If you don’t know,
DCA purchase in BARE* is difficult for housing, too expensive.
Best course of action
Sit tight and do nothing, to avoid capital gain tax and loss of low property tax base.
Is what I am doing :laughing:

*Possible for cheaper area like Austin :wink: Denver, RTP, Phoenix, Houston, Tampa,

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what is BARE?

Bay Area Real Estate :roll_eyes:

Market timing is very difficult for homes (Or it was very difficult after 2008 crash because many people were in state of panic and extreme fear, or extreme confidence due to their previous success). A friend of mine successfully timed selling his home in 2007. Purchased a new home in 2010. Timed a sell again in 2015. Still nursing the injury from the premature sale. Could have made at least half million more if had he sold three years later. I know someone who sold his home in 2013 and started renting. Could have earned at least 700K more if he had waited until 2017.


The one who sold in 2013 didn’t know how to read macro trends. Conditions are bullish. Instead of buying in BARE, I bought the first Austin SFH for $235k :laughing: Using zilllow, from 2013 to now, SV house appreciated 47% while Austin SFH rose 62%. So for this period, prices in Austin rose faster than SV, sorry @manch.

The one who sold in 2015 wasn’t bad. Can’t recall the macro event, prices did roll over in 2016 but re-bounce in 2017 only to peak in mid 2018. So long he is not playing around with his Primary, I consider that a good decision. Some money is just not your, have to leave them for others.

I bought from him in 2007 :slight_smile: and bought again in 2011. 2007 is an obvious peak, my wife wanted to buy and my children and I tried to talk her out unsuccessfully :sob: I managed to convince her to upgrade from the townhouse rather than buy the SFH and keep the townhouse. So I wasn’t hurt much by the crisis. In fact, price decline from 2007 to 2010 in both % and absolute term is lower than from mid 2018 to now.

The villager who believed the wolf crying boy.