Most of the article discusses the technology powerhouses behind the market's strength (Oracle, Google). Big web company employees get massive paychecks, and most of those employees live in Santa Clara and San Mateo Counties.
While the rest of the country was chewed up and spit out by foreclosures, Silicon Valley dodged major damage thanks to job growth in the tech sector and the area's high average salaries. Subprime issues are only really hitting parts of San Jose and the fringes of the Valley. The areas with the best schools (see? schools have a lot to do with the value of your home, check out some other posts for more info on this topic) have the most thriving markets (Palo Alto, Woodside, Los Altos, etc).
The market here has definitely slowed, but plenty of listings still attract multiple offers. Teardowns are still happening too, another indicator of the market's strength. Teardowns are when a buyer purchases a house solely to knock it down and build another in its place. The real gold in Silicon Valley is the land--undeveloped land is going for high prices because investment potential for buildable plots is sky-high.
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