The Bay Area tech boom has long been reflected in ever-rising real estate prices. As tech execs and rock-star developers look for ways to invest spend the money they’re earning—and collecting from investors—they look to buy homes and condos.
The demand has sent prices soaring to levels topping $1200 per square foot, making a compact 100-square-foot dwelling worth a whopping $1.2 million! But according to a variety of reports, price per square foot for new condos in San Francisco have started falling in recent months. Some note drops of anywhere from 1% to 3% from September to October, and another 5% in November.
Those are far from dramatic dips, and prices remain astronomical—far above year-ago levels. $1,215 per square foot is still absurd. But considering that figure was $1,283 in October, it seems the market for new condos could be starting to slide, or at least flatten.
That’s not just of interest to Bay Area buyers. The new condo market is a telling marker for the high-tech industry because these units are often favored by local tech workers and ambitious newcomers flush with fat salaries, signing bonuses, and equity payouts. Sure, rising inventory can play a key role in pricing, but the demand side matters too.
See also: With Google developers now living in their cars, is Silicon Valley going to drive tech talent out?
Numbers like this suggest that not as many techies are making quite as much money, either because companies aren’t offering the same pay and bonuses, or because VCs and angel investors aren’t showering startups with quite as much cash at such lofty valuations—especially in later rounds. Analysts have noted that increasing numbers of private companies have had trouble raising new rounds of financing, and the number of successful IPOs has dwindled.
Given the heated pace of both Bay Area real estate and tech funding, a rational slowdown may not be such a bad thing. But if you think how wealthy tech workers are feeling is a measure of the prosperity of their companies, it makes sense to track the price of the real estate they buy.