Recent tech layoffs and the real estate market.

Okay, Its almost Thanksgiving. 

The Bay Area is stepping into the holiday season with the buzz being all about Tech job layoffs!

In the last few weeks Bay Area tech and biotech companies laid of thousands of employees. Notable companies rolling out lay off plans include Meta, Twitter, Cisco, Roku, PayPal and Lyft.

Bay Area folks are anxious about the ramifications, what does it mean for the job economy, will it be a recession, what might this do to the housing market?

Take a deep breath ya’ll, here are some bigger picture, positive numbers. In this last month, October 2022, the Bay Area added 17,600 jobs. In that same month, the state of CA added 56,200 jobs.

Statewide, the economy has gained 30,800 more jobs than the 2.79 million jobs lost in the worst 2 months of the deepest darkest pandemic shut down in 2020.

So the job market over all remains strong. That being said, the tech industry has certainly entered another realignment period. When the job market made a huge shift to virtual during Covid, tech companies, with their PPE money, hired a massive amount of employees that, in hind sight, were just  too many people. Now that things have calmed down, and these companies are reassessing profit and loss, its time to size back down. Coming back down to reality.

In short, the huge shift to online life, has swung back in the other direction. People are not living virtually now, and the overinflated tech industry is shrinking back down to a reasonable size.

Now, will these layoffs effect the Bay Area housing market?

In short, we think not.

First of all, many of the people who have lost their positions in these top companies did not necessarily own homes here. For those who do, there are still available jobs, with positions that need to be filled. As the numbers we looked at before show, there is work here for people who need it. The sweet interest rates people have landed pre inflation will keep them sitting pretty.

Monday team leader Kerri made some awesome points this week about the parallel between the tech and housing market. Both were over injected with too much value too quickly, and neither were sustainable, due to the unnatural growth rate. Its like a 2 year old hitting 10 feet tall before solidly knowing how to walk, falling is inevitable.  Growth and value must be achieved with time in order to be long lasting. You gotta walk before you run.

Many Bay Area homes will appreciate back up to the high values we saw them jump to due to the pandemic... in time. The jump back they are seeing is a correction.

In both areas, tech and housing, Covid hit the gas hard. The direct result was a dramatic injection of synthetic value. As life settles back to a semblance of what it was before the shut down, the hot mess of economic turmoil  is sorting itself out. The cooling of the housing market, and the downgrading of the tech labor force are a natural progression.