Echoes of the 1990s: Tech Investment Bodes Well for Northern California

By Richard Barrington
Local Lender Columnist
Sep 12, 2007
Real estate agents in Northern California may want to party like it's 1999 all over again. While most of the nation grapples with a housing slump in the face of rising mortgage rates, renewed commercial investment is likely to bolster real estate values in Northern California.

Silicon Valley is a leading example of how technology companies are putting money into a community in a way not seen since the dot.coms went bust in 2000.

Investments are Comprehensive, and Growing

Northern California took a particular hit when the technology bubble burst. As tech companies went bankrupt, jobs were lost and the real estate market softened. While the area is not back to those bubble levels--which may be a good thing--the outlook is improving. Apple, Google, and Yahoo have invested more than $400 million in Silicon Valley real estate over the past year.

This commercial investment is bound to have a ripple effect on the residential real estate market, for Silicon Valley in particular, and surrounding parts of Northern California in general. Not only does the investment create jobs, but these companies are also investing in community improvements such as teacher training.

Timing Counteracts Mortgage Pressures

All of this bodes well for housing prices at a time when the housing market could use some good news. Twin problems on the mortgage front--a growing default rate and rising mortgage rates--have led to weakening real estate prices in much of the nation.

For anyone biding their time before getting into the area's real estate market, the message might be not to wait too long. With investment in the area up, real estate prices seem likely to follow.

Source
International Herald Tribune

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.