What Recession? Silicon Valley Is Booming

I was in the Bay Area for a week recently and got a feel of the lay of the land in Silicon Valley and San Francisco. For those of you who don’t know, I used to live there (on the Peninsula and in the City). I was there for the dot-com boom, the bust and left just as things were picking up about two years ago.

You could tell by the feel of the city, that the boom is back. All of my friends are now employed (something not that common even three years ago) and all of them told me the job market was “great” or “the best they’ve seen in awhile.” Salaries are starting to inch higher.

The housing market is starting to wobble on the outer fringes of the Bay Area now (in Solano County and Contra Costa County.) But you don’t feel the housing downturn in the city yet. Sales are slowing even as prices stay sky-high.

Where you do feel the boom is in the rental market. When I first moved to San Francisco in 1998, when you went to an open house for a rental apartment, you had to literally take your resume with you to “convince” the landlord to let you rent their place. It was that crazy. That all went away with the dot-com bust. Instead, landlords were desperate to get you to rent and rental prices plunged.

Now, the city is back to hundreds of people showing up at open houses for apartments and apartments renting in only a day. A friend just searched for a not too cheap two bedroom around $3500 (with parking) and had very little to choose from. What was out there rented nearly instaneously.

So far, I haven’t heard of stories of people living in a bedroom in a group house in Silicon Valley (which was common during the dot-com boom because space was so scarce) but in another year, who knows?

The “average” worker is finding herself completely priced out of even a studio in the city- where prices have gone up to $1400 or $1500 in even “iffy” neighborhoods like the Mission.

I also saw other signs of a booming economy. There were new restaurants and the stores were crowded at the new indoor Mall near Union Square where a shiny new Bloomingdales didn’t try to hide the fact that they were selling $1000 dresses on every floor. The downtowns of the towns on the Peninsula also seemed healthy. In downtown Burlingame, small boutiques with upscale goods seemed to be making it right next door to the big chains like Ann Taylor.

Yes, the money is once again flowing in the Bay Area.

Yet, there were still the usual number of homeless. And the murder rate is scary high in both San Francisco and Oakland for an economy that is this good.

But otherwise, you can feel the prosperity in the air there. And that’s a good thing. Outside of the housing downdraft, it is all systems go.

And you know what they say: whither California, whither the rest of the nation.