Recession? We don't need no stinking recession! Despite an unemployment rate of 7.6% (and rising), and some of the highest housing prices in the country, Bay Area home sales are up 22% (July 2002, compared to July 2001). In Santa Clara County (San Jose area, where I live) the median house price is now $515,000.
Meanwhile, the effects of the dot-com-bomb are continuing to ripple through the region. Last week we tried to go to dinner to a formerly very popular pizza place in Cupertino (birthplace of Apple computer, among others). They were closed for good; collateral damage. Nobody has money for cheap pizza, but they somehow, inexplicably, have money for expensive homes.
The official 7.6% unemployment rate doesn't begin to get at the problem. Those figures are based solely on the number of people currently getting state unemployment benefits. It doesn't include the "discouraged workers" (an actual official federal designation) whose benefits have expired without them finding employment. It also doesn't count the number of people accepting part-time work as a stop-gap measure.
At my work, we're lucky enough to have just gotten funding to restore a part-time support position that was cut last December. I placed one on-line ad (on craigslist.org) last Friday afternoon. By the time I came into work Monday morning, I had 35 resumes, including four with graduate degrees. This is for a part-time, admin assistant job in a nonprofit organization - not glamorous or highly paid work. Two years ago, when I was last in a position to do any hiring, I considered myself lucky to get a dozen resumes for a full-time, professional over a two week period.
And yet, somehow, home sales continue to rise, and continue to support a ridiculously high median price. Why? My guess is that it's a combination of two things. First, the housing shortage in the Bay Area is severe enough that we could export all our unemployed elsewhere, and still not have enough decent housing for everybody remaining. Second, with the stock market as it is, real estate is the only investment people still trust.
Personally, as a perennial renter (if you think I've got $515,00, you don't know who you're reading), I'm hoping and waiting for the real estate market to slip if I'm ever going to be able to buy a house. Well, now that the pizza place is closed, maybe I can start saving towards property.