Between all the news hype about foreclosures, government bail out, TARP, Henry Paulson, bankrupt auto industry, how is this really effecting the real estate industry in the Santa Clara Valley. Now I understand that layoffs are imminent. Some tech insiders, past clients, have told me that their firms are down sizing and some have already gone through rounds of layoffs. I even had a gentleman come through my open house one weekend and tell me that he thinks that the layoffs are going to be so widespread across the valley affecting executives and workers and therefore eventually bringing down real estate values in the untouchable Los Altos, Saratoga, and Los Gatos markets to 1980’s values.
Well that’s a bold statement, one I don’t think many people want to see in this valley. But today looking at the performance of these three areas, a couple of things are for certain these markets have slowed and prices have drop. Erasing gains that they made in 2007 and 2008. While layoffs start to hit these home owners, some of whom may have purchased 5 years ago on adjustable rate loans, will we see a high rate of foreclosures in this area, or significant price drops. Most likely significant price drops but foreclosures probably not to many. Many still have equity in their homes and can either sell or refinance. Also if they lose their job they will received 6 to 12 months of unemployment which should carry them through to next year where we hope the job market will start to recover. Either way you look at it its a challenging time for home owners in the valley.