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What % off of peak prices will clear excess inventories?
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2011 Jul 12, 2:46am 3,237 views 11 comments
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klarek
2011 Jul 12, 3:50am
how much is significant?
It's a sliding scale, much like how he'd call a 5% drop in prices "flat", a 5% increase "rising", or just draw a leftward line from current level to past levels and say it's "basically flat". He even shifts seasonal activity, like December price declines happening in August, etc. Anything is possible in the world of magically-sliding scales.
Some areas are close to reasonable (Stockton, Hollister, etc). Some are still resistant (good parts of San Jose, Sunnyvale, etc).
I'd say the pricy areas of San Jose could still go down 40-50%.
In addition to just general correcting, those homes were already old at the start of the bubble, and certainly aren't getting any younger.
Â¥
2011 Jul 12, 5:21am
Cisco To Fire 10,000 People
holy sh-
N San Jose is already mostly a Cisco campus, and the empty office blocks are starting to pile up.
Each building holds 400 people or so, that's a lot of empty space!
Plus all the jobs. This is going to kill real estate that's outside the AAPL/GOOG zone.
American in Japan
2011 Jul 12, 11:59am
@E-man
>Yes, it will hurt, but a positive way to look at it is, the Silicon Valley will have more start up companies from some of these lay-off employees. We've been down this road before such as massive lay-offs from Sun, Peoplesoft, Siebel, etc. and we're still thriving.
I hope you are right. I'd light to think that American ingenuity and innovation can still create something onf value. I have more respect for these companies than I do the corporations that benefit from "rentierism" (just hanging on to a resource that many could utilize, like land, coal or oil).
Although shadow inventory is shrinking it isn't that significant to the total number. Then again if one bank totally unloads then others might follow suit. It is like watching opec. If one member sells more oil others might as well.
>Yes, it will hurt, but a positive way to look at it is, the Silicon Valley will have more start up companies from some of these lay-off employees. We've been down this road before such as massive lay-offs from Sun, Peoplesoft, Siebel, etc. and we're still thriving.
Well its been 10 plus years since the Tech blow up, and still our count of employers are shrinking. I would have expected to seen plenty of new start up poping up.. but that didnt happen. Few people today have the chops to make a new company. Of course there is LinkedIn, FaceBook and Pandora...
.....wow impressive.... not!
Each building holds 400 people or so, that's a lot of empty space!
Cisco was talking,a year ago, about reoccupying their prior building from the landlord, which they vacated some 5-6 years back. Out of some 1m sq ft they vacated 3/4 and paid upfront lease payments to get out of the lease. So now they are shrinking again.
You should see how big HP, Intel, and many othere were back in the day... Those guys were really really big back in the 80s. But today a small shadow of their past glory.
"What % off of peak prices will clear excess inventories?"
Back to mid 90s prices plus some inflation.
There seems to be some debate about what it will take to clear all the excess inventory (both shadow and listed), in order to get back to a "normal" real estate market. 50% off appears to be where markets have been clearing at the lower tier in California ($1-$250,000). What about the mid tier ($251,000-$500,000) and the highest tier ($501,000+)? The last real estate bust in the 90s, the highest end actually corrected the most? Obviously, with many different micromarkets in California, it will vary tremendously. But, in general, what is the magic number? 40%, 50%, 60% off of peak prices?
What say ye?
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