Sound Off: How would a dip in the tech sector affect Bay Area real estate?


A: Diversity remains one of the Bay Area’s greatest assets, and that extends to employment opportunities. An economic downturn, even in the technology sector, would be tempered by the variety of available jobs elsewhere in the Bay Area.

Econ 101 tells us when a viable industry slows down, the process eliminates weaker businesses and allows stronger companies to thrive and consolidate.

These more vibrant firms can then absorb much of the labor force laid off from those that do not survive. Because of the vast diversity of Bay Area commerce, we are fortunate to be somewhat insulated from the effects of challenges faced by a specific industry or trade.

Technology continues to dominate our global society. Research and development to stay ahead of the curve demands constant rebranding, remarketing and strategy revisions.

Our economic future shines bright in the Bay Area. The good news for San Francisco, Silicon Valley and surrounding communities is if an economic slowdown targets a specific industry, we would likely feel it last and be the first to recover. With the diversity of our lifestyles, desirable weather, cultural and social enhancements and a dedicated workforce, the Bay Area continues to be a beacon for strong employment opportunities.

Jill Gumina,

Pacific Union Real Estate, (415) 265-1717, jillgumina@pacunion.com

A: The strong real estate market we have seen for the past four years in the Bay Area is a result of the incredibly strong demand for housing and a lack of homes for sale.

Job growth in the biotech, high-tech, social media and medical sectors of our local economy drives demand. The continuation of low interest rates and our region’s quality public schools factor in as well. So if job creation in the technology sector cooled, that would have a negative effect on the demand for housing in the Bay Area, including the Peninsula.

History shows us more affordable areas tend to get hit harder when the market overcorrects. But so much of the Bay Area market is being driven by job creation, all areas would be negatively affected to some degree by an economic downturn — more so, if the technology and biotech sectors were to regress simultaneously.

Job creation will remain for quite some time. We live in the area of innovation, and most of the innovative Bay Area companies will continue to hire and expand their operations and revenues. It also appears that the low interest mortgage rates will stay with us for a while, based on comments from the Federal Reserve and the country’s lack of inflation. Real estate remains the best long-term investment one can make to accumulate wealth.

Jeff LaMont, Coldwell Banker,

(650) 740-8808,

jeff@jefflamont.com

A: It’s helpful to better understand some of the factors driving current market conditions before predicting the future. A relatively weak foreign economy offers investors few options for solid returns, so a lot of capital has been poured into the technology industry, whose epicenter is the Bay Area.

During the past several years, venture capitalists and large asset managers have invested large sums of capital into “unicorn” companies (those valued in the private market at more than $1 billion), and foreign investors have put their money into property (commercial and residential) in this area. Only if global macroeconomic conditions begin to improve significantly will we begin to see capital shift elsewhere, at which point tech valuations may level out and a lot of startups may feel the pain of having to raise capital in a more competitive credit environment.

But returns simply don’t exist in the same way in other sectors. While most expect housing price appreciation to slow in the next year or two, I believe the housing markets I serve on the Peninsula and in San Francisco are well positioned to continue to build value, even in the event of a slowdown. I believe the Bay Area is the center of our country’s economic future, and the supply-demand effect is real: We still have more buyers than available homes.

Katharine Carroll,

Pacific Union, (415) 300-7122, kat@katcarroll.com

Article source: http://www.sfgate.com/realestate/article/Sound-Off-How-would-a-dip-in-the-tech-sector-6601595.php

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