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It's just like Hollywood attracting actors, directors and producers. As long as there is the factor of prestige, Silicon Valley is going to continue to see thi

It's just like Hollywood attracting actors, directors and producers. As long as there is the factor of prestige, Silicon Valley is going to continue to see this nearly unbelievable housing market. If there were a true tech crash, like the dot-com bubble bursting, we'd see a slow down. But in order for there to be a sustained weakening, Apple, Google, Facebook, and the Y Combinators of the valley will all have to see a substantial weakening in profitability. It's the high salaries they are able to pay to legions of workers that is primarily responsible for housing prices. That's what this article is about.

noobermin 10y ago
My point is hackers are idealistic supposed to be more rational--I was sarcastic in my post, but statistically, they should be more rational. I don't know if I need to break this to any of you, but you can hack on anything. I learned C on an island with a 28 kbps internet (that was metered). I didn't have to fly to SV to attend a code bootcamp and shell out hundreds to a thousand dollars. Also, the internet is a wonderful thing, being connected to people has never been easier. My point is that no Apple, et. al, you can't keep extracting heat from the system and violate the second law of thermodynamics, at some point, people will evaluate the costs and people will be more and more reluctant to relocate to SV just to have a shot.
- 11thEarlOfMar 10y ago
  Allow me to say it a little differently, then. As long as profits flow to silicon valley companies from around the world, people from around the world will also flow there, and housing prices will increase. So I'd say that the heat is being extracted from the world's population (dollars from their pockets) and as long as that source is plentiful, the growth will continue. Since the global standard of living is increasing, the world's ability to buy iPhones and thereby consume Internet advertising presented by Google and Facebook, all continues to grow. Come to think of it, it may be self sustaining. How many HN readers came to SV with a job offer in hand? The more profitable the companies are, the bigger the delta between what SV pays and what the ROW pays and the more people will be willing to take the plunge. This could go on for a very long time. (Google + Apple + Facebook pre-tax profit = ~$20 billion in the last 3 months.)
sliverstorm 10y ago
Another possibility is the Googles of the world get tired of paying Bay Area wages and start doing their damndest to open shops elsewhere and try to shift the bulk of their workforce out of the Bay. Yes, they hire in the Bay because there is talent in the Bay. But talent is in the Bay because they hire there. If they set themselves to it, I'd imagine they could convince a lot of people to work in other locations. "If you move to <city> with half the CoL, we'll pay you 90% of your current salary"
- czep 10y ago
  > "If you move to <city> with half the CoL, we'll pay you 90% of your current salary". It's an interesting proposition and one that I suspect many would take seriously. But as an eternal pessimist, I would immediately ask what would happen if I were to lose my job after 6 months living in <city> where my alternatives would be to work for Regional Bank A or Third-Tier Manufacturing Co. B who would not be offering 90% of my previous salary but rather 40%? We stay in the Valley because if, as has happened to me twice already, I wake up and find the company I worked for is now insolvent, I send two emails and find myself another job before lunchtime.
  - noobermin 10y ago
    >I wake up and find the company I worked for is now insolvent Google, facebook, twitter et. al aren't insolvent. Yest, I know, bordering no-true-scotsman... I think his point is if the superstar corps move, there may be some motion, not hipster-startup #229777. Yes, and Yahoo! and other examples of big names going under exist.

noobermin 10y ago

My point is hackers are idealistic supposed to be more rational--I was sarcastic in my post, but statistically, they should be more rational. I don't know if I need to break this to any of you, but you can hack on anything. I learned C on an island with a 28 kbps internet (that was metered). I didn't have to fly to SV to attend a code bootcamp and shell out hundreds to a thousand dollars. Also, the internet is a wonderful thing, being connected to people has never been easier. My point is that no Apple, et. al, you can't keep extracting heat from the system and violate the second law of thermodynamics, at some point, people will evaluate the costs and people will be more and more reluctant to relocate to SV just to have a shot.

11thEarlOfMar 10y ago
Allow me to say it a little differently, then. As long as profits flow to silicon valley companies from around the world, people from around the world will also flow there, and housing prices will increase. So I'd say that the heat is being extracted from the world's population (dollars from their pockets) and as long as that source is plentiful, the growth will continue. Since the global standard of living is increasing, the world's ability to buy iPhones and thereby consume Internet advertising presented by Google and Facebook, all continues to grow. Come to think of it, it may be self sustaining. How many HN readers came to SV with a job offer in hand? The more profitable the companies are, the bigger the delta between what SV pays and what the ROW pays and the more people will be willing to take the plunge. This could go on for a very long time. (Google + Apple + Facebook pre-tax profit = ~$20 billion in the last 3 months.)

sliverstorm 10y ago

Another possibility is the Googles of the world get tired of paying Bay Area wages and start doing their damndest to open shops elsewhere and try to shift the bulk of their workforce out of the Bay. Yes, they hire in the Bay because there is talent in the Bay. But talent is in the Bay because they hire there. If they set themselves to it, I'd imagine they could convince a lot of people to work in other locations. "If you move to <city> with half the CoL, we'll pay you 90% of your current salary"

czep 10y ago
> "If you move to <city> with half the CoL, we'll pay you 90% of your current salary". It's an interesting proposition and one that I suspect many would take seriously. But as an eternal pessimist, I would immediately ask what would happen if I were to lose my job after 6 months living in <city> where my alternatives would be to work for Regional Bank A or Third-Tier Manufacturing Co. B who would not be offering 90% of my previous salary but rather 40%? We stay in the Valley because if, as has happened to me twice already, I wake up and find the company I worked for is now insolvent, I send two emails and find myself another job before lunchtime.
- noobermin 10y ago
  >I wake up and find the company I worked for is now insolvent Google, facebook, twitter et. al aren't insolvent. Yest, I know, bordering no-true-scotsman... I think his point is if the superstar corps move, there may be some motion, not hipster-startup #229777. Yes, and Yahoo! and other examples of big names going under exist.