Sunday, February 07, 2016

Apartments near Caltrain stations

Renting in San Francisco Bay Area has gotten increasingly expensive over the last five years. Competition for apartments means renters are less likely to be able to negotiate with landlords, especially for an apartments near Caltrain stations. In the same time the renters should pay attention to the changes happening in the Silicon Valley today.

If carefully you look at the stock chart below, it almost appears as if LinkedIn's (LNKD) shares went through a 2-for-1 stock split on Friday. Unfortunately, this is actual performance, and it displays what happened to LinkedIn recently. Shares went south on Friday after the company's fourth-quarter report, with the daily low being more than 50% off of prices seen earlier in the week. While many investors will look for an excellent buying opportunity on the drop, a valuation argument can be made that LinkedIn's stock is still overvalued. LNKD has stalled and will probably decline further. I didn't feel it necessary to describe how many of my friends have LinkedIn accounts, which we never use. Some people refer to LinkedIn as a "repository of fake resumes."

When venture capitalists throw millions of dollars at Silicon Valley tech companies, people get hired who wouldn’t otherwise when there’s no profit. These people rent apartments preferably near near Caltrain stations. When that money is suddenly gone, new employees go with it, and so do rent values.

Let’s take for example Madera Apartments near the Caltrain and downtown Mountain View. They currently ask $5,300 per month for 2 bedroom/2 bathroom apartment and I suspect that there are renters from LinkedIn. So what happens if economy slows down and layoff happens. We do not know what exactly happens next. It may be a gentle decline over many months or years, or a sudden crash, but the rental prices will go down.

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