Foreword: It is NEVER good when employees lose their jobs. I am never happy when this happens to anyone.
Cisco, which hasn’t been doing well for the longest time, has decided to layoff 14,000 employees or more, globally. Since they are local, one can assume at least a small, yet significant number of those layoffs will happen here.
So, not all jobs will be lost near Milpitas (or Smellpitas as it is usually called, a quaint local “cultural” fact), where you can bid (not buy, mind you) a dumpster sitting on a lot for about 1 Mil and upwards. Of course, this new level of madness is brought to you with the notion that along with Cisco, Google, Samsung and Apple and sundry’s employees will be endowed with never ending wealth and therefore should be the only ones able to afford living (if you can call it that) in the area. Throw in a BART station and the dumpster’s asking price went up to 1.5 Mil. If you think, I am joking, go to Realtor.com and search for houses around 95035. Of course, as with all things evil, the real estate bubble just grew from Smelpitas to San Jose, Fremont, Tracy and Stockton, and she hasn’t really stopped yet.
For months now, people have been hoping that this craziness will quiet down eventually. Let’s see…
- Well, Yahoo! went boom-boom, and nothing.
- As also mentioned before, Twitter, GoPro and a few others have not been doing well, and still nothing.
- Dropbox’s supposed 2017 IPO has been met with the loudest snores..
- Apple’s stock and outlook are really terrible right now, with vague promises of better crap..
All this, and yet, Real Estate prices have only gone up, up and away. For example, in Hayward, somebody wants $399,000 for this (there’s more, if still on sale, go have a look-see at some of the other pictures). It is so bad, they didn’t even bother taking good photos!
Absolutely nothing has slowed down the madness so far, which begs the question:
What WILL it take for Bay Area Real Estate to meet Reality?
We know, that from greedy developers, to mindnumbingly greedy Santa Clara City Officials and beyond, there is just an absolute sense that reality is for suckers. Unabated construction, most times, absolutely meaningless in terms of actual, future growth (and adjustments, that will come) is rampant. Communist style, ugly, matchbox dwellings go up everywhere with enough idiots who want to buy them, preyed upon on by new and increasingly bizarre lending practices (if you work at Google or Facebook or some of the other cat and ephemeral p0rn sharing sites, you can get a loan for up to to $2mn or so, with zero down, I kid you not!).
This has left out the “rest of us” who have still the desire to work in a world that doesn’t believe in “sharing economies” where we all serve as each others’ taxi drivers du jour. AND it leaves out the rest of us, who have to do real jobs of designing, cooking, delivering and you know, things that are not glamorous enough for Silicon Valley to even recognize, without a heavy priced, newly minted, monthly billing “start up” that does the same thing telling investors there are billions in feeding and fattening software engineers catered lunches.
In all this, of course, we have been trying to see WHAT can actually make a difference. And, I have to wonder if individual failures and downturns like that of Yahoo! or Cisco are enough to even make a measurable dent. It also appears that these occurrences are happening out of sync with each other, that the bubble is still able to grow and feed on itself. For instance, right in Milpitas is a “storage solutions” company whose acquisition completed in May. One has to only wonder if that will also result in “cost savings” and other measures, which could potentially have a cascading effect. However, even that will just be another blip, and people will move on, just tacking another $100,000 or more to their insane bid.
It is becoming nearly impossible to predict the kind of business/finance related disaster that it will take to cause this bubble to burst. It appears that multiple events need to trigger right next to each other on the time scale for a true dent to appear in Bay Area’s housing madness. One of these surely could be the election, leading to an indecisive or absent lead for Democrats in the Senate, or worse, a Donald Trump Presidency.
Thus, I have to conclude that even Cisco’s seemingly massive layoffs are not enough for Bay Area RE to start its slow descent towards normalcy.
And, that, is just scary.