Silicon Valley – Two Economies

The pandemic has hit Silicon Valley as if there were two separate worlds here. Troy Wolverton, of the Silicon Valley Business Journal, summarized it nicely: “The tech industry and those involved largely thrived – thanks in large part to a resurgent stock market and the industry’s ability to shift to a remote work model – helping to buoy not only the region’s economy, but that of the state and nation as well.”

“On the flip side, those outside of tech and those who have long struggled to gain a foothold in it were hammered by the coronavirus and the recession it sparked.”

These two worlds may be pointing to a near future where real estate prices somewhat diverge depending upon the price range they are in.

Much of the tech world including: remote work, e-commerce, streamed entertainment, increased computer useage, and smartphones, saw increased demand during stay-at-home orders. “By the end of the year, the Bay Area’s top 15 largest tech companies had increased their workforce in the region by 4%, adding more jobs in the area than the combined number they added to Atlanta, Austin and Denver.”

More Silicon Valley companies went public last year (24) than in any of the last 14 years. Silicon Valley startups received $26.4 billion in venture capital, the highest amount since the 2000 end of the dot-com boom.

“While tech employment was actually up 2% at the end of the second quarter last year — at the height of the pandemic-spurred layoffs — that of every other sector of the local economy was down sharply. Areas including arts and entertainment and personal services saw their employment rates fall by more than 50%.”

Silicon Valley real estate trends will have to be watched to see if different areas or different price ranges diverge.

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