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huge corrections under way, guarantee this is not the end, just the beginning.

unicorn slaughter.

upside: expect house prices in the SF bay area to become more affordable.




> upside: expect house prices in the SF bay area to become more affordable.

Until the Chinese peg falls, I don't think you can. I mean, aren't SF house prices driver by Chinese investors about as much as by domestic Twitter millionaires?


It's probably supported by both. But if prices fall, that could lead to Chinese abandoning the market and dropping prices further.


it sure didn't dip much in 2008.


Correct. Cash real estate purchases by Chinese nationals will continue to dwarf those of Silicon Valley employees.


Are there any sources / links you can share on cash real estate purchases in SV or Bay Area? I'm interested in reading more about this and a preliminary search isn't yielding any recent news.


This sort of data would be interesting/ useful for any location. I was recently in Phuket where I was told property prices are dropping due to the Russian currency tanking, so many of the Russian owners are selling up. Knowing how much of an area is owned by certain foreigners would definitely be valuable knowledge.


Doubtful - if global investors aren't putting their money into stocks, they'll just continue to buy up real estate.


With such rose colored glasses you should become a real estate agent. Always a good time to buy!


Once you take the crazy money out of the equation, the SF Bay Area is not that appealing as a pure real estate play.


Tell that to Vancouver, BC :(


Russians and Chinese are a major contributor, and they're not so affected by SV cycles.


I don't know about SV, but foreign investment is pretty dam low in Victoria, BC, which could be used as a proxy for Vancouver. 97.8% were domestic buyers.[1]

It's not foreign buyers driving up the market in Vancouver, it's Canadians will to put themselves into serious debt in order to buy a house.

[1]http://www.greaterfool.ca/2016/01/31/of-debt-data/


Actually, it is foreign investment: http://news.nationalpost.com/news/canada/in-a-six-month-peri...

  "In a recent six-month period about 70 per cent of all
   detached homes sold on Vancouver’s west side were
   purchased by Mainland China buyers..."
Even if those numbers are off, it's a huge influence on the market.


Did you read the article? They looked at the last names on the titles and if they were Mainland Chinese names they assumed they were foreigners, which is utterly ridiculous in the city of Vancouver where the population is almost 50% Asian, with most being multi-generational immigrants.

That's like doing the same study in Boston and claiming foreigner buyers from Ireland own 50% of Boston homes!


But what induces the higher market?

You get echo effects from places like Vancouver. Wealthy foreign buyers use high end real estate as a bank account increase the prices of top of the line housing significantly. Wealthier natives (Dentists?), now priced out of the highest end go down the scale and start purchasing lower end stuff with more money, increasing the price for everyone in a domino effect.

Government, not wanting the housing market to go down, create laws to allow subprime mortgage lending and buyers buy houses without real limits on price, and the middle class can now keep up with the price boom.


What? No, the Chinese are still heavily interested in the Vancouver market. Since when is small Victoria a proxy for big Vancouver?


Well, it's been reported that foreign buyers are invested in a lot of the more expensive properties (> $3 million) in certain regions, but a lot of Canadians are STILL buying Vancouver properties. There's been a lot of concern over Canadians getting in over their heads with mortgages. It also doesn't help that Vancouver has crappy wages.


Well the problem is, Victoria is the only city in Canada that collects citizenship information in house sales. It's the only data we have.

Victoria isn't that far from Vancouver, but prices have gone through the roof, similar to what Vancouver has experienced.


If you think SV is bad, check out the recent returns out of Russia and China!


What's SV?


Suddenly Vulnerable.


silicon valley


It will be after the next ... lets call it business cycle.


Whys that? Year round awesome weather not good enough?


You've never been to San Francisco, have you?


I'm not so sure about that, a lot of the conditions previously supporting real estate investment have given way. Oil's down, China is volatile, interest rates have risen, arguably you could say the trend could reverse due to people who previously bought as investments needing their money back.


That's assuming that they need their money back. The way I understand it is that there's a glut of money, and the rich are just piling it up and moving it around to where ever the best return seems to be.


Tableau and LinkedIn aren't exactly early-stage startups. They have pretty established businesses.


An established business should be self-sustaining, hence profitable.

Tableau is not, LinkedIn P/E is north of 1000.

But being profitable, that is just crazy talk.


True, but the performance of your neighbors affects investors' attitudes in general.


Does this affect big companies like Alphabet/Amazon/FB/Microsoft, etc?


It's the dot-com bubble all over again. Look at the NEWR stock chart, it looks like the dot-com burst in 2000-2001 compressed to a few months. It's happening a lot faster now, then it happened back then.


...but Tableau is in Seattle.


The additional 18k people that Amazon apparently plans to hire will probably keep the Seattle market hot for the foreseeable future. Also, Chinese investors.




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