Slowing Economy

Mercury News: Median home price down 4.2% in Santa Clara County. The effects of the Sept. 11 events probably won’t show up in home sales statistics until October or November. By then, it will be clearer whether buyers now are opting to put off purchasing, or are deciding to buy while mortgage rates are low and sellers are in the mood to deal.

Anyone who’d buy a house in Silicon Valley at this point, at these still-ridiculous prices, is either crazy or has money to burn. The uncertainty was bad enough before. Now it’s over the top.

I moderated a Churchill Club panel last night about opportunities in Asia, and the prevailing view was that India and China offer an incredible bargain for U.S. companies that need tech talent. Silicon Valley, in this economic climate, may have priced itself out of many markets.

I’ve been wrong on this before. The housing bubble here never made that much sense to me in the first place. It only made some sense toward the end of the stock bubble — when people were wisely cashing out of potential equity dogs and putting the money into real estate, figuring that even a housing crash that took away half of the value was less risky than a bubble deflation that wiped out the stock’s entire value, or most of it.

I would not buy a house in Silicon Valley today. Period.


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