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Employees with high salaries at the larger more stable tech companies are doing most of the Bay Area home buying. Think FAANG, stripe, twitter, slack, etc. Th

Employees with high salaries at the larger more stable tech companies are doing most of the Bay Area home buying. Think FAANG, stripe, twitter, slack, etc. These companies can weather economic downturns without laying off people so Bay Area house prices don’t drop much. This was the case in 2000 and 2009. Supply is also dropping as tons of homeowners are refinancing, which balances out any drop in demand. The biggest hit is usually on the lower end of the market where you’ll see foreclosures as middle class people lose their jobs.

TheOtherHobbes 7y ago
Anyone who thinks FAANG will survive without a contraction is deluding themselves. What happens to the ad market during a depression? How about luxury IT hardware? Entertainment subscriptions? Web services? If there isn't a bounceback in three months or so, the entire tech sector will deflate like a balloon. FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled projects and mass lay-offs. And those will have an effect on the the property and rental markets, on startup funding, and on everyone's cash flow. Business is a herd phenomenon, and as soon as panic spreads through the herd it reverses direction - until some new excuse for optimism appears.
- jzl 7y ago
  Yup. Google has basically doubled in employee count since 2016. It doesn't seem unreasonable at all that it would contract back a few years or more, headcount-wise.
- thethethethe 7y ago
  > FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled projects and mass lay-offs. And those will have an effect on the the property and rental markets, on startup funding, and on everyone's cash flow FAANG will lay off their armies of contractors before down sizing FTEs. Google has 125k FTEs but over 300k temps. Will it get to the point where FTEs are laid off? I’m not sure, but it seems pretty unlikely unless things don’t improve over the next few years or so
  - throwaway2048 7y ago
    contractors aren't summoned from the aether, they still live in houses.
  - quickthrower2 7y ago
    Are these temps and FTEs even doing the same role? It’s probably going to depend more on the role they are doing than work status.
    - thethethethe 7y ago
      Depends. There are many many contractors doing corporate tech stuff but there are also vendors making food and they all have the same bright red badge
- AdrianB1 7y ago
  The cloud service providers will survive because they have a serious and relatively stable revenue from their services; even if they drop revenue to half, they cut contractors and investments for some months or a year and they are fine. Companies that rely on ads (like FB) will take a bad hit, ads are not essential services and companies will cut hard on that.
- ummonk 7y ago
  I've been reached out to by Google recruiters with COVID-19 specific messages. They know this is the time to hire software engineers.
  - mepiethree 7y ago
    Startups with cash are doing this, too. My takeaway so far is that the tech job search is going to be way more competitive for a while. Since this started, we have had about twice as many people pass phone screens. Smart people who were taking time off who suddenly want a stable income, and smart people who were laid off from less secure startups. Some very talented people that we would have hired two months ago, might not get hired when they interview next week, and it's not because we are hiring less.
  - imprettycool 7y ago
    This. Lots of cheap/desperate talent right now.
- dehrmann 7y ago
  > Entertainment subscriptions $15 per month for Netflix might be one of the cheapest forms of entertainment in a recession. Classpass, not quite so much.
- tech-historian 7y ago
  There may be modest layoffs in some specific targeted teams. But the giant tech companies are still hiring right now too. I'm still hearing from their recruiters.
- otterley 7y ago
  Only two of the FAANG companies get most of their revenue from ads, and all of those companies are weathering the storm rather well (except perhaps Google, but I can’t say for certain). Facebook is struggling to keep up with site demand; more people are using it to communicate while shut in during this period of uncertainty. Apple has enough cash on hand to not sell a single product for months - maybe years - and still keep paying everyone. But they have plenty of subscription-based revenue coming in anyway. Amazon can barely keep up with demand to the extent that they are hiring 100,000 people and denying shipments of nonessential goods. (disclaimer: I work for AWS but have no inside information here; I read the same news stories everyone else does.) Netflix is entertaining more people than ever who are stuck at home. Google is, well, Google, and like Apple, awash in cash. It’s not the FAANG companies we need to worry about; it’s the startups that were based on great ideas but needed the space and investment to incubate them but are now rapidly being depleted of oxygen.
  - tonyedgecombe 7y ago
    Facebooks problem won't be lack of users, it will be lack of advertisers.
    - otterley 7y ago
      While it is true that the marketing budget is often the first to go in terms of spend, FB is also awash in cash ($35B at EOY 2019) to keep them afloat for quite a while.
  - quickthrower2 7y ago
    This is day zero. Let’s see what happens on day 1.
xsmasher 7y ago
> Supply is also dropping as tons of homeowners are refinancing, which balances out any drop in demand. Can you explain this? How does refinancing affect housing supply?
- derekdahmer 7y ago
  Refinancing and selling your home are both ways to get cash. The best time to refinance is when 1) rates are at their lowest 2) your home value is at its highest and 3) you can get good ROI on that cash. Typically people look for ROI either by investing it in the currently down market or using it for down payment on a second rental property. All three of those apply at this moment so record numbers of people have been getting refi’s this month. When fed rates eventually go up perhaps next year people will shift back to selling, or simply holding while they wait for their perceived home value to recover. Either way you have less people selling homes. Not an expert - this is just what has been explained to me so take it with a grain of salt. Also this falls apart if the market is flooded with foreclosures.

