Intero Real Estate Blog

Have you been watching the Nasdaq lately? Of course you have. So have I, like a hawk, particularly over the last couple of months. What do we see? We see the late 90’s all over again!

2011 was not too bad for the Nasdaq. It played the little train that could, grinding most of the year, an inch at- a -time. The tempo accelerated a bit mid-December and that train now looks like nothing is going to stop it. There is no better bellwether of things to come in the Valley than the Nasdaq. Sure we are still far from the March 2000 peak of 5134 but the uphill direction in which the tech heavy index is headed and the pace at which it is moving make a statement: happy days are ahead.

There are some differences though between, say, 1998 and today. For one, we had plenty of homes to sell back then; today we have little inventory where the demand is hot, particularly on the mid-Peninsula. Also, mortgage money is still hard to get today while it was flowing during the dotcom boom. Finally, the escalation of Bay Area real estate prices in 98, 99 & the first half of 2000 was mirroring almost perfectly the progression of the Nasdaq; today, they are still slow to warm up and the thawing process is likely to be very spotty on the regional map for a while.

The barometer, irrespective of the above concerns, is indicating sunny & dry tomorrows. The “Facebook effect” you might say. Hundreds of employees and paper millionaires are already counting their money, waiting for pay-day. It might take months before the lucky jackpot winners free their cash, but they will, and just as surely, that cash is going to turn a lot of California real estate into gold. We have been there before, when regional tech IPO’s were hitting the market every week in the late 90’s. The Facebook phenomenon is going to change the Bay Area real estate landscape in a hurry.

Yes, the tsunami is coming. We don’t see the wave from shore just yet but we can already hear & feel the vibrations. Other IPO’s are lined up through the year to keep the momentum going. Looks like there is enough on the horizon to bring wealth or at least financial comfort and security to many.

The Silicon Valley, as it is often said, is the land of fear and greed. Greed is winning again. Considering the alternative, it is a very good thing. We may thank for that the genius of local visionaries, from Steve Jobs to Mark Zuckerberg, but also the background actors & directors without whom the Silicon Valley may only be another valley: the VC people. They have been using their brain cells and risking their money for nearly two decades to guarantee that the sun would keep on shining in Northern California and beyond.

In fact, they may be the true engine of growth. Obviously innovation is the necessary ingredient to produce economic success, but, by itself, it is rarely enough to leverage & multiply the opportunities and considerably accelerate & amplify the resulting benefits. By discerning the right ideas and bringing them to market, the VC companies are fueling innovation. In a way, they are “manufacturing” growth. We sincerely appreciate it. After years of bad news, we will happily reap the benefits of their good work.