Photo: Flickr/David Ohmer
Multiple smoke signals have been spotted, and it seems like the infamous Bay Area tech boom is losing steam.
The floundering stock market is partly to blame, and with it, angel investors are loathed to shell out the same amount of funding year after year. As David Baker from the San Francisco Chronicle explains: Square, the payment processing company beloved of food-truck chefs, had to price its IPO at $9 a share, well below the expected range of $11 to $13, to ensure a first-day pop. Fitbit priced its June IPO at $20 per share, soared above $50 in August, and has tumbled ever since, now trading below $18.
In a separate article explaining what the term “unicorn” means to the tech industry — private tech startups allegedly valued at $1 billion — the Chronicle reported: Last year, 18 companies sold themselves for less money than what they raised, compared with nine in 2010, according to CB Insights.
What does it mean for the housing market?
Despite the recent coverage surrounding tech’s instability, developers are rushing ahead to build more condos. Patrick Carlisle, chief market analyst of Paragon, recently told the Financial Times that there are more than 25,000 condos still slated for construction, primarily targeting the upper-end of the market. “So far the onrush of new supply has not altered the balance [of supply and demand],” he says. “But there is certainly concern there is so much in the pipeline that it could saturate the market.”
It’s similar to the Bay Area’s boom-and-bust cycle during the dot-com era of the late 90s, or the over confidence in the housing market leading up The Great Recession of 2008. Considering these warning signs of imminent downturn, would it be wise to hold off on any lavish purchases — especially for those working in the tech industry?