TheOtherHobbes 7y ago

Anyone who thinks FAANG will survive without a contraction is deluding themselves. What happens to the ad market during a depression? How about luxury IT hardware? Entertainment subscriptions? Web services? If there isn't a bounceback in three months or so, the entire tech sector will deflate like a balloon. FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled projects and mass lay-offs. And those will have an effect on the the property and rental markets, on startup funding, and on everyone's cash flow. Business is a herd phenomenon, and as soon as panic spreads through the herd it reverses direction - until some new excuse for optimism appears.

jzl 7y ago
Yup. Google has basically doubled in employee count since 2016. It doesn't seem unreasonable at all that it would contract back a few years or more, headcount-wise.
thethethethe 7y ago
> FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled projects and mass lay-offs. And those will have an effect on the the property and rental markets, on startup funding, and on everyone's cash flow FAANG will lay off their armies of contractors before down sizing FTEs. Google has 125k FTEs but over 300k temps. Will it get to the point where FTEs are laid off? I’m not sure, but it seems pretty unlikely unless things don’t improve over the next few years or so
- throwaway2048 7y ago
  contractors aren't summoned from the aether, they still live in houses.
- quickthrower2 7y ago
  Are these temps and FTEs even doing the same role? It’s probably going to depend more on the role they are doing than work status.
  - thethethethe 7y ago
    Depends. There are many many contractors doing corporate tech stuff but there are also vendors making food and they all have the same bright red badge
AdrianB1 7y ago
The cloud service providers will survive because they have a serious and relatively stable revenue from their services; even if they drop revenue to half, they cut contractors and investments for some months or a year and they are fine. Companies that rely on ads (like FB) will take a bad hit, ads are not essential services and companies will cut hard on that.
ummonk 7y ago
I've been reached out to by Google recruiters with COVID-19 specific messages. They know this is the time to hire software engineers.
- mepiethree 7y ago
  Startups with cash are doing this, too. My takeaway so far is that the tech job search is going to be way more competitive for a while. Since this started, we have had about twice as many people pass phone screens. Smart people who were taking time off who suddenly want a stable income, and smart people who were laid off from less secure startups. Some very talented people that we would have hired two months ago, might not get hired when they interview next week, and it's not because we are hiring less.
- imprettycool 7y ago
  This. Lots of cheap/desperate talent right now.
dehrmann 7y ago
> Entertainment subscriptions $15 per month for Netflix might be one of the cheapest forms of entertainment in a recession. Classpass, not quite so much.
tech-historian 7y ago
There may be modest layoffs in some specific targeted teams. But the giant tech companies are still hiring right now too. I'm still hearing from their recruiters.
otterley 7y ago
Only two of the FAANG companies get most of their revenue from ads, and all of those companies are weathering the storm rather well (except perhaps Google, but I can’t say for certain). Facebook is struggling to keep up with site demand; more people are using it to communicate while shut in during this period of uncertainty. Apple has enough cash on hand to not sell a single product for months - maybe years - and still keep paying everyone. But they have plenty of subscription-based revenue coming in anyway. Amazon can barely keep up with demand to the extent that they are hiring 100,000 people and denying shipments of nonessential goods. (disclaimer: I work for AWS but have no inside information here; I read the same news stories everyone else does.) Netflix is entertaining more people than ever who are stuck at home. Google is, well, Google, and like Apple, awash in cash. It’s not the FAANG companies we need to worry about; it’s the startups that were based on great ideas but needed the space and investment to incubate them but are now rapidly being depleted of oxygen.
- tonyedgecombe 7y ago
  Facebooks problem won't be lack of users, it will be lack of advertisers.
  - otterley 7y ago
    While it is true that the marketing budget is often the first to go in terms of spend, FB is also awash in cash ($35B at EOY 2019) to keep them afloat for quite a while.
- quickthrower2 7y ago
  This is day zero. Let’s see what happens on day 1.

xsmasher 7y ago

> Supply is also dropping as tons of homeowners are refinancing, which balances out any drop in demand. Can you explain this? How does refinancing affect housing supply?

derekdahmer 7y ago
Refinancing and selling your home are both ways to get cash. The best time to refinance is when 1) rates are at their lowest 2) your home value is at its highest and 3) you can get good ROI on that cash. Typically people look for ROI either by investing it in the currently down market or using it for down payment on a second rental property. All three of those apply at this moment so record numbers of people have been getting refi’s this month. When fed rates eventually go up perhaps next year people will shift back to selling, or simply holding while they wait for their perceived home value to recover. Either way you have less people selling homes. Not an expert - this is just what has been explained to me so take it with a grain of salt. Also this falls apart if the market is flooded with foreclosures.