patrick.net

Yes. I am targeting 1999-2000 prices as sustainable absent some major inflationary event.

I think 1997 has already happened.

SF Ace,

The seven years of famine 1990-1996 were during declines in employment in manufacturing, direct defense (ie, "bases"), defense contractor (Lockheed, etc.). That turning point you write of was a nascent time for internet/dotcom/networking which quickly flowered as what techies (and real estate folks) hope for, "the next big thing". There was a huge inflow of capital from all over the world at that time that worked its way into stock options, house prices, and yes also lots of elite kids who got in with their H-1's and used dowry or family dynasty money to bid up The Fortress. There was even some "cheating" a little bit on the inflow of capital for real estate loans with the creative and fancy no-doc this, stated-that, Jumbo-mumbo crap to get more than the usual amount of real estate loan capital coming in that ought to have been expected for normal times.

If another Big Bang in employment comes in internet/dotcom/networking, much of the hiring will not be in the USA. Lotsa folks in those industries have been spending a decade in bringing those capabilities online in Asia now. Our counterparts in Asia are grown up now and all on their own; they don't really need more people working in the Bay Area; they will thrive without us thankyouverymuch.

I imagine there will always be some kind of premium for certain kinds of people who will pay the premium for the weather, the Hip-and-Coolness, and to segregate ourselves from bubba (provided we don't tax ourselves out of that value proposition), but to prop up prices here to big multiples over the rest of the USA like we've seen in recent years is going to require big flow of capital from other places, like "the next big thing".

We are rooting for you on the "next big thing" to keep the capital coming in, what do you think it will be?

" I understand the dot-coms fueled some of the rise in 1997-2000 but wage inflation was pretty high during this time too overall. Most people’s base wage notwithstanding natural career progression (I know the exceptions are the engineers, which probably had it way too good prior to 2000) enjoyed pretty good wage increases."

The wage inflation came from "Too much money ,$150B, chasing too few good ideas". As such that much money supply was simply was spent like drunken sailor by VC and their funded investments.
Once the party was over, Private funding simply died out. In the aftermath, we had jobs declines
as well as salary/wages. There just wasnt that much demand for tech infrastructure products as was the case in the 80s or 90s when we had near virgin markets . From double digit corporate spending down to under 5%. Many corporations are just doing well with their 5 year old IT products with little need to spend as once was the case.

sybrib says

We are rooting for you on the “next big thing” to keep the capital coming in, what do you think it will be?

The 'next big thing' is what is in high demand today, not what someone wants to cook up and be a cool glamorous millionaire. For now, we need is cheap energy. The answer will be nuclear. Not an attractive cool glamours profession and often ignored, but so was computer industry in the 80s and software in the 90s. Certainly SV is not the hot bed of nuclear technology, may find that elsewhere!

sybrib says

The seven years of famine 1990-1996

High employment...
A very good year for some to strike it on their own with ideas that may yield some fruit.
Loss of Industries...
Yes, lots .. and not a bad lesson to learn that anyone can be taken down by the competition in a short period of time.
Drop in RE prices...
Wonderful, makes cost of labor cheaper for employers. After all thats why early founders of SV chose cheap farm land a
suitable place to create their business.

After a decade of decadence, a sobering period for all.

"Most people’s base wage notwithstanding natural career progression (I know the exceptions are the engineers, which probably had it way too good prior to 2000) enjoyed pretty good wage increases"

Yes some made good money, but that was in some cases due to poor controls on spending. Like SGI,
they simply overspend themself to oblivion.

The best earners in late 1990 during the tech boom were actually outside the valley. The sales people who were out in the field selling domestic/international collecting fat commissions on huge sales of tech products + quarterly MBOs + Salary. I know of many who lived outside of California selling back then hot tech products who made $1M in compensation. Even the most senior well paid SW engineers paled in comparison, as did the VPs and CEO.

"1989-1997. Housing price peaked around the time of the 89 quake "

1989 was also the job peak in SV. It was when the Japanese pretty much
undercut our prices for tech products as they did with Detriot which sent local tech industries
into a huge losses and a tail spin for years. We pretty much lost our pricing power in Semi and computer component markets.

DOD and Navy pullbacks were also painful. A billion dollars out of an economy is 60,000 jobs or so, depending on the velocity of money